Q - AdaptHealth

Previous wording

During the three months ended March 31, 2024, the Company previously classified certain expenses, primarily related to revenue cycle management costs, as a component of Cost of net revenue in its Consolidated Statements of Operations. During the three months ended March 31, 2025, the Company has classified these costs within General and administrative expenses to better align with common industry practice, and has reclassified these costs in its Consolidated Statements of Operations for the three months ended March 31, 2024 to conform to the current period presentation. During the three months ended March 31, 2024, the Company reclassified $40.7 million from Cost of net revenue to General and administrative expenses. The resulting reclassifications had no impact on the Company's historical reported net revenue, operating income (loss), or cash flows from operating activities, investing activities, and financing activities for the three months ended March 31, 2024.

Current wording

During thethree and six months ended June 30, 2024, the Company previously classified certain expenses, primarily related to revenue cycle management costs, as a component of Cost of net revenue in its Consolidated Statements of Operations. During thethree and six months ended June 30, 2025, the Company has classified these costs within General and administrative expenses to better align with common industry practice, and has reclassified these costs in its Consolidated Statements of Operations for thethree and six months ended June 30, 2024 to conform to the current period presentation. During thethree and six months ended June 30, 2024, the Company reclassified $42.3 million and $83.0 million, respectively, from Cost of net revenue to General and administrative expenses. The resulting reclassifications had no impact on the Company's historical reported net revenue, operating income (loss), or cash flows from operating activities, investing activities, and financing activities for thethree and six months ended June 30, 2024.

Previous wording

The Company services beneficiaries of Medicare, Medicaid and commercial insurance payors. As of March 31, 2025, AdaptHealth serviced approximately 4.2 million patients annually in all 50 states through its network of approximately 660 locations in 47 states. The Company’s principal executive offices are located at 555 East North Lane, Suite 5075, Conshohocken, Pennsylvania 19428.

Current wording

The Company services beneficiaries of Medicare, Medicaid and commercial insurance payors. As of June 30, 2025, AdaptHealth serviced approximately 4.2 million patients annually in all 50 states through its network of approximately 630 locations in 47 states. The Company’s principal executive offices are located at 555 East North Lane, Suite 5075, Conshohocken, Pennsylvania 19428.

Previous wording

Net Revenue. Net revenue is recognized for services and related products that AdaptHealth provides to patients for healthcare-at-home solutions including home medical equipment ("HME"), medical supplies and related services. Revenues are recognized either at a point in time for the sale of supplies and disposables, over the service period for equipment rental (including, but not limited to, CPAP 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 patient starts and to generate referrals from patient referral sources and the ability to meet the increased demand considering inflationary pressures.

Current wording

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 disposables, over the service period for equipment rental (including, but not limited to, CPAP 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 patient starts and to generate referrals from patient referral sources and the ability to meet the increased demand considering inflationary pressures.

Previous wording

(a) Certain amounts previously reported within Cost of net revenue have been reclassified to General and administrative expenses in order to conform to the current year presentation. See Note 1(f), Reclassifications, included in the accompanying notes to the interim consolidated financial statements for the three months ended March 31, 2025 and 2024 for additional discussion of such reclassification.

Current wording

(a) Certain amounts previously reported within Cost of net revenue have been reclassified to General and administrative expenses in order to conform to the current year presentation. See Note 1(f), Reclassifications, included in the accompanying notes to the interim consolidated financial statements for thethree and six months ended June 30, 2025 and 2024 for additional discussion of such reclassification.

Previous wording

Net revenue from AdaptHealth's Sleep Health segment decreased by $9.0 million, or 2.8%, for the three months ended March 31, 2025 compared to the prior year period, primarily due to a decrease in net revenue from fixed monthly equipment reimbursements from lower sleep rental products and related supplies, partially offset by an increase in sleep sales revenue primarily from an increase in sales of CPAP resupply products. Net revenue from AdaptHealth's Respiratory Health segment increased by $5.2 million, or 3.3%, for the three months ended March 31, 2025 compared to the prior year period, primarily due to increased patient census driven by strong patient demand for respiratory products. Net revenue from AdaptHealth's Diabetes Health segment decreased by $12.0 million, or 8.0%, for the three months ended March 31, 2025 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. Net revenue from AdaptHealth's Wellness at Home segment increased by $1.2 million, or 0.7% for the three months ended March 31, 2025 compared to the prior year period, primarily due to increased revenues from HME products and certain other product categories within this segment, partially offset by decreased revenues from the disposition of certain custom rehab technology assets in the third quarter of 2024.

Current wording

Net revenue from AdaptHealth's Sleep Health segment increased by $3.1 million, or 0.9%, for the three months ended June 30, 2025 compared to the prior year period, primarily due to an increase in sleep sales revenue primarily from higher patient census from sales of CPAP resupply products, partially offset by a decrease in net revenue from fixed monthly equipment reimbursements from lower sleep rental products and related supplies. Net revenue from AdaptHealth's Respiratory Health segment increased by $9.1 million, or 5.6%, for the three months ended June 30, 2025 compared to the prior year period, due to higher fixed monthly equipment reimbursements primarily from higher patient census for oxygen equipment products. Net revenue from AdaptHealth's Diabetes Health segment decreased by $6.2 million, or 4.1%, for the three months ended June 30, 2025 compared to the prior year period, primarily due to a shift in payor mix from commercial insurance to government payors, partially offset by growth in CGM patient census. Net revenue from AdaptHealth's Wellness at Home segment decreased by $11.6 million, or 7.2% for the three months ended June 30, 2025 compared to the prior year period, primarily due to decreased revenues from the disposition of two businesses in the second quarter of 2025 as well as the disposition of certain custom rehab technology assets in the third quarter of 2024, partially offset by increased revenues from HME products and certain other product categories within this segment.

Previous wording

For the three months ended March 31, 2025, net sales revenue compr ised 63.7% of total net revenue, compared to 63.9% of total net revenue for the three months ended March 31, 2024. For the three months ended March 31, 2025 and March 31, 2024, net revenue from fixed monthly equipment reimbursements comprised 32.1% of total net revenue. For the three months ended March 31, 2025, net revenue from capitated revenue arrangements comprised 4.2% of total net revenue, compared to 4.0% of total net revenue for the three months ended March 31, 2024.

Current wording

For the three months ended June 30, 2025, net sales revenue comprised 63.1% of total net revenue, compared to 64.1% of total net revenue for the three months ended June 30, 2024. For the three months ended June 30, 2025, net revenue from fixed monthly equipment reimbursements comprised 33.0% of total net revenue, compared to 32.0% of total net revenue for the three months ended June 30, 2024. For the three months ended June 30, 2025 and 2024, net revenue from capitated revenue arrangements comprised 3.9% of total net revenue.

Previous wording

Cost of net revenue for the three months ended March 31, 2025 and 2024 was $657.4 million and $635.0 million, respectively, an increase of $22.4 million or 3.5%. Costs of products and supplies increased by $11.7 million, primarily as a result of product mix and general inflationary cost increases. Salaries, labor and benefits increased by $6.0 million, primarily due to annual merit increases and increases in benefits costs. Patient equipment depreciation increased by $2.4 million, primarily due to higher medical equipment prices, partially offset by lower net revenue from fixed monthly equipment reimbursements. The increase in other operating expenses was primarily due to higher distribution expenses, including increased vehicle rental costs and equipment repair costs.

Current wording

Cost of net revenue for the three months ended June 30, 2025 and 2024 was $645.7 million and $636.6 million, respectively, an increase of $9.1 million or 1.4%. Costs of products and supplies increased by $3.1 million primarily as a result of product mix and general inflationary cost increases, partially offset by lower net sales revenue. The increase in cost of products and supplies was also attributable to the benefit received in the three months ended June 30, 2024 related to credits received from a supplier related to certain product recalls which were recognized as a reduction to the cost of products and supplies. Salaries, labor and benefits increased by$3.6 million, primarily due to annual merit increases and increases in benefits costs. Patient equipment depreciation increased by $2.4 million, primarily due to higher medical equipment prices.

Previous wording

General and Administrative Expenses. General and administrative expenses for the three months ended March 31, 2025 and 2024 were $86.9 million and $89.0 million respectively, a decrease of $2.2 million or 2.5%. This decrease is primarily due to lower salaries, labor and benefits, legal fees and legal settlement costs, partially offset by higher consulting expenses, software costs and equity-based compensation. General and administrative expenses as a percentage of net revenue was 11.2% in the 2025 and 2024 period. General and administrative expenses in the 2025 period included $4.1 million of equity-based compensation expense and other non-recurring expenses of $5.1 million, consisting of $2.3 million of consulting expenses associated with asset dispositions, $1.6 million of consulting expenses associated with systems implementation activities, and $1.2 million of other expenses. General and administrative expenses in the 2024 period included $3.3 million of equity-based compensation expense and other non-recurring expenses of $3.3 million, consisting of $1.2 million of expenses associated with litigation, $1.0 million of consulting expenses associated with systems implementation activities, $0.7 million of consulting expenses associated with asset dispositions, and $0.4 million of other expenses.

Current wording

General and Administrative Expenses. General and administrative expenses for the three months ended June 30, 2025 and 2024 were $97.4 million and $99.4 million respectively, a decrease of $1.9 million or 1.9%. This decrease is primarily due to lower consulting expenses and salaries, labor and benefits, partially offset by higher software costs, legal settlement costs and equity-based compensation. General and administrative expenses as a percentage of net revenue was 12.2% in the 2025 period, compared to 12.3% in the 2024 period. General and administrative expenses in the 2025 period included $4.5 million of equity-based compensation expense and other non-recurring expenses of $9.8 million, consisting of $6.9 million of consulting expenses associated with asset dispositions (of which $5.1 million relates to contingent success fees on the sales of businesses), $1.0 million of transaction costs associated with acquisitions, and $1.9 million of other expenses. General and administrative expenses in the 2024 period included $3.9 million of equity-based compensation expense and other non-recurring expenses of $9.4 million, consisting of $5.8 million of consulting expenses associated with systems implementation activities, $1.6 million of expenses associated with litigation, $0.3 million of consulting expenses associated with asset dispositions, and $1.7 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 March 31, 2025 and 2024 was $10.4 million and $11.4 million, respectively, a decrease of $1.0 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 June 30, 2025 and 2024 was $10.2 million and $11.4 million, respectively, a decrease of $1.2 million, primarily related to lower intangible amortization expense.

Previous wording

Goodwill Impairment. The goodwill impairment charge for the three months ended March 31, 2024 relates to the disposition of certain immaterial custom rehab technology assets during 2024.

Current wording

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

Previous wording

Interest Expense, net. Interest expense, net for the three months ended March 31, 2025 and 2024 was $28.4 million and $32.5 million, respectively, a decrease of $4.1 million. Interest expense related to AdaptHealth's credit agreement decreased by $5.7 million in 2025 compared to 2024 as a result of lower interest rates as well as lower average outstanding borrowings in 2025 compared to 2024. This decrease was partially offset by an increase of $0.4 million related to AdaptHealth's finance leases in 2025 compared to 2024. In addition, the impact from AdaptHealth's interest rate swap agreements reduced interest expense by $0.9 million and $2.1 million in 2025 and 2024, respectively.

Current wording

Interest Expense, net. Interest expense, net for the three months ended June 30, 2025 and 2024 was $27.5 million and $33.0 million, respectively, a decrease of $5.5 million. Interest expense related to AdaptHealth's credit agreement decreased by $6.6 million in 2025 compared to 2024 as a result of lower interest rates as well as lower average outstanding borrowings in 2025 compared to 2024. This decrease was partially offset by an increase of $0.1 million related to AdaptHealth's finance leases in 2025 compared to 2024. In addition, the impact from AdaptHealth's interest rate swap agreements reduced interest expense by $0.9 million and $1.5 million in 2025 and 2024, respectively.

Previous wording

Income Tax Expense. Income tax expense for the three months ended March 31, 2025 and 2024 was $0.9 million and $6.6 million, respectively. The decrease in income tax expense was primarily related to lower pre-tax income. Additionally, the Company recognized a $0.5 million income tax benefit, and corresponding increase to net deferred tax assets, related to a non-cash goodwill impairment charge of $6.5 million recognized during the three months ended March 31, 2024. See Note 6, Goodwill and Identifiable Intangible Assets, for additional details.

Current wording

Income Tax Expense. Income tax expense for the three months ended June 30, 2025 and 2024 was $35.9 million and $7.2 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. Additionally, for the three months ended June 30, 2025, AdaptHealth recognized a $27.4 million discrete income tax expense related to the dispositions. See Note 4, Disposals, for additional details.

Previous wording

Certain amounts previously reported within these categories of Cost of net revenue have been reclassified to General and administrative expenses in order to conform to the current year presentation. See Note 1(f), Reclassifications, included in the accompanying notes to the interim consolidated financial statements for the three months ended March 31, 2025 and 2024 for additional discussion of such reclassification.

Current wording

Certain amounts previously reported within these categories of Cost of net revenue have been reclassified to General and administrative expenses in order to conform to the current year presentation. See Note 1(f), Reclassifications, included in the accompanying notes to the interim consolidated financial statements for the three and six months ended June 30, 2025 and 2024 for additional discussion of such reclassification.

Previous wording

Change in Fair Value of Warrant Liability. AdaptHealth had outstanding warrants to purchase shares of Common Stock, as discussed in Note 11, Stockholders’ Equity, to the accompanying March 31, 2025 interim consolidated financial statements. These warrants were liability-classified, and the change in fair value of the warrant liability represented a non-cash charge in the three months ended March 31, 2024 for the change in estimated fair value of such liability during such period.

Current wording

Change in Fair Value of Warrant Liability. During thesix months ended June 30, 2024, AdaptHealth had outstanding warrants to purchase shares of Common Stock, as discussed in Note 12, Stockholders’ Equity, to the accompanying June 30, 2025 interim consolidated financial statements. These warrants were liability-classified, and the change in fair value of the warrant liability represents a non-cash charge in the six months ended June 30, 2024 for the change in the estimated fair value of such liability during such period. These warrants expired on November 8, 2024.

Previous wording

Other Loss, net. Other loss, net for the three months ended March 31, 2024 consisted of a pre-tax expense of $4.2 million for the change in fair value of shares of the Company'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.

Current wording

Other Loss, net. Other loss, net for the six months ended June 30, 2024 consisted of a 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.

Previous wording

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.

Current wording

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,

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, 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, litigation settlement expense (gain), gain on sale of businesses, and certain other non-recurring items of expense or income.

Previous wording

The following unaudited table presents the reconciliation of net loss attributable to AdaptHealth Corp. to EBITDA and Adjusted EBITDA, and the reconciliation of net loss attributable to AdaptHealth Corp. as a percentage of net revenue to Adjusted EBITDA Margin, for the three months ended March 31, 2025 and 2024:

Current 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, 2025 and 2024:

Previous wording

(e)The 2025 period consists of $2.3 million of consulting expenses associated with asset dispositions, $1.6 million of consulting expenses associated with systems implementation activities, and $1.2 million of other non-recurring expenses. The 2024 period consists of $1.2 million of expenses associated with litigation, $1.0 million of consulting expenses associated with systems implementation activities, a $0.7 million write-down of assets, $0.7 million of consulting expenses associated with asset dispositions, and $0.4 million of other non-recurring expenses.

Current wording

(f)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 2024 period consists of $5.8 million of consulting expenses associated with systems implementation activities, $1.6 million of expenses associated with litigation, a $0.9 million write-down of assets, $0.3 million of consulting expenses associated with asset dispositions, and $1.7 million of other non-recurring expenses.

Previous wording

(b)Represents a non-cash charge for the change in the estimated fair value of the warrant liability. See Note 11, Stockholders' Equity, included in the accompanying notes to the interim consolidated financial statements for the three months ended March 31, 2025 for additional discussion of such non-cash charge. These warrants expired on November 8, 2024.

Current wording

(b)Represents a non-cash charge for the change in the estimated fair value of the warrant liability. See Note 12, Stockholders’ Equity, included in the accompanying notes to the interim consolidated financial statements for the three and six months ended June 30, 2025 for additional discussion of such non-cash charge. These warrants expired on November 8, 2024.

Previous wording

(d)Represents a $4.2 million charge for the change in fair value of shares of Common Stock of the Company that were issued in July 2024 following final court approval of a previously disclosed securities settlement, as well as an expense of $0.9 million to settle a shareholder derivative complaint.

Current 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 a previously disclosed securities settlement, as well as an expense of $0.9 million to settle a shareholder derivative complaint.

Previous wording

(a) See Note 5, Segment Information, in the accompanying notes to the interim consolidated financial statements for the three months ended March 31, 2025 and 2024 for a reconciliation of consolidated Adjusted EBITDA to consolidated income (loss) before income taxes.

Current wording

(a) See Note 6, Segment Information, in the accompanying notes to the interim consolidated financial statements for the three and six months ended June 30, 2025 and 2024 for a reconciliation of consolidated Adjusted EBITDA to consolidated income before income taxes.

Previous wording

(1) Represents the significant segment expense categories disclosed in Note 5, Segment Information, in the accompanying notes to the interim consolidated financial statements for the three months ended March 31, 2025 and 2024.

Current wording

(1) Represents the significant segment expense categories disclosed in Note 6, Segment Information, in the accompanying notes to the interim consolidated financial statements for the three and six months ended June 30, 2025 and 2024.

Previous wording

Adjusted EBITDA from the Respiratory Health segment increased by $0.1 million or 0.3%, for the three months ended March 31, 2025 compared to the prior year period, due to higher net revenue (as discussed above), offset by increased costs and expenses. The increase in the cost of products and supplies was primarily due to an increase in sales revenue and general inflationary cost increases. The increase in labor cost was primarily due to annual merit increases and increases in benefits costs. The increase in other operating expenses was primarily due to higher distribution expenses. The decrease in other segment items was due to a decrease in general and administrative expenses that were allocated to the segment.

Current wording

Adjusted EBITDA from the Sleep Health segment increased by $0.1 million or 0.2%, for the three months ended June 30, 2025 compared to the prior year period, primarily due to higher net revenue (as discussed above), partially offset by increased costs and expenses. The decrease in the cost of products and supplies was primarily due to product mix, offset by general inflationary cost increases. The increase in labor cost was primarily due to annual merit increases and increases in benefits costs. The decrease in other segment items was due to a decrease in general and administrative expenses that were allocated to the segment.

Previous wording

Adjusted EBITDA from the Wellness at Home segment decreased by $0.6 million or 4.5%, for the three months ended March 31, 2025 compared to the prior year period, due to higher cost and expenses, partially offset by higher net revenue (as discussed above). The increase in the cost of products and supplies was primarily due to product mix and general inflationary cost increases. The increase in other operating expenses was primarily due to higher distribution expenses. The decrease in other segment items was due to a decrease in general and administrative expenses that were allocated to the segment.

Current wording

Adjusted EBITDA from the Respiratory Health segment decreased by $7.3 million or 13.1%, for the three months ended June 30, 2025 compared to the prior year period, due to increased costs and expenses, partially offset by higher net revenue (as discussed above). The increase in cost of products and supplies was primarily due to the benefit received in the three months ended June 30, 2024 related to credits received from a supplier related to certain product recalls which were recognized as a reduction to the cost of products and supplies, as well as general inflationary cost increases. The increase in labor cost was primarily due to annual merit increases and increases in benefits costs. The increase in other operating expenses was primarily due to higher distribution expenses and software costs. The increase in other segment items was due to an increase in general and administrative expenses that were allocated to the segment.

Previous wording

Net revenue from the Sleep Health segment decreased by $9.0 million, or 2.8%, for the three months ended March 31, 2025 compared to the prior year period, primarily due to a decrease in net revenue from fixed monthly equipment reimbursements from lower sleep rental products and related supplies, partially offset by an increase in sleep sales revenue primarily from an increase in sales of CPAP resupply products.

Current wording

Net revenue from the Sleep Health segment decreased by $5.8 million, or 0.9%, for thesix months ended June 30, 2025 compared to the prior year period, primarily due to a decrease in net revenue from fixed monthly equipment reimbursements from lower sleep rental products and related supplies, partially offset by an increase in sleep sales revenue primarily from higher patient census from sales of CPAP resupply products.

Previous wording

Adjusted EBITDA from the Sleep Health segment decreased by $15.9 million or 20.0%, for the three months ended March 31, 2025 compared to the prior year period, primarily due to lower net revenue (as discussed above), as well as increased costs and expenses. The increase in the cost of products and supplies was primarily due to an increase in sales revenue and general inflationary cost increases. The increase in labor cost was primarily due to annual merit increases and increases in benefits costs. The increase in other operating expenses was primarily due to higher distribution expenses. The decrease in other segment items was due to a decrease in general and administrative expenses that were allocated to the segment.

Current wording

Adjusted EBITDA from the Sleep Health segment decreased by $15.8 million or 9.8%, for thesix months ended June 30, 2025 compared to the prior year period, primarily due to increased costs and expenses, as well as lower 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 annual merit increases and increases in benefits costs. The increase in other operating expenses was primarily due to higher distribution expenses and software costs. The decrease in other segment items was due to a decrease in general and administrative expenses that were allocated to the segment.

Previous wording

AdaptHealth’s principal sources of liquidity are its operating cash flows, borrowings under its credit agreements and other debt arrangements, and proceeds from equity issuances. 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.

Current wording

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.

Previous wording

As of March 31, 2025, AdaptHealth had approximately $53.7 million of cash.

Current wording

As of June 30, 2025, AdaptHealth had $68.6 million of cash.

Previous wording

In September 2024, AdaptHealth entered into an amendment to its existing credit agreement (as amended, the "2024 Credit Agreement"). The 2024 Credit Agreement included a $650 million term loan (the “2024 Term Loan”) and $300 million in revolving credit commitments with a $55 million letter of credit sublimit (the “2024 Revolver”, and together with the 2024 Term Loan, the "2024 Credit Facility"). The 2024 Credit Facility matures in September 2029. However, if the 6.125% Senior Notes (as defined below) have not been refinanced (to extend the maturity date to a date that is later than December 13, 2029) or repaid in full, on or prior to December 31, 2027, then the 2024 Credit Facility will mature on May 1, 2028; and, if the 4.625% Senior Notes (as defined below) have not been refinanced (to extend the maturity date to a date that is later than December 13, 2029) or repaid in full, on or prior to December 31, 2028, then the 2024 Credit Facility will mature on May 1, 2029. As of March 31, 2025, 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. During the three months ended March 31, 2025, AdaptHealth made a voluntary repayment on the 2024 Term Loan of $20.9 million. At March 31, 2025, there was $525.0 million outstanding under the 2024 Term Loan. Subsequent to March 31, 2025, AdaptHealth repaid $70.0 million on the 2024 Term Loan. Borrowings under the 2024 Revolver may be used for working capital and other general corporate purposes, including for capital expenditures and acquisitions permitted under the 2024 Credit Agreement. At March 31, 2025, 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 March 31, 2025, based on the financial debt covenants under the 2024 Credit Agreement, the maximum amount AdaptHealth could borrow under the 2024 Revolver and remain in compliance with the financial debt covenants under the agreement was $277.6 million.

Current wording

In September 2024, AdaptHealth entered into an amendment to its existing credit agreement (as amended, the "2024 Credit Agreement"). The 2024 Credit Agreement included a $650 million term loan (the “2024 Term Loan”) and $300 million in revolving credit commitments with a $55 million letter of credit sublimit (the “2024 Revolver”, and together with the 2024 Term Loan, the "2024 Credit Facility"). The 2024 Credit Facility matures in September 2029. However, if the 6.125% Senior Notes (as defined below) have not been refinanced (to extend the maturity date to a date that is later than December 13, 2029) or repaid in full, on or prior to December 31, 2027, then the 2024 Credit Facility will mature on May 1, 2028; and, if the 4.625% Senior Notes (as defined below) have not been refinanced (to extend the maturity date to a date that is later than December 13, 2029) or repaid in full, on or prior to December 31, 2028, then the 2024 Credit Facility will mature on May 1, 2029. As of June 30, 2025, 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. During thesix months ended June 30, 2025, AdaptHealth made voluntary repayments on the 2024 Term Loan totaling $166.9 million. At June 30, 2025, there was $375.0 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. At June 30, 2025, there was $25.5 million outstanding under letters of credit. As of the date of this filing, there were no outstanding borrowings under the 2024 Revolver. At June 30, 2025, based on the financial debt covenants under the 2024 Credit Agreement, the maximum amount AdaptHealth could borrow under the 2024 Revolver and remain in compliance with the financial debt covenants under the agreement was $274.5 million.

Previous wording

As of March 31, 2025 and December 31, 2024, AdaptHealth had working capital of $168.4 million and $188.8 million, respectively. A significant portion of AdaptHealth’s current assets consists of accounts receivable from third-party payors that are responsible for payment for the products and services that AdaptHealth provides.

Current wording

As of June 30, 2025 and December 31, 2024, AdaptHealth had working capital of $35.9 million and $188.8 million, respectively. A significant portion of AdaptHealth’s current assets consists of accounts receivable from third-party payors that are responsible for payment for the products and services that AdaptHealth provides.

Previous wording

Cash Flow. The following table presents selected data from AdaptHealth’s consolidated statements of cash flows for the three months ended March 31, 2025 and 2024:

Current wording

Cash Flow. The following table presents selected data from AdaptHealth’s consolidated statements of cash flows for the six months ended June 30, 2025 and 2024:

Previous wording

Net cash provided by operating activities for the three months ended March 31, 2025 and 2024 was $95.5 million and $49.0 million, respectively, an increase of $46.5 million. The increase was the result of a $5.0 million reduction in net income, a net decrease of $16.8 million in non-cash charges, primarily from depreciation and amortization, deferred income taxes, and the reduction in the carrying amount of operating and finance lease right-of-use assets, and a net $68.3 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.

Current wording

Net cash provided by operating activities for the six months ended June 30, 2025 and 2024 was $257.5 million and $247.0 million, respectively, an increase of $10.5 million. The increase was the result of a $9.7 million reduction in net income, a net decrease of $38.4 million in non-cash charges, primarily from depreciation and amortization, deferred income taxes, and the reduction in the carrying amount of operating and finance lease right-of-use assets, and a net $58.6 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 three months ended March 31, 2025 and 2024 was $95.6 million and $87.9 million, respectively. The use of funds in the 2025 and 2024 periods related to equipment and other fixed asset purchases.

Current wording

Net cash used in investing activities for the six months ended June 30, 2025 and 2024 was $86.0 million and $169.2 million, respectively. The net use of funds in 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. The use of funds in the 2024 period related to equipment and other fixed asset purchases.

Previous wording

Net cash used in financing activities forthe three months ended March 31, 2025 was $56.0 million, compared to net cash provided by financing activities of $41.3 million forthe three months ended March 31, 2024. Net cash used in financing activities for the 2025 period consisted of repayments of $28.2 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 $2.0 million for a distribution to the noncontrolling interest, and payments of $1.3 million for tax withholdings associated with equity-based compensation, offset by proceeds of $0.6 million in connection with the employee stock purchase plan. Net cash provided by financing activities for the 2024 period consisted of borrowings on lines of credit of $75.0 million, proceeds of $0.6 millionin connection with the employee stock purchase plan, and proceeds of$0.5 million relating to stock option exercises, offset by repayments of$27.3 million on long-term debt and finance lease liabilities, a payment of$5.0 million for contingent consideration in connection with an acquisition, payments of$1.4 million in connection with the Company's liability relating to the TRA, andpayments of$1.1 million for tax withholdings associated with equity-based compensation.

Current wording

Net cash used in financing activities forthe six months ended June 30, 2025 and 2024 was $212.7 million and $85.2 million, respectively. 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. Net cash used in financing activities for the 2024 period consisted ofrepayments 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, andpayments of$1.4 million for tax withholdings associated with equity-based compensation, offset byborrowings on lines of credit of $75.0 million, proceeds of $0.6 millionin 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 for the three months ended March 31, 2025 and 2024:

Current wording

The following table reconciles net cash provided by operating activities to free cash flow for the three and six months ended June 30, 2025 and 2024:

Previous wording

Free cash flow was negative $0.1 million for the three months ended March 31, 2025 compared to negative $38.9 million for the three months ended March 31, 2024. The increase in free cash flow was due to higher net cash provided by operating activities, primarily due to a net increase in the cash provided from operating assets and liabilities related to accounts receivable, inventory and accounts payable and accrued expenses. In addition, during the three months ended March 31, 2024, free cash flow was materially adversely impacted by the Change Healthcare cybersecurity incident as discussed above. The higher net cash provided by operating activities was offset by an increase in, and timing of, purchases of patient medical equipment for operating requirements.

Current wording

Free cash flow was $73.3 million for the six months ended June 30, 2025 compared to $77.9 million for the six months ended June 30, 2024. The decrease in free cash flow was due to an increase in, and timing of, purchases of patient medical equipment for operating requirements, partially offset by higher net cash provided by operating activities, primarily due to a net increase in the cash provided from operating assets and liabilities related to accounts receivable, inventory and accounts payable and accrued expenses. In addition, during the six months ended June 30, 2024, free cash flow was positively impacted by AdaptHealth's participation in the Optum Temporary Funding Assistance Program.

Previous wording

From time to time and in the normal course of business, the Company is subject to loss contingencies, arising from legal proceedings, claims, and governmental and other investigations under or with respect to various governmental programs and state and federal laws relating to its business, including as a result of or following acquisitions and other business activities, that cover a wide range of matters. In accordance with FASB ASC Topic 450, Accounting for Contingencies, the Company records accruals for such loss contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. If there is no probable estimate within a range of reasonably possible outcomes, the Company’s policy is to record at the low end of the range of such reasonably possible outcomes. Significant judgment is required to determine both probability and the estimated amount. The Company reviews its accruals at least quarterly and adjusts accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information. At this time, the Company has no material accruals related to lawsuits, claims, investigations or proceedings.

Current wording

From time to time and in the normal course of business, the Company is subject to loss contingencies, arising from legal proceedings, claims, and governmental and other investigations under or with respect to various governmental programs and state and federal laws relating to its business, including as a result of or following acquisitions and other business activities, that cover a wide range of matters. In accordance with FASB ASC Topic 450, Accounting for Contingencies, the Company records accruals for such loss contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. If there is no probable estimate within a range of reasonably possible outcomes, the Company’s policy is to record at the low end of the range of such reasonably possible outcomes. Significant judgment is required to determine both probability and the estimated amount. The Company reviews its accruals at least quarterly and adjusts accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information. At this time, the Company has no material accruals related to lawsuits, claims, investigations or proceedings. While there can be no assurance, based on the Company’s evaluation of information currently available, the Company’s management believes any liability that may ultimately result from resolution of such loss contingencies will not have a material adverse effect on the Company’s financial conditions or results of operations. However, the Company’s assessment may change in the future based upon availability of new information and further developments in the proceedings of such matters. The results of legal proceedings, claims and investigations are inherently uncertain, and material adverse outcomes are possible. Professional legal fees associated with any such legal proceedings, claims and investigations are expensed as they are incurred.

Previous wording

On October 24, 2023, Allegheny County Employees’ Retirement System, a purported shareholder of the Company, filed a purported class action complaint against the Company and certain of its current and former officers, and certain underwriters in the United States District Court for the Eastern District of Pennsylvania. On January 23, 2024, the court entered an order appointing Allegheny County Employees' Retirement System, International Union of Operating Engineers, Local No. 793, Members Pension Benefit Trust of Ontario, and City of Tallahassee Pension Plan as Lead Plaintiffs (the "Allegheny Lead Plaintiffs"). On May 14, 2024, Allegheny Lead Plaintiffs filed a consolidated complaint against the Company and certain of its current and former officers and directors, and certain underwriters, on behalf of shareholders that purchased or otherwise acquired the Company’s stock between August 4, 2020 and November 7, 2023 (as to the complaint the “Allegheny County Consolidated Complaint”; as to the action, the “Allegheny County Consolidated Class Action”). The Allegheny County Consolidated Complaint alleges, among other things, that the defendants violated federal securities laws by making allegedly false and misleading statements and/or failing to disclose material information regarding (i) the Company’s billing practices with respect to its diabetes product category, and (ii) the Company’s compliance programs and integration with respect to acquired companies. The Allegheny County Consolidated Complaint seeks unspecified damages. On July 23, 2024, the defendants filed a motion to dismiss the Allegheny County Consolidated Complaint. The Allegheny Lead Plaintiffs filed their opposition brief on October 1, 2024, and defendants filed their reply brief on November 15, 2024.

Current wording

On October 24, 2023, Allegheny County Employees’ Retirement System, a purported shareholder of the Company, filed a purported class action complaint against the Company and certain of its current and former officers, and certain underwriters in the United States District Court for the Eastern District of Pennsylvania. On January 23, 2024, the court entered an order appointing Allegheny County Employees' Retirement System, International Union of Operating Engineers, Local No. 793, Members Pension Benefit Trust of Ontario, and City of Tallahassee Pension Plan as Lead Plaintiffs (the "Allegheny Lead Plaintiffs"). On May 14, 2024, Allegheny Lead Plaintiffs filed a consolidated complaint against the Company and certain of its current and former officers and directors, and certain underwriters, on behalf of shareholders that purchased or otherwise acquired the Company’s stock between August 4, 2020 and November 7, 2023 (as to the complaint the “Allegheny County Consolidated Complaint”; as to the action, the “Allegheny County Consolidated Class Action”). The Allegheny County Consolidated Complaint alleges, among other things, that the defendants violated federal securities laws by making allegedly false and misleading statements and/or failing to disclose material information regarding (i) the Company’s billing practices with respect to its diabetes product category, and (ii) the Company’s compliance programs and integration with respect to acquired companies. The Allegheny County Consolidated Complaint seeks unspecified damages. On July 23, 2024, the defendants filed a motion to dismiss the Allegheny County Consolidated Complaint. The Allegheny Lead Plaintiffs filed their opposition brief on October 1, 2024, and defendants filed their reply brief on November 15, 2024. On May 28, 2025, the parties jointly filed a letter requesting that the Court hold the motion to dismiss in abeyance pending the outcome of a private mediation between the parties.

Previous wording

On March 20, 2024, a putative shareholder of the Company, Weiding Wu, filed a shareholder derivative complaint related to the allegations in the Allegheny County Complaint, and against certain current and former directors and officers of the Company in the United States District Court for the Eastern District of Pennsylvania (as to the complaint, the “Wu Derivative Complaint”; as to the action, the “Wu Derivative Action”). The Wu Derivative Complaint alleges, among other things, that the defendants breached their fiduciary duties and violated federal securities laws by making allegedly false and misleading statements and/or failing to disclose material information regarding the Company’s organic growth in its diabetes product category. The Wu Derivative Complaint also alleges claims for unjust enrichment, waste of corporate assets, abuse of control, and gross mismanagement. The Wu Derivative Complaint seeks, among other things, an award of money damages.

Current wording

On March 20, 2024, a putative shareholder of the Company, Weiding Wu, filed a shareholder derivative complaint related to the allegations in the Allegheny County Complaint, and against certain current and former directors and officers of the Company in the United States District Court for the Eastern District of Pennsylvania (as to the complaint, the “Wu Derivative Complaint”; as to the action, the “Wu Derivative Action”). The Wu Derivative Complaint alleges, among other things, that the defendants breached their fiduciary duties and violated federal securities laws by making allegedly false and misleading statements and/or failing to disclose material information regarding (i) the Company’s billing practices with respect to its diabetes product category, and (ii) the Company’s compliance programs and integration with respect to acquired companies. The Wu Derivative Complaint also alleges claims for unjust enrichment, waste of corporate assets, abuse of control, and gross mismanagement. The Wu Derivative Complaint seeks, among other things, an award of money damages.