10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-38399

AdaptHealth Corp.

(Exact name of registrant as specified in its charter)

Delaware	82-3677704
(State of Other Jurisdiction of incorporation or Organization)	(I.R.S. Employer Identification No.)
220 West Germantown Pike Suite 250, Plymouth Meeting, Pennsylvania	19462
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code: (610) 424-4515

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name Of Each Exchange On Which Registered
Common Stock, par value $0.0001 per share	AHCO	The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.0405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
			Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of November 3, 2023, there were 136,389,655 shares of the Registrant’s Common Stock issued and outstanding.

ADAPTHEALTH CORP.

FORM 10-Q

TABLE OF CONTENTS

	Page Number
PART I FINANCIAL INFORMATION
Item 1. Interim Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	3
Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022	4
Consolidated Statements of Comprehensive (Loss) Income for the three and nine months ended September 30, 2023 and 2022	5
Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2023 and 2022	6
Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022	8
Notes to Interim Consolidated Financial Statements	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3. Quantitative and Qualitative Disclosures About Market Risk	53
Item 4. Controls and Procedures	53
PART II OTHER INFORMATION	54
Item 1. Legal Proceedings	54
Item 1A. Risk Factors	54
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 3. Defaults upon Senior Securities	54
Item 4. Mine Safety Disclosure	54
Item 5. Other Information	54
Item 6. Exhibits	54
Signatures	56

1

CAUTIONARY STATEMENT

In this Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I Item 2, and the documents incorporated by reference herein, we make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to expectations for future financial performance, business strategies or expectations for our business. These statements may be preceded by, followed by or include the words “may,” “might,” “will,” “will likely result,” “should,” “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “continue,” “target” or similar expressions.

These forward-looking statements are based on information available to us as of the date they were made, and involve a number of risks and uncertainties which may cause them to turn out to be wrong. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:

•competition and the ability of our business to grow and manage growth profitably;

•fluctuations in the U.S. and/or global stock markets;

•the possibility that we may be adversely affected by other economic, business, and/or competitive factors;

•changes in applicable laws or regulations; and

•other risks and uncertainties set forth in this Form 10-Q.

Investors should carefully consider the foregoing factors and the other risks and uncertainties that may affect our business including those outlined under Item 1A, Risk Factors, in our most recent annual report on Form 10-K and our quarterly reports on Form 10-Q.

2

PART I – FINANCIAL INFORMATION

Item 1. Interim Consolidated Financial Statements

ADAPTHEALTH CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(UNAUDITED)

	September 30, 2023		December 31, 2022
Assets
Current assets:
Cash	$	56,143	$	46,272
Accounts receivable	370,740		359,146
Inventory	116,332		127,754
Prepaid and other current assets	41,852		52,136
Total current assets	585,067		585,308
Equipment and other fixed assets, net	490,053		487,079
Operating lease right-of-use assets	110,007		129,506
Finance lease right-of-use assets	21,528		5,423
Goodwill	3,041,446		3,545,297
Identifiable intangible assets, net	135,728		162,773
Other assets	22,504		22,415
Deferred tax assets	318,915		281,786
Total Assets	$	4,725,248	$	5,219,587
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses	$	314,452	$	337,498
Current portion of long-term debt	40,000		35,000
Current portion of operating lease obligations	28,736		30,001
Current portion of finance lease obligations	5,947		2,211
Contract liabilities	47,981		31,641
Other liabilities	11,069		19,863
Total current liabilities	448,185		456,214
Long-term debt, less current portion	2,126,803		2,153,267
Operating lease obligations, less current portion	85,700		104,394
Finance lease obligations, less current portion	15,581		3,950
Other long-term liabilities	302,590		305,501
Warrant liability	6,617		38,503
Total Liabilities	2,985,476		3,061,829
Commitments and contingencies (note 14)
Stockholders' Equity:
Common Stock, par value of $0.0001 per share, 300,000,000 shares authorized; 134,991,451 and 134,435,119 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	13		13
Preferred Stock, par value of $0.0001 per share, 5,000,000 shares authorized; 124,060 shares issued and outstanding as of September 30, 2023 and December 31, 2022	1		1
Treasury stock, at cost (1,382,788 and 750,835 shares at September 30, 2023 and December 31, 2022, respectively)	(23,216)		(13,992)
Additional paid-in capital	2,145,376		2,130,148
(Accumulated deficit) Retained earnings	(398,097)		26,295
Accumulated other comprehensive income	8,408		8,693
Total stockholders' equity attributable to AdaptHealth Corp.	1,732,485		2,151,158
Noncontrolling interest in subsidiary	7,287		6,600
Total Stockholders' Equity	1,739,772		2,157,758
Total Liabilities and Stockholders' Equity	$	4,725,248	$	5,219,587

See accompanying notes to unaudited interim consolidated financial statements.

3

ADAPTHEALTH CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net revenue	$	804,031	$	756,495	$	2,341,943	$	2,190,312
Costs and expenses:
Cost of net revenue	693,488		646,714		2,022,281		1,853,847
General and administrative expenses	45,198		40,681		142,797		124,673
Depreciation and amortization, excluding patient equipment depreciation	14,515		16,151		45,596		48,113
Goodwill impairment (note 5)	511,866		—		511,866		—
Total costs and expenses	1,265,067		703,546		2,722,540		2,026,633
Operating (loss) income	(461,036)		52,949		(380,597)		163,679
Interest expense, net	32,306		28,521		96,813		78,905
Change in fair value of warrant liability (note 10)	(9,160)		1,364		(31,886)		(17,145)
Other loss, net	3,317		257		6,574		7,179
(Loss) income before income taxes	(487,499)		22,807		(452,098)		94,740
Income tax (benefit) expense	(34,578)		5,580		(30,893)		20,036
Net (loss) income	(452,921)		17,227		(421,205)		74,704
Income attributable to noncontrolling interest	1,155		1,105		3,187		2,800
Net (loss) income attributable to AdaptHealth Corp.	$	(454,076)	$	16,122	$	(424,392)	$	71,904
Weighted average common shares outstanding - basic	134,825		134,227		134,549		134,186
Weighted average common shares outstanding - diluted	134,982		137,583		135,202		138,599
Basic net (loss) income per share (note 11)	$	(3.37)	$	0.11	$	(3.15)	$	0.49
Diluted net (loss) income per share (note 11)	$	(3.43)	$	0.11	$	(3.37)	$	0.35

See accompanying notes to unaudited interim consolidated financial statements.

4

ADAPTHEALTH CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(IN THOUSANDS)

(UNAUDITED)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net (loss) income	$	(452,921)	$	17,227	$	(421,205)	$	74,704
Other comprehensive income (loss):
Gain (loss) on interest rate swap agreements, inclusive of reclassification adjustment, net of tax	66		7,757		(285)		15,348
Comprehensive (loss) income	(452,855)		24,984		(421,490)		90,052
Income attributable to noncontrolling interest	1,155		1,105		3,187		2,800
Comprehensive (loss) income attributable to AdaptHealth Corp.	$	(454,010)	$	23,879	$	(424,677)	$	87,252

See accompanying notes to unaudited interim consolidated financial statements.

5

ADAPTHEALTH CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(IN THOUSANDS)

(UNAUDITED)

	Common Stock			Preferred Stock			Treasury Stock			Additional paid-in capital		Retained earnings (Accumulated deficit)		Accumulated other comprehensive income (loss)		Noncontrolling interest in subsidiary		Total
	Shares	Amount		Shares	Amount		Shares	Amount
Balance, December 31, 2022	134,435	$	13	124	$	1	751	$	(13,992)	$	2,130,148	$	26,295	$	8,693	$	6,600	$	2,157,758
Equity-based compensation	292	—		—	—		—	—		5,916		—		—		—		5,916
Payments for tax withholdings from restricted stock vesting	—	—		—	—		—	—		(1,883)		—		—		—		(1,883)
Common Stock issued in connection with employee stock purchase plan	53	—		—	—		—	—		1,021		—		—		—		1,021
Shares purchased under share repurchase program	(632)	—		—	—		632	(9,224)		—		—		—		—		(9,224)
Net income	—	—		—	—		—	—		—		15,707		—		968		16,675
Change in fair value of interest rate swaps, inclusive of reclassification adjustment	—	—		—	—		—	—		—		—		(2,805)		—		(2,805)
Balance, March 31, 2023	134,148	$	13	124	$	1	1,383	$	(23,216)	$	2,135,202	$	42,002	$	5,888	$	7,568	$	2,167,458
Equity-based compensation	156	—		—	—		—	—		6,847		—		—		—		6,847
Exercise of stock options	214	—		—	—		—	—		—		—		—		—		—
Payments for tax withholdings from restricted stock vesting and stock option exercises	—	—		—	—		—	—		(2,229)		—		—		—		(2,229)
Distribution to non-controlling interest	—	—		—	—		—	—		—		—		—		(2,500)		(2,500)
Net income	—	—		—	—		—	—		—		13,977		—		1,064		15,041
Change in fair value of interest rate swaps, inclusive of reclassification adjustment	—	—		—	—		—	—		—		—		2,454		—		2,454
Balance, June 30, 2023	134,518	$	13	124	$	1	1,383	$	(23,216)	$	2,139,820	$	55,979	$	8,342	$	6,132	$	2,187,071
Equity-based compensation	176	—		—	—		—	—		4,521		—		—		—		4,521
Exercise of stock options	215	—		—	—		—	—		538		—		—		—		538
Payments for tax withholdings from restricted stock vesting and stock option exercises	—	—		—	—		—	—		(513)		—		—		—		(513)
Common Stock issued in connection with employee stock purchase plan	82	—		—	—		—	—		1,010		—		—		—		1,010
Net income	—	—		—	—		—	—		—		(454,076)		—		1,155		(452,921)
Change in fair value of interest rate swaps, inclusive of reclassification adjustment	—	—		—	—		—	—		—		—		66		—		66
Balance, September 30, 2023	134,991	$	13	124	$	1	1,383	$	(23,216)	$	2,145,376	$	(398,097)	$	8,408	$	7,287	$	1,739,772

6

	Common Stock			Preferred Stock			Treasury Stock			Additional paid-in capital		(Accumulated deficit) Retained earnings		Accumulated other comprehensive income (loss)		Noncontrolling interest in subsidiary		Total
	Shares	Amount		Shares	Amount		Shares	Amount
Balance, December 31, 2021	133,844	$	13	124	$	1	—	$	—	$	2,107,267	$	(43,021)	$	(2,354)	$	4,783	$	2,066,689
Equity-based compensation	187	—		—	—		—	—		5,502		—		—		—		5,502
Exercise of stock options	184	—		—	—		—	—		723		—		—		—		723
Payments for tax withholdings from restricted stock vesting and stock option exercises	—	—		—	—		—	—		(1,269)		—		—		—		(1,269)
Common Stock issued in connection with employee stock purchase plan	31	—		—	—		—	—		753		—		—		—		753
Net income	—	—		—	—		—	—		—		41,750		—		480		42,230
Change in fair value of interest rate swaps, inclusive of reclassification adjustment	—	—		—	—		—	—		—		—		5,998		—		5,998
Balance, March 31, 2022	134,246	$	13	124	$	1	—	$	—	$	2,112,976	$	(1,271)	$	3,644	$	5,263	$	2,120,626
Equity-based compensation	117	—		—	—		—	—		5,720		—		—		—		5,720
Exercise of stock options	43	—		—	—		—	—		—		—		—		—		—
Payments for tax withholdings from restricted stock vesting and stock option exercises	—	—		—	—		—	—		(613)		—		—		—		(613)
Shares purchased under share repurchase program	—	—		—	—		199	(3,375)		—		—		—		—		(3,375)
Reclassification of warrant liability to equity for exercised warrants	19	—		—	—		—	—		495		—		—		—		495
Distribution to non-controlling interest	—	—		—	—		—	—		—		—		—		(2,000)		(2,000)
Net income	—	—		—	—		—	—		—		14,032		—		1,215		15,247
Change in fair value of interest rate swaps, inclusive of reclassification adjustment	—	—		—	—		—	—		—		—		1,593		—		1,593
Balance, June 30, 2022	134,425	$	13	124	$	1	199	$	(3,375)	$	2,118,578	$	12,761	$	5,237	$	4,478	$	2,137,693
Equity-based compensation	83	—		—	—		—	—		5,562		—		—		—		5,562
Exercise of stock options	99	—		—	—		—	—		665		—		—		—		665
Payments for tax withholdings from restricted stock vesting and stock option exercises	—	—		—	—		—	—		(808)		—		—		—		(808)
Shares purchased under share repurchase program	—	—		—	—		552	(10,617)		—		—		—		—		(10,617)
Common Stock issued in connection with employee stock purchase plan	47	—		—	—		—	—		863		—		—		—		863
Reclassification of warrant liability to equity for exercised warrants	69	—		—	—		—	—		1,608		—		—		—		1,608
Net income	—	—		—	—		—	—		—		16,122		—		1,105		17,227
Change in fair value of interest rate swaps, inclusive of reclassification adjustment	—	—		—	—		—	—		—		—		7,757		—		7,757
Balance, September 30, 2022	134,723	$	13	124	$	1	751	$	(13,992)	$	2,126,468	$	28,883	$	12,994	$	5,583	$	2,159,950

See accompanying notes to unaudited interim consolidated financial statements.

7

ADAPTHEALTH CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(UNAUDITED)

	Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities:
Net (loss) income	$	(421,205)	$	74,704
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including patient equipment depreciation	290,419		248,835
Goodwill impairment	511,866		—
Equity-based compensation	17,284		16,784
Change in fair value of warrant liability	(31,886)		(17,145)
Reduction in the carrying amount of operating lease right-of-use assets	26,309		16,924
Reduction in the carrying amount of finance lease right-of-use assets	3,821		—
Deferred income tax (benefit) expense	(37,033)		18,058
Change in fair value of interest rate swaps, net of reclassification adjustment	(1,394)		(2,202)
Amortization of deferred financing costs	3,926		3,926
Other	350		(2,023)
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable	(10,043)		2,357
Inventory	12,769		(3,992)
Prepaid and other assets	10,956		4,211
Operating lease obligations	(26,959)		(16,794)
Operating liabilities	(23,780)		(66,696)
Net cash provided by operating activities	325,400		276,947
Cash flows from investing activities:
Purchases of equipment and other fixed assets	(248,816)		(248,511)
Payments for business acquisitions, net of cash acquired	(17,917)		(16,134)
Payments for cost method investments	(128)		(731)
Net cash used in investing activities	(266,861)		(265,376)
Cash flows from financing activities:
Proceeds from borrowings on long-term debt	50,000		—
Repayments on long-term debt	(75,000)		(15,000)
Repayments of finance lease liabilities	(4,558)		(14,219)
Payments for shares purchased under share repurchase program	(9,224)		(13,992)
Proceeds from the exercise of stock options	538		1,388
Proceeds received in connection with employee stock purchase plan	2,031		1,616
Payments relating to the Tax Receivable Agreement	(3,202)		—
Distributions to noncontrolling interest	(2,500)		(2,000)
Payments for tax withholdings from restricted stock vesting and stock option exercises	(5,253)		(2,690)
Payments of contingent consideration and deferred purchase price from acquisitions	(1,500)		(5,563)
Net cash used in financing activities	(48,668)		(50,460)
Net increase (decrease) in cash	9,871		(38,889)
Cash at beginning of period	46,272		149,627
Cash at end of period	$	56,143	$	110,738
Supplemental disclosures:
Cash paid for interest	$	113,083	$	97,389
Cash paid for income taxes	5,727		10,490
Noncash investing and financing activities:
Equipment acquired under finance lease obligations	$	—	$	1,335
Unpaid equipment and other fixed asset purchases at end of period	32,481		50,864
Assets subject to operating lease obligations	8,179		5,411
Operating lease obligations	(8,179)		(5,411)
Assets subject to finance lease obligations	19,726		—
Finance lease obligations	(19,726)		—
Deferred purchase price in connection with acquisitions	50		422

See accompanying notes to unaudited interim consolidated financial statements.

8

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited)

(1)    General Information

AdaptHealth Corp. and subsidiaries ("AdaptHealth" or the "Company"), is a national leader in providing patient-centered, healthcare-at-home solutions including home medical equipment ("HME"), medical supplies, and related services. AdaptHealth focuses primarily on providing (i) sleep therapy equipment, supplies and related services (including CPAP and bi PAP services) to individuals suffering from obstructive sleep apnea ("OSA"), (ii) medical devices and supplies to patients for the treatment of diabetes (including continuous glucose monitors ("CGM") and insulin pumps), (iii) home medical equipment to patients discharged from acute care and other facilities, (iv) oxygen and related chronic therapy services in the home, and (v) other HME devices and supplies on behalf of chronically ill patients with wound care, urological, incontinence, ostomy and nutritional supply needs. AdaptHealth services beneficiaries of Medicare, Medicaid and commercial insurance payors.

As previously disclosed, by mutual agreement with the Company, effective June 30, 2023, Stephen Griggs resigned as Chief Executive Officer and did not stand for reelection as a member of the Company’s Board of Directors (the “Board”) at the Company’s annual meeting. As previously disclosed, Richard Barasch, Chairman of the Board of the Company and Interim Chief Executive Officer will continue to serve as Interim Chief Executive Officer until a successor chief executive officer is appointed.

The interim consolidated financial statements are unaudited, but reflect all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Interim results are not necessarily indicative of the results for a full year.

There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

(a)    Basis of Presentation

The interim consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). In the opinion of management, the interim consolidated financial statements include all necessary adjustments for a fair presentation of the financial position and results of operations for the periods presented.

(b)    Basis of Consolidation

The accompanying interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

(c)    Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash.

(d)    Accounting Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and reported amounts of revenues and expenses during the reporting period. Management bases these estimates and assumptions upon historical experience, existing and known circumstances, authoritative accounting pronouncements and other factors that management believes to be reasonable. Significant areas requiring the use of management estimates relate to revenue recognition and the valuation of accounts

9

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

receivable (implicit price concession), income taxes and the tax receivable agreement, equity-based compensation, warrant liability, long-lived assets, including goodwill and identifiable intangible assets, and contingencies. Actual results could differ from those estimates.

(e)    Valuation of Goodwill

The Company has a significant amount of goodwill on its balance sheet that resulted from the business acquisitions the Company has made. Goodwill is not amortized, rather, it is assessed for impairment annually and upon the occurrence of a triggering event or change in circumstances indicating a possible impairment. Such triggering events potentially warranting an annual or interim goodwill impairment assessment include, among other factors, declines in historical or projected revenue, operating income or cash flows, and sustained decreases in the Company’s stock price or market capitalization. Such changes in circumstance can include, among others, changes in the legal environment, reimbursement environment, operating performance, and/or future prospects. The Company performs its annual impairment assessment of goodwill during the fourth quarter of each year. The impairment assessment can be performed on either a quantitative or qualitative basis. The Company first assesses qualitative factors to determine whether it is necessary to perform a quantitative goodwill impairment analysis. If determined necessary, the Company applies the quantitative impairment test to identify and measure the amount of impairment, if any. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors, such as estimates of a reporting unit's fair value and judgment about impairment triggering events. As a result, there can be no assurance that the estimates and assumptions made for purposes of the annual or interim goodwill impairment test will prove to be accurate predictions of the future. During the quarters ended March 31, 2023 and June 30, 2023, the Company experienced a decline in its market capitalization as a result of a sustained decrease in the Company’s stock price. The Company considered such sustained decreases to represent a triggering event and performed goodwill impairment tests as of March 31, 2023 and June 30, 2023. During the three months ended September 30, 2023, the Company experienced a further decline in its market capitalization as a result of a sustained decrease in the Company’s stock price and also revised its financial projections. The Company considered these items to represent a triggering event and performed a goodwill impairment test as of September 30, 2023. The Company did not recognize any impairment charges of goodwill during the six months ended June 30, 2023 and the nine months ended September 30, 2022. The Company recognized a non-cash goodwill impairment charge of $511.9 million during the three and nine months ended September 30, 2023. Refer to Note 5, Goodwill and Identifiable Intangible Assets, for additional details.

(f)    Long-Lived Assets

The Company’s long-lived assets, such as equipment and other fixed assets, operating lease right-of-use assets, finance lease right-of-use assets and definite-lived identifiable intangible assets, are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Definite-lived identifiable intangible assets consist of tradenames, payor contracts, contractual rental agreements and developed technology. These assets are amortized using the straight-line method over their estimated useful lives, which reflects the pattern in which the economic benefits of the assets are expected to be consumed. In addition to consideration of impairment upon the events or changes in circumstances described above, management regularly evaluates the remaining useful lives of its long-lived assets. The following table summarizes the useful lives of the Company’s identifiable intangible assets:

Tradenames	5 to 10 years
Payor contracts	10 years
Contractual rental agreements	2 years
Developed technology	5 years

The Company did not recognize any impairment charges on long-lived assets for the three and nine months ended September 30, 2023 and 2022.

10

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

(g)    Equity-based Compensation

The Company accounts for its equity-based compensation in accordance with FASB ASC Topic 718, Compensation Stock Compensation, which establishes accounting for share-based awards exchanged for employee services and requires companies to expense the estimated fair value of these awards over the requisite employee service period. Equity-based compensation expense related to these grants is included within general and administrative expenses and cost of net revenue in the accompanying consolidated statements of operations. The Company measures and recognizes equity-based compensation expense for such awards based on their estimated fair values on the date of grant. For share-based awards with service only or service and performance conditions, the value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service period in the Company’s consolidated financial statements. For share-based awards with only a service condition, equity-based compensation expense is recognized on a straight-line basis over the requisite service period. For awards with performance conditions, equity-based compensation expense is recognized straight-line on a tranche-by-tranche basis over the employees’ requisite service period subject to management’s estimation of the probability of vesting of such awards. If management determines that the performance conditions are no longer probable of achievement, the Company will reverse the previously recognized equity-based compensation expense in the period of determination. For awards with market conditions, the grant-date fair value is estimated using a monte-carlo simulation analysis, which is recognized straight-line on a tranche-by-tranche basis over the employees’ requisite service period regardless of whether or the extent to which the awards ultimately vest. Refer to Note 10, Stockholders’ Equity, for additional information regarding the Company’s equity-based compensation expense.

(h)    Business Segment

Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”) for the purposes of allocating resources and evaluating financial performance. The Company’s CODM is its Interim Chief Executive Officer, who reviews financial information on a consolidated level for purposes of allocating resources and evaluating financial performance, and as such, the Company’s operations constitute one operating segment and one reportable segment.

(i)    Accounting for Leases

The Company accounts for its leases in accordance with FASB Accounting Standards Codification Topic 842, Leases (ASC 842). ASC 842 requires the Company to recognize a lease liability, which represents the discounted obligation to make future minimum lease payments, and a corresponding right-of-use ("ROU") asset on its consolidated balance sheet for most leases, and disclose key information about leasing arrangements. ASC 842 applies to a number of arrangements to which the Company is a party.

Whenever the Company enters into a new arrangement, it must determine, at the inception date, whether the arrangement is or contains a lease. This determination generally depends on whether the arrangement conveys to the Company the right to control the use of an explicitly or implicitly identified asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and obtain substantially all the economic benefits from the use of the underlying asset.

If a lease exists, the Company must then determine the separate lease and non-lease components of the arrangement. Each right to use an underlying asset conveyed by a lease arrangement should generally be considered a separate lease component if it both: (i) can benefit the Company without depending on other resources not readily available to the Company and (ii) does not significantly affect and is not significantly affected by other rights of use conveyed by the lease. Aspects of a lease arrangement that transfer other goods or services to the Company but do not meet the definition of lease components are considered non-lease components. The consideration owed by the Company pursuant to a lease arrangement is generally allocated to each lease and non-lease component for accounting purposes. However, the Company has elected, for all of its leases, to not separate lease and non-lease components. Each lease component is accounted for separately from other lease components, but together with the associated non-lease components.

For each lease, the Company must then determine the lease term, the present value of lease payments and the classification of the lease as either an operating or finance lease.

11

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

The lease term is the period of the lease not cancellable by the Company, together with periods covered by: (i) renewal options the Company is reasonably certain to exercise, (ii) termination options the Company is reasonably certain not to exercise, and (iii) renewal or termination options that are controlled by the lessor.

The present value of lease payments is calculated based on:

•Lease payments – lease payments include fixed and certain variable payments, less lease incentives, together with amounts probable of being owed by the Company under residual value guarantees and, if reasonably certain of being paid, the cost of certain renewal options and early termination penalties set forth in the lease arrangement. Lease payments exclude consideration that is not related to the transfer of goods and services of the Company.

•Discount rate – the discount rate must be determined based on information available to the Company upon the commencement of the lease. Lessees are required to use the rate implicit in the lease whenever such rate is readily available; however, as the implicit rate in the Company’s leases is generally not readily determinable, the Company generally uses the hypothetical incremental borrowing rate it would have to pay to borrow an amount equal to the lease payments, on a collateralized basis, over a timeframe similar to the lease term.

In making the determination of whether a lease is an operating lease or a finance lease, the Company considers the lease term in relation to the economic life of the leased asset, the present value of lease payments in relation to the fair value of the leased asset and certain other factors, including the lessee’s and lessor’s rights, obligations, and economic incentives over the term of the lease.

Generally, upon the commencement of a lease, the Company will record a lease liability and a ROU asset. However, the Company has elected, for all underlying leases with initial terms of twelve months or less (known as short-term leases), to not recognize a lease liability or ROU asset. Lease liabilities are initially recorded at lease commencement as the present value of future lease payments. ROU assets are initially recorded at lease commencement as the initial amount of the lease liability, together with the following, if applicable: (i) initial direct costs incurred by the lessee and (ii) lease payments made to the lessor net of lease incentives received, prior to lease commencement.

Over the lease term, the Company generally increases its lease liabilities using the effective interest method and decreases its lease liabilities for lease payments made. For finance leases, amortization and interest expense are recognized separately in the consolidated statements of operations, with amortization expense generally recorded on a straight-line basis over the lease term and interest expense recorded using the effective interest method. For operating leases, a single lease cost is generally recognized in the consolidated statements of operations on a straight-line basis over the lease term unless an impairment has been recorded with respect to a leased asset. Lease costs for short-term leases not recognized in the consolidated balance sheets are recognized in the consolidated statements of operations on a straight-line basis over the lease term. Variable lease costs not initially included in the lease liability and ROU asset impairment charges are expensed as incurred. ROU assets are assessed for impairment, similar to other long-lived assets. Refer to Note 12, Leases, for additional information.

(j)    Recently Adopted Accounting Pronouncements

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform ("Topic 848"), which provides optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. Specifically, the guidance permits an entity, when certain criteria are met, to consider amendments to contracts made to comply with reference rate reform to meet the definition of a modification under U.S. GAAP. It further allows hedge accounting to be maintained and a one-time transfer or sale of qualifying held-to-maturity securities. The expedients and exceptions provided by the amendments are permitted to be adopted any time through December 31, 2024, with early adoption permitted, and do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for certain optional expedients elected for certain hedging relationships existing as of December 31, 2022. The Company adopted this standard during the nine months ended September 30, 2023, which did not have a material impact on its consolidated financial statements and related disclosures.

12

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

(2)    Revenue Recognition and Accounts Receivable

Revenue Recognition

The Company generates revenues for services and related products that the Company provides to patients for home medical equipment, related supplies, and other items. The Company’s revenues are recognized in the period in which services and related products are provided to customers and are recorded either at a point in time for the sale of supplies and disposables, over the fixed monthly service period for equipment, or in the month in which eligible members are entitled to receive healthcare services in connection with at-risk capitation arrangements.

Revenues are recognized when control of the promised good or service is transferred to customers, in an amount that reflects the consideration to which the Company expects to receive from patients or under reimbursement arrangements with Medicare, Medicaid and third-party payors, in exchange for those goods and services.

The Company determines the transaction price based on contractually agreed-upon amounts or rates, adjusted for estimates of variable consideration, such as implicit price concessions. The Company utilizes the expected value method to determine the amount of variable consideration that should be included to arrive at the transaction price, using contractual agreements and historical reimbursement experience within each payor type. The Company applies constraint to the transaction price, such that net revenue is recorded only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in the future. If actual amounts of consideration ultimately received differ from the Company’s estimates, the Company adjusts these estimates, which would affect net revenue in the period such adjustments become known.

Sales revenue is recognized upon transfer of control of products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. Revenues for the sale of sleep therapy equipment supplies (including CPAP resupply products), home medical equipment and related supplies (including wheelchairs, hospital beds and infusion pumps), diabetic medical devices and supplies (including continuous glucose monitors ("CGM") and insulin pumps), and other HME products and supplies are recognized when control of the promised good or service is transferred to customers, which is generally upon shipment for direct to consumer medical devices and supplies and upon delivery to the home for home medical equipment.

The Company provides certain equipment to patients which is reimbursed periodically in fixed monthly payments for as long as the patient is using the equipment and medical necessity continues (in certain cases, the fixed monthly payments are capped at a certain amount). The equipment provided to the patient is based upon medical necessity as documented by prescriptions and other documentation received from the patient’s physician. The patient generally does not negotiate or select the manufacturer or model of the equipment prescribed by their physician and delivered by the Company. Once initial delivery of this equipment is made to the patient for initial setup, a monthly billing process is established based on the initial setup service date. The Company recognizes the fixed monthly revenue ratably over the service period as earned, less estimated adjustments, and defers revenue for the portion of the monthly bill that is unearned. No separate revenue is earned from the initial setup process. Included in fixed monthly revenue are unbilled amounts for which the revenue recognition criteria had been met as of period-end but were not yet billed to the payor. The estimate of net unbilled fixed monthly revenue recognized is based on historical trends and estimates of future collectability.

The Company receives a per member per month (“PMPM”) fee under certain at-risk capitation arrangements, which refers to a model in which the Company receives a PMPM fee from the third-party payor, and is responsible for managing a range of healthcare services and associated costs of its members. In at-risk capitation arrangements, the Company is responsible for the cost of contracted healthcare services required by those members in accordance with the terms of each agreement. Capitated revenue contracts with payors are generally multi-year arrangements and have a single monthly stand ready performance obligation to provide all aspects of necessary medical care to members for the contracted period in accordance with the scope of the agreements. The Company recognizes revenue in the month in which eligible members are entitled to receive healthcare services during the contract term. The Company’s revenue recognized under its capitation arrangements is included in the “other” product category in net sales revenue in the table below.

The Company’s billing system contains payor-specific price tables that reflect the fee schedule amounts in effect or contractually agreed upon by various government and commercial insurance payors for each item of equipment or supply provided to a customer. Revenues are recorded based on the applicable fee schedule. The Company has established a

13

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

contractual allowance to account for adjustments that result from differences between the payment amount received and the expected realizable amount. If the payment amount received differs from the net realizable amount, an adjustment is recorded to revenues in the period that these payment differences are determined. The Company reports revenues in its consolidated financial statements net of such adjustments.

The Company recognizes revenue in the consolidated statements of operations and contract assets on the consolidated balance sheets only when services have been provided. Since the Company has performed its obligation under the contract, it has unconditional rights to the consideration recorded as contract assets and therefore classifies those billed and unbilled contract assets as accounts receivable.

Fixed monthly payments that the Company receives from customers in advance of providing services represent contract liabilities. Such payments primarily relate to patients who are billed monthly in advance and are recognized over the period as earned.

The Company disaggregates net revenue from contracts with customers by payor type and by core product lines. The Company believes that disaggregation of net revenue into these categories depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The payment terms and conditions within the Company’s revenue-generating contracts vary by payor type and payor source.

The composition of net revenue by payor type for the three and nine months ended September 30, 2023 and 2022 are as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Insurance	$	486,136	$	465,625	$	1,397,748	$	1,322,694
Government	220,351		198,841		618,860		576,829
Patient pay	97,544		92,029		325,335		290,789
Net revenue	$	804,031	$	756,495	$	2,341,943	$	2,190,312

14

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

The composition of net revenue by core product lines for the three and nine months ended September 30, 2023 and 2022 are as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net sales revenue:
Sleep	$	227,005	$	198,206	$	656,311	$	585,234
Diabetes	157,328		169,075		464,893		482,693
Supplies to the home	48,349		47,793		143,227		131,539
Respiratory	8,164		9,734		24,284		25,770
HME	27,095		29,463		82,895		89,828
Other	64,184		58,252		174,403		166,068
Total net sales revenue	$	532,125	$	512,523	$	1,546,013	$	1,481,132
Net revenue from fixed monthly equipment reimbursements:
Sleep	$	88,387	$	72,423	$	256,092	$	196,022
Diabetes	2,609		4,211		10,326		12,191
Respiratory	142,919		130,618		423,531		392,063
HME	25,087		25,482		71,402		76,754
Other	12,904		11,238		34,579		32,150
Total net revenue from fixed monthly equipment reimbursements	$	271,906	$	243,972	$	795,930	$	709,180
Total net revenue:
Sleep	$	315,392	$	270,629	$	912,403	$	781,256
Diabetes	159,937		173,286		475,219		494,884
Supplies to the home	48,349		47,793		143,227		131,539
Respiratory	151,083		140,352		447,815		417,833
HME	52,182		54,945		154,297		166,582
Other	77,088		69,490		208,982		198,218
Total net revenue	$	804,031	$	756,495	$	2,341,943	$	2,190,312

Accounts Receivable

Due to the continuing changes in the healthcare industry and third-party reimbursement environment, certain estimates are required to record accounts receivable at their net realizable values. Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available. The complexity of third-party billing arrangements and laws and regulations governing Medicare and Medicaid may result in adjustments to amounts originally recorded.

The Company performs a periodic analysis to review the valuation of accounts receivable and collectability of outstanding balances. Management’s evaluation takes into consideration such factors as historical cash collections experience, business and economic conditions, trends in healthcare coverage, other collection indicators and information about specific receivables. The Company’s evaluation also considers the age and composition of the outstanding amounts in determining their estimated net realizable value.

15

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

Receivables are considered past due when not collected by established due dates. Specific patient balances are written off after collection efforts have been followed and the account has been determined to be uncollectible. Revisions in receivable estimates are recognized as an adjustment to net revenue in the period of revision.

Included in accounts receivable are earned but unbilled accounts receivables. Billing delays, ranging from several days to several weeks, can occur due to the Company’s policy of compiling required payor specific documentation prior to billing for its services rendered. As of September 30, 2023 and December 31, 2022, the Company’s unbilled accounts receivable was $44.7 million and $38.6 million, respectively.

(3)    Acquisitions

During the nine months ended September 30, 2023 and 2022, the Company completed certain acquisitions to strengthen its current market share in existing markets. Each of the Company’s acquisitions was accounted for using the acquisition method pursuant to the requirements of FASB ASC Topic 805, Business Combinations, and are included in the Company’s consolidated financial statements since the respective acquisition date. The goodwill generated from these acquisitions is attributable to expected growth and cost synergies and the expected contribution of each acquisition to the Company’s overall strategy. The goodwill recorded during the nine months ended September 30, 2023 is expected to be deductible for tax purposes. The estimated fair values of the net assets of acquired businesses as described below are subject to change resulting from such items as final analysis of valuations and working capital adjustments post-acquisition. As a result, the acquisition accounting for certain acquired businesses could change in subsequent periods resulting in adjustments to goodwill once finalized.

Nine Months Ended September 30, 2023

During the nine months ended September 30, 2023, the Company acquired 100% of the equity interests of three providers of home medical equipment ("HME") and acquired certain assets from two providers of home medical equipment. The following table summarizes the consideration paid at closing for all acquisitions during the nine months ended September 30, 2023 (in thousands):

Cash	$	18,173
Deferred payments	50
Total	$	18,223

The Company allocated the consideration paid to the net assets acquired based on their estimated acquisition date fair values. Based upon management’s evaluation, which is preliminary and subject to completion of working capital and other adjustments, the consideration paid for all acquisitions during the nine months ended September 30, 2023 was allocated as follows during the period (in thousands):

Cash	$	256
Accounts receivable	1,798
Inventory	1,413
Prepaid and other current assets	10
Equipment and other fixed assets	9,008
Operating lease right-of-use assets	5,506
Finance lease right-of-use assets	200
Goodwill	7,297
Accounts payable and accrued expenses	(713)
Other current liabilities	(846)
Operating lease liabilities	(5,506)
Finance lease liabilities	(200)
Net assets acquired	$	18,223

16

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

Nine Months Ended September 30, 2022

During the nine months ended September 30, 2022, the Company acquired 100% of the equity interests of two providers of HME and acquired certain assets from five providers of home medical equipment.

The following table summarizes the consideration paid at closing for all acquisitions during the nine months ended September 30, 2022 (in thousands):

Cash	$	16,477
Deferred payments	422
Total	$	16,899

The Company allocated the consideration paid to the net assets acquired based on their estimated acquisition date fair values. Based upon management’s evaluation, which was preliminary and subject to completion of working capital and other adjustments, the consideration paid for all acquisitions during the nine months ended September 30, 2022 was allocated as follows during that period (in thousands):

Cash	$	155
Accounts receivable	2,206
Inventory	686
Prepaid and other current assets	16
Equipment and other fixed assets	4,502
Goodwill	11,788
Identifiable intangible assets	500
Accounts payable and accrued expenses	(2,820)
Contract liabilities	(134)
Net assets acquired	$	16,899

During the nine months ended September 30, 2022, the Company received net cash of $0.2 million relating to working capital and other adjustments associated with businesses that were acquired during 2021, which was recorded as a decrease to goodwill within the respective measurement period.

Net revenue and operating income in the period of acquisition since the respective acquisition dates for the acquisitions described above were immaterial for the three and nine months ended September 30, 2023 and 2022.

(4)    Equipment and Other Fixed Assets

Equipment and other fixed assets as of September 30, 2023 and December 31, 2022 are as follows (in thousands):

	September 30, 2023		December 31, 2022
Patient medical equipment	$	776,366	$	747,985
Computers and Software	92,208		70,897
Delivery vehicles	43,078		35,326
Other	21,159		16,059
Gross carrying value	932,811		870,267
Less accumulated depreciation	(442,758)		(383,188)
Equipment and other fixed assets, net	$	490,053	$	487,079

17

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

For the three months ended September 30, 2023 and 2022, the Company recorded depreciation expense of $90.3 million and $82.4 million, respectively. For the nine months ended September 30, 2023 and 2022, the Company recorded depreciation expense of $263.4 million and $218.9 million, respectively.

(5)    Goodwill and Identifiable Intangible Assets

Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. The change in the carrying amount of goodwill for the nine months ended September 30, 2023 was as follows (in thousands):

	Gross carrying amount
Balance at December 31, 2022	$	3,545,297
Goodwill from acquisitions	7,297
Net increase relating to measurement period adjustments	718
Impairment charge	(511,866)
Balance at September 30, 2023	$	3,041,446

Management is required to perform an assessment of the recoverability of goodwill on an annual basis and upon the identification of a triggering event. Triggering events potentially warranting an interim goodwill impairment assessment include, among other factors, declines in historical or projected revenue, operating results or cash flows, and sustained decreases in the Company’s stock price or market capitalization. While management cannot predict if or when future goodwill impairments may occur, a non-cash goodwill impairment charge could have a material adverse effect on the Company’s operating results, net assets and the Company’s cost of, or access to, capital.

During the quarters ended March 31, 2023 and June 30, 2023, the Company experienced a decline in its market capitalization as a result of a sustained decrease in the Company’s stock price. The Company considered such sustained decreases to represent a triggering event and performed goodwill impairment tests as of March 31, 2023 and June 30, 2023. Based on the results of the tests performed as of those dates, it was concluded that the estimated fair value of the Company’s reporting unit was greater than its carrying value, as such, the Company did not recognize a goodwill impairment charge during the periods ended March 31, 2023 and June 30, 2023. During the three months ended September 30, 2023, the Company experienced a further decline in its market capitalization as a result of a sustained decrease in the Company’s stock price and also revised its financial projections. The Company considered these items to represent a triggering event and performed a goodwill impairment test as of September 30, 2023. Based on the results of the test performed as of that date, 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 three and nine months ended September 30, 2023. If in future periods the Company were to experience a further decline in its market capitalization or expected results for a sustained period of time, the Company may be required to perform an additional goodwill impairment test at an interim or annual period and could be required to recognize a non-cash goodwill impairment charge at that time, which could be material.

Identifiable intangible assets that are separable and have determinable useful lives are valued separately and amortized over the period which reflects the pattern in which the economic benefits of the assets are expected to be

18

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

consumed. Identifiable intangible assets consisted of the following at September 30, 2023 and December 31, 2022 (dollars in thousands):

	September 30, 2023
			Weighted-Average Remaining Life (Years)
Tradenames, net of accumulated amortization of $35,111	$	77,689	6.8
Payor contracts, net of accumulated amortization of $26,166	55,834		6.8
Developed technology, net of accumulated amortization of $4,095	2,205		1.8
Identifiable intangible assets, net	$	135,728

	December 31, 2022
			Weighted-Average Remaining Life (Years)
Tradenames, net of accumulated amortization of $25,498	$	87,302	7.5
Payor contracts, net of accumulated amortization of $20,016	61,984		7.6
Contractual rental agreements, net of accumulated amortization of $43,863	10,337		0.8
Developed technology, net of accumulated amortization of $3,150	3,150		2.5
Identifiable intangible assets, net	$	162,773

Amortization expense related to identifiable intangible assets, which is included in depreciation and amortization, excluding patient equipment depreciation, in the accompanying statements of operations was $7.0 million and $27.0 million for the three and nine months ended September 30, 2023, respectively, and was $10.0 million and $30.0 million for the three and nine months ended September 30, 2022, respectively.

Future amortization expense related to identifiable intangible assets is estimated to be as follows (in thousands):

Twelve months ending September 30,
2024	$	22,276
2025	21,828
2026	19,617
2027	18,190
2028	17,936
Thereafter	35,881
Total	$	135,728

The Company did not recognize any impairment charges related to identifiable intangible assets during the nine months ended September 30, 2023 and 2022.

(6)    Fair Value of Assets and Liabilities

FASB ASC Topic 820, Fair Value Measurements and Disclosures ("ASC 820"), creates a single definition of fair value, establishes a framework for measuring fair value in U.S. GAAP and expands disclosures about fair value

19

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

measurements. Assets and liabilities adjusted to fair value in the balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Level inputs, as defined by ASC 820, are as follows:

Level input	Input Definition
Level 1	Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
Level 2	Inputs, other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data at the measurement date.
Level 3	Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

The following table presents the valuation of the Company’s financial assets and liabilities as of September 30, 2023 and December 31, 2022 measured at fair value on a recurring basis. The fair value estimates presented herein are based on information available to management as of September 30, 2023 and December 31, 2022. These estimates are not necessarily indicative of the amounts the Company could ultimately realize.

(in thousands)	Level 1		Level 2		Level 3
September 30, 2023
Assets
Interest rate swap agreements-short term	$	—	$	6,340	$	—
Interest rate swap agreements-long term	—		4,147		—
Total assets measured at fair value	$	—	$	10,487	$	—
Liabilities
Acquisition-related contingent consideration-short term	$	—	$	—	$	7,850
Warrant liability	—		—		6,617
Total liabilities measured at fair value	$	—	$	—	$	14,467

(in thousands)	Level 1		Level 2		Level 3
December 31, 2022
Assets
Interest rate swap agreements-short term	$	—	$	5,748	$	—
Interest rate swap agreements-long term	—		3,728		—
Total assets measured at fair value	$	—	$	9,476	$	—
Liabilities
Acquisition-related contingent consideration-short term	$	—	$	—	$	7,500
Warrant liability	—		—		38,503
Total liabilities measured at fair value	$	—	$	—	$	46,003

Interest Rate Swaps

The Company uses interest rate swap agreements to manage interest rate risk by converting a portion of its variable rate borrowings to a fixed rate and recognizes these derivative instruments as either assets or liabilities in the accompanying consolidated balance sheets at fair value. The valuation of these derivative instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair value of the Company’s interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected

20

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

variable cash payments receipts. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. To comply with the provisions of FASB ASC Topic 820, Fair Value Measurement, the Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with the Company’s derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and the respective counterparties. The Company has determined that the significance of the impact of the credit valuation adjustments made to its derivative contracts, which determination was based on the fair value of each individual contract, was not significant to the overall valuation. As a result, all of the Company’s derivatives held as of September 30, 2023 and December 31, 2022 were classified as Level 2 of the fair value hierarchy. Refer to Note 7, Derivative Instruments and Hedging Activities, for additional information regarding the Company’s derivative instruments.

Acquisition-Related Contingent Consideration

The Company estimates the fair value of acquisition-related contingent consideration liabilities by applying the income approach using a probability-weighted discounted cash flow model. This fair value measurement is based on significant inputs not observed in the market and thus represents a Level 3 measurement. Level 3 instruments are valued based on unobservable inputs that are supported by little or no market activity and reflect the Company’s own assumptions in measuring fair value. Each period, the Company evaluates the fair value of acquisition-related contingent consideration obligations and records any changes in the fair value of such liabilities in other income in the Company’s consolidated statements of operations. At September 30, 2023 and December 31, 2022, contingent consideration liabilities of $7.9 million and $7.5 million were included in other current liabilities, respectively, in the accompanying consolidated balance sheets. A reconciliation of the Company’s contingent consideration liabilities related to acquisitions for the nine months ended September 30, 2023 and 2022 is as follows (in thousands):

Nine Months Ended September 30, 2023	Beginning Balance		Payments		Change in Fair Value		Ending Balance
Contingent consideration - Level 3 liabilities	$	7,500	$	—	$	350	$	7,850
Nine Months Ended September 30, 2022
Contingent consideration - Level 3 liabilities	$	20,300	$	(6,250)	$	477	$	14,527

Warrant Liability

The warrant liability represents the estimated fair value of the Company’s outstanding private warrants. The fair value of the private warrants was estimated using the Black-Scholes option pricing model. Refer to Note 10, Stockholders' Equity, for additional discussion of the warrant liability and the material assumptions leveraged for the pricing model.

Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis

During the nine months ended September 30, 2023 and 2022, other than the non-cash goodwill impairment charge discussed in Note 5, Goodwill and Identifiable Intangible Assets, there were no fair value measurements on a non-recurring basis for the Company’s non-financial assets.

(7)    Derivative Instruments and Hedging Activities

The Company records all derivatives on its consolidated balance sheet at fair value. As of September 30, 2023, the Company had outstanding interest rate derivatives with third parties in which the Company pays a fixed interest rate and receives a rate equal to the one-month Secured Overnight Financing Rate ("Term SOFR"). As of December 31, 2022, the Company had outstanding interest rate derivatives with third parties in which the Company paid a fixed interest rate and received a rate equal to the one-month LIBOR. During the nine months ended September 30, 2023, the Company amended its interest rate swap agreements to change the benchmark rate under the agreements from LIBOR to Term SOFR. As discussed

21

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

in Note 1(j), General Information - Recently Adopted Accounting Pronouncements, during the nine months ended September 30, 2023, the Company adopted ASU No. 2020-04, Reference Rate Reform ("Topic 848"). As a result of the adoption of this standard, the amendments to the Company's interest rate swap agreements did not have an impact on the accounting for such derivative instruments. The notional amount associated with the Company's interest rate swap agreements that were outstanding as of September 30, 2023 was $250 million and have maturity dates in March 2024 and January 2026. In April 2022, the Company entered into forward-dated interest rate swap agreements with third parties. The purpose of these forward-dated interest rate swap agreements is to ensure that the Company operates within its derivatives policy by maintaining a total notional amount of $250 million under the Company’s outstanding interest rate swap agreements through the maturity date of the Company’s current credit agreement. A portion of these forward-dated interest rate swap agreements became effective in February 2023 and a portion will become effective in March 2024, and mature in January 2026. The Company has designated its swaps as effective cash flow hedges of interest rate risk. Accordingly, changes in the fair value of the interest rate swaps are recorded as a component of accumulated other comprehensive income within stockholders’ equity and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings.

The table below presents the fair value of the Company’s derivatives related to its interest rate swap agreements, which are designated as hedging instruments, as well as their classification in the consolidated balance sheets at September 30, 2023 and December 31, 2022 (in thousands):

	September 30, 2023		December 31, 2022
Balance Sheet Location	Asset
Prepaid and other current assets	$	6,340	$	5,748
Other assets	4,147		3,728
Total	$	10,487	$	9,476

During the three months ended September 30, 2023 and 2022, as a result of the effect of cash flow hedge accounting, the Company recognized a gain, net of tax, of $0.5 million and $8.5 million, respectively, in other comprehensive income. In addition, during the three months ended September 30, 2023 and 2022, $0.4 million and $0.8 million, respectively, was reclassified from other comprehensive income and recognized as a reduction to interest expense, net, in the accompanying consolidated statements of operations. During the nine months ended September 30, 2023 and 2022, as a result of the effect of cash flow hedge accounting, the Company recognized a gain, net of tax, of $1.1 million and $17.5 million, respectively, in other comprehensive income. In addition, during the nine months ended September 30, 2023 and 2022, $1.4 million and $2.2 million, respectively, was reclassified from other comprehensive income and recognized as a reduction to interest expense, net, in the accompanying consolidated statements of operations.

(8)    Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses as of September 30, 2023 and December 31, 2022 consisted of the following (in thousands):

	September 30, 2023		December 31, 2022
Accounts payable	$	205,098	$	222,505
Employee-related accruals	53,273		41,872
Accrued interest	10,051		28,877
Other	46,030		44,244
Total	$	314,452	$	337,498

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ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

(9)    Debt

The following is a summary of long term-debt as of September 30, 2023 and December 31, 2022 (in thousands):

	September 30, 2023		December 31, 2022
Secured term loans	$	740,000	$	765,000
Senior unsecured notes	1,450,000		1,450,000
Unamortized deferred financing fees	(23,197)		(26,733)
	2,166,803		2,188,267
Current portion	(40,000)		(35,000)
Long-term portion	$	2,126,803	$	2,153,267

In January 2021, the Company entered into a credit agreement, as amended, (the "2021 Credit Agreement"). The 2021 Credit Agreement included borrowings of $800 million under a secured term loan (the "2021 Term Loan"), and $450 million in commitments for revolving credit loans (the "2021 Revolver"). The 2021 Revolver has a $55 million letter of credit sublimit. The 2021 Term Loan and the 2021 Revolver both have maturities in January 2026. On March 31, 2023, the Company amended the 2021 Credit Agreement to change the variable interest rate under the agreement to be based on Term SOFR. In connection with the amendment, amounts borrowed under the 2021 Credit Agreement bear interest quarterly at variable rates based upon the sum of (a) Term SOFR (subject to a zero percent floor) equal to Term SOFR (as defined) for the applicable interest period multiplied by the statutory reserve rate, plus (b) an applicable margin (as defined) ranging from 1.50% to 3.25% per annum based on the Consolidated Senior Secured Leverage Ratio (as defined), plus (c) a Term SOFR Adjustment (as defined) of 0.1%. Prior to the March 31, 2023 amendment to the Company's credit agreement, the variable interest rate for amounts borrowed under the 2021 Credit Agreement was based on Adjusted LIBOR. 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 average daily undrawn portion of the 2021 Revolver based on the Consolidated Senior Secured Leverage Ratio.

Under the 2021 Credit Agreement, the Company is subject to a number of restrictive covenants that, among other things, impose operating and financial restrictions on the Company. Financial covenants include a Consolidated Total Leverage Ratio and a Consolidated Interest Coverage Ratio, both as defined in the 2021 Credit Agreement. The 2021 Credit Agreement also contains certain customary events of default, including, among other things, failure to make payments when due thereunder, failure to observe or perform certain covenants, cross-defaults, bankruptcy and insolvency-related events, and non-compliance with healthcare laws. Any borrowing 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 not reinvested, unpermitted debt transactions, and excess cash flow, as defined, if certain leverage tests are not met. There were no changes to these restrictive covenants per the March 2023 amendment. The Company was in compliance with all debt covenants as of September 30, 2023.

Secured Term Loans

The borrowings under the 2021 Term Loan require quarterly principal repayments of $5.0 million beginning June 30, 2021 through March 31, 2023, increasing to $10.0 million beginning June 30, 2023 through December 31, 2025, and the unpaid principal balance is due at maturity in January 2026. At September 30, 2023 and December 31, 2022, there was $740 million and $765 million, respectively, outstanding under the 2021 Term Loan. The interest rate under the 2021 Term Loan was 7.43% at September 30, 2023.

Revolving Credit Facility

During the nine months ended September 30, 2023, the Company borrowed $50.0 million under the 2021 Revolver, and repaid $50.0 million during the period. At September 30, 2023, there were no outstanding borrowings under the 2021 Revolver. During the nine months ended September 30, 2022, the Company had no borrowings under the 2021 Revolver. At

23

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

September 30, 2023, based on the financial debt covenants under the 2021 Credit Agreement, the maximum borrowings available pursuant to the 2021 Revolver was $144.3 million.

Senior Unsecured Notes

In August 2021, the Company issued $600.0 million aggregate principal amount of 5.125% senior unsecured notes (the "5.125% Senior Notes"). The 5.125% Senior Notes will mature on March 1, 2030. Interest on the 5.125% Senior Notes is payable on March 1st and September 1st of each year, beginning on March 1, 2022. The 5.125% Senior Notes will be redeemable at the Company’s option, in whole or in part, at any time on or after March 1, 2025, and the redemption price for the 5.125% Senior Notes if redeemed during the 12 months beginning (i) March 1, 2025 is 102.563%, (ii) March 1, 2026 is 101.281%, (iii) March 1, 2027 and thereafter is 100.000% , in each case together with accrued and unpaid interest. The Company may also redeem some or all of the 5.125% Senior Notes before March 1, 2025 at a redemption price of 100% of the principal amount of the 5.125% Senior Notes, plus a “make-whole” premium, together with accrued and unpaid interest. In addition, the Company may redeem up to 40% of the original aggregate principal amount of the 5.125% Senior Notes before March 1, 2025 with the proceeds from certain equity offerings at a redemption price equal to 105.125% of the principal amount of the 5.125% Senior Notes, together with accrued and unpaid interest. Furthermore, the Company may be required to make an offer to purchase the 5.125% Senior Notes upon the sale of certain assets or upon specific kinds of changes of control.

In January 2021, the Company issued $500.0 million aggregate principal amount of 4.625% senior unsecured notes (the "4.625% Senior Notes"). The 4.625% Senior Notes will mature on August 1, 2029. Interest on the 4.625% Senior Notes is payable on February 1st and August 1st of each year, beginning on August 1, 2021. The 4.625% Senior Notes will be redeemable at the Company’s option, in whole or in part, at any time on or after February 1, 2024, and the redemption price for the 4.625% Senior Notes if redeemed during the 12 months beginning (i) February 1, 2024 is 102.313%, (ii) February 1, 2025 is 101.156%, (iii) February 1, 2026 and thereafter is 100.000%, in each case together with accrued and unpaid interest. The Company may also redeem some or all of the 4.625% Senior Notes before February 1, 2024 at a redemption price of 100% of the principal amount of the 4.625% Senior Notes, plus a “make-whole” premium, together with accrued and unpaid interest. In addition, the Company may redeem up to 40% of the original aggregate principal amount of the 4.625% Senior Notes before February 1, 2024 with the proceeds from certain equity offerings at a redemption price equal to 104.625% of the principal amount of the 4.625% Senior Notes, together with accrued and unpaid interest. Furthermore, the Company may be required to make an offer to purchase the 4.625% Senior Notes upon the sale of certain assets or upon specific kinds of changes of control.

In July 2020, the Company issued $350.0 million aggregate principal amount of 6.125% senior unsecured notes (the "6.125% Senior Notes"). The 6.125% Senior Notes will mature on August 1, 2028. Interest on the 6.125% Senior Notes is payable on February 1st and August 1st of each year, beginning on February 1, 2021. The 6.125% Senior Notes will be redeemable at the Company’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. The Company 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, the Company 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, the Company may be required to make an offer to purchase the 6.125% Senior Notes upon the sale of certain assets or upon specific kinds of changes of control.

(10)    Stockholders' Equity

Under the Company's Third Amended and Restated Certificate of Incorporation, there are 300,000,000 shares of authorized Common Stock and 5,000,000 shares of authorized Preferred Stock. Holders of Common Stock are entitled to one vote for each share. The shares of Preferred Stock shall be issued with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors.

24

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

Treasury Stock

In May 2022, the Company’s board of directors authorized a share repurchase program for up to $200.0 million of the Company’s Common Stock through December 31, 2023 (the "Share Repurchase Program"). The timing and actual number of shares to be repurchased will depend upon market conditions and other factors. Shares of the Company’s Common Stock may be purchased from time to time on the open market, through privately negotiated transactions or otherwise. Purchases of the Company’s Common Stock may be started or stopped at any time without prior notice depending on market conditions and other factors. During the nine months ended September 30, 2023 and 2022, the Company purchased 631,953 and 750,835 shares of the Company’s Common Stock for $9.2 million and $14.0 million, respectively, under the Share Repurchase Program, which is reflected in Treasury Stock in the accompanying consolidated statements of stockholders’ equity. As of September 30, 2023, there was $176.8 million remaining that may be used to purchase shares under the Share Repurchase Program.

Warrants

As of September 30, 2023, the Company had 3,871,557 warrants outstanding, which have an expiration date of November 20, 2024. Each warrant is exercisable into one share of Common Stock at a price of $11.50 per share. The exercise price and number of shares of Common Stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend, or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for the issuance of Common Stock at a price below its exercise price. There were no warrants exercised during the nine months ended September 30, 2023. During the nine months ended September 30, 2022, 184,870 warrants were exercised in cashless transactions resulting in the issuance of 87,553 shares of Common Stock.

The Company classifies its warrants as a liability in its consolidated balance sheets because of certain terms included in the corresponding warrant agreement. The estimated fair value of the warrants is recorded as a liability, with such fair value reclassified to stockholders’ equity upon the exercise of such warrants. Prior to exercise, the change in the estimated fair value of such warrants each period is recognized as a non-cash charge or gain in the Company’s consolidated statements of operations.

A reconciliation of the changes in the warrant liability during the nine months ended September 30, 2023 and 2022 was as follows (in thousands):

Estimated fair value of warrant liability at December 31, 2022	$	38,503
Change in estimated fair value of the warrant liability	(31,886)
Estimated fair value of warrant liability at September 30, 2023	$	6,617
Estimated fair value of warrant liability at December 31, 2021	$	57,764
Change in estimated fair value of the warrant liability	(17,145)
Reclassification of warrant liability to equity for exercised warrants	(2,103)
Estimated fair value of warrant liability at September 30, 2022	$	38,516

Equity-based Compensation

In connection with the Company’s 2019 Stock Incentive Plan (the "2019 Plan"), the Company provides equity-based compensation to attract and retain employees while also aligning employees’ interest with the interests of its stockholders. The 2019 Plan permits the grant of various equity-based awards to selected employees and non-employee directors. At September 30, 2023, the 2019 Plan permits the grant of up to 10,000,000 shares of Common Stock, subject to certain adjustments and limitations. At September 30, 2023, 1,166,968 shares of the Company’s Common Stock were available for issuance under the 2019 Plan.

25

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

Stock Options

There were no stock options granted during the nine months ended September 30, 2023 and 2022. The following table provides the activity regarding the Company’s outstanding stock options during the nine months ended September 30, 2023 that were granted in connection with the 2019 Plan (in thousands, except per share data):

	Number of Options	Weighted-Average Grant Date Fair Value per Share		Weighted-Average Exercise Price per Share		Weighted-Average Remaining Contractual Term
Outstanding, December 31, 2022	2,219	$	3.75	$	19.36
Activity - none	—
Outstanding, September 30, 2023	2,219	$	3.75	$	19.36	5.3 Years

The following table provides the activity for all outstanding stock options during the nine months ended September 30, 2023 (in thousands, except per share data):

	Number of Options	Weighted-Average Exercise Price per Share		Weighted-Average Remaining Contractual Term
Outstanding, December 31, 2022	4,962	$	12.19
Exercised	(1,542)	$	6.25
Outstanding, September 30, 2023	3,420	$	14.86	5.1 Years

During the nine months ended September 30, 2023, 200,000 stock options were exercised resulting in $0.5 million of cash proceeds received by the Company and the issuance of 200,000 shares of the Company’s Common Stock. During the nine months ended September 30, 2023, 1,341,770 stock options were exercised on a cashless basis resulting in the issuance of 228,466 shares of the Company's Common Stock. During the nine months ended September 30, 2022, 194,002 stock options were exercised resulting in $1.4 million of cash proceeds received by the Company and the issuance of 194,002 shares of the Company’s Common Stock. Also, during the nine months ended September 30, 2022, 315,349 stock options were exercised on a cashless basis resulting in the issuance of 131,741 shares of the Company’s Common Stock.

Restricted Stock

During the nine months ended September 30, 2023, the Company granted 286,002 shares of restricted stock to various employees which vest ratably over the three-year period following the vesting commencement date (which is generally the grant date), subject to the employees’ continuous employment through the applicable vesting date. The grant-date fair value of these awards was $3.4 million. During the nine months ended September 30, 2023, the Company granted 139,190 shares of restricted stock to its non-employee directors, which vest approximately one year following the grant date. The grant-date fair value of these awards was $1.4 million. During the nine months ended September 30, 2023, the Company granted 30,841 shares of restricted stock to its interim CEO, which vest on the two-month anniversary following the grant date. The grant-date fair value of these awards was $0.3 million.

During the nine months ended September 30, 2023, the Company granted 327,000 restricted stock units to senior executive management of the Company. These awards vest ratably over the three-year period following the vesting commencement date (February 1, 2023), subject to the employees’ continuous employment through the applicable vesting date. The grant-date fair value of these awards was $4.9 million. In addition, during the nine months ended September 30, 2023, the Company granted 327,000 shares of performance-vested restricted stock units ("Performance RSUs") to senior executive management of the Company which will vest on the third anniversary of the vesting commencement date (February 1, 2023) subject to the achievement of specified goals relative to the Company’s three-year relative total shareholder return

26

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

("Relative TSR") performance versus the Company’s defined peer group (the "Peer Group"), which is considered a market condition, and is also subject to the employees’ continuous employment through the vesting date. The grant-date fair value of these awards, using a Monte-Carlo simulation analysis, was $6.6 million, which will be recognized as equity-based compensation expense from the date of grant through the third anniversary of the vesting commencement date, regardless of whether or the extent to which the awards ultimately vest. The payout of shares on the vesting date are as follows based on the Company’s Relative TSR versus the Peer Group (for performance between the stated goals noted below, straight-line interpolation will be applied):

•Less than 25th Percentile – No payout

•Greater than or equal to 25th Percentile – 50% of Performance RSUs

•Equal to 50th Percentile – 100% of Performance RSUs

•Greater than or equal to 75th Percentile – 200% of Performance RSUs

Activity related to the Company’s non-vested restricted stock grants for the nine months ended September 30, 2023 is presented below (in thousands, except per share data):

	Number of Shares of Restricted Stock	Weighted-Average Grant Date Fair Value per Share
Non-vested balance, December 31, 2022	2,261	$	23.90
Granted	1,110	$	14.96
Vested	(808)	$	21.31
Forfeited	(424)	$	26.04
Non-vested balance, September 30, 2023	2,139	$	19.68

Equity-Based Compensation Expense

The Company recognized equity-based compensation expense of $4.5 million during the three months ended September 30, 2023, of which $3.5 million and $1.0 million is included in general and administrative expenses and cost of net revenue, respectively, in the accompanying consolidated statements of operations. The Company recognized equity-based compensation expense of $5.6 million during the three months ended September 30, 2022, of which $4.0 million and $1.6 million is included in general and administrative expenses and cost of net revenue, respectively, in the accompanying consolidated statements of operations. The Company recognized equity-based compensation expense of $17.3 million during the nine months ended September 30, 2023, of which $15.8 million and $1.5 million is included in general and administrative expenses and cost of net revenue, respectively, in the accompanying consolidated statements of operations. The Company recognized equity-based compensation expense of $16.8 million during the nine months ended September 30, 2022, of which $11.5 million and $5.3 million is included in general and administrative expenses and cost of net revenue, respectively, in the accompanying consolidated statements of operations. At September 30, 2023, there was $25.2 million of unrecognized compensation expense related to equity-based compensation awards, which is expected to be recognized over a weighted-average period of 1.8 years.

As previously disclosed, by mutual agreement with the Company, effective June 30, 2023, Stephen Griggs resigned as Chief Executive Officer and did not stand for reelection as a member of the Company's board of directors at the Company's annual shareholder meeting. In connection with Mr. Griggs’ separation, the Company accelerated the vesting of 78,130 unvested stock options and 143,739 unvested shares of restricted stock which were subject to time-based vesting conditions only. In addition, the Company modified the vesting conditions for 159,555 shares of Performance RSU's to allow for vesting based on the achievement of the applicable Relative TSR, but no longer requires continuous employment through the applicable vesting date. In connection with the accelerated vesting and modification, the Company recognized $4.0 million of equity-based compensation expense, which is included in general and administrative expenses in the accompanying consolidated statements of operations for the nine months ended September 30, 2023.

27

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

(11)    Earnings Per Share

Earnings Per Share ("EPS") is computed by dividing net (loss) income by the weighted average number of common shares outstanding during the period on a basic and diluted basis. The Company computes diluted net (loss) income per share using the more dilutive of the treasury stock method and the two-class method after giving effect to all potential dilutive Common Stock.

The Company’s potentially dilutive securities include potential common shares related to outstanding warrants, unvested restricted stock, outstanding stock options and outstanding preferred stock. Refer to Note 10, Stockholders' Equity, for additional discussion of these potential dilutive securities.

Diluted net (loss) income per share considers the impact of potentially dilutive securities except when the potential common shares have an antidilutive effect. The Company’s outstanding preferred stock are considered participating securities, thus requiring the two-class method of computing diluted net (loss) income per share. Computation of diluted net (loss) income per share under the two-class method excludes from the numerator any dividends paid or owed on participating securities and any undistributed earnings considered to be attributable to participating securities. The related participating securities are similarly excluded from the denominator.

Computations of basic and diluted net income per share were as follows (in thousands, except per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Numerator
Net (loss) income attributable to AdaptHealth Corp.	$	(454,076)	$	16,122	$	(424,392)	$	71,904
Less: Earnings allocated to participating securities (1)	—		1,360		—		6,079
Net (loss) income for basic EPS	$	(454,076)	$	14,762	$	(424,392)	$	65,825
Change in fair value of warrant liability (2)	(9,160)		—		(31,886)		(17,145)
Net (loss) income for diluted EPS	$	(463,236)	$	14,762	$	(456,278)	$	48,680
Denominator (1) (2)
Basic weighted-average common shares outstanding	134,825		134,227		134,549		134,186
Add: Warrants (2)	157		—		653		1,436
Add: Stock options	—		2,903		—		2,669
Add: Unvested restricted stock	—		453		—		308
Diluted weighted-average common shares outstanding	134,982		137,583		135,202		138,599
Basic net (loss) income per share	$	(3.37)	$	0.11	$	(3.15)	$	0.49
Diluted net (loss) income per share	$	(3.43)	$	0.11	$	(3.37)	$	0.35

(1)The Company’s preferred stock are considered participating securities. Computation of EPS under the two-class method excludes from the numerator any dividends paid or owed on participating securities and any undistributed earnings considered to be attributable to participating securities. The related participating securities are similarly excluded from the denominator. There was no amount allocated to the participating securities during the three and nine months ended September 30, 2023 due to the net loss reported in those periods.

(2)For the nine months ended September 30, 2023 and 2022, and the three months ended September 30, 2023, the impact to earnings from the change in fair value of the Company’s warrant liability is excluded from the numerator, and the corresponding security is included in the denominator, for purposes of computing diluted net (loss) income per share. This adjustment is included as the effect of the numerator and denominator adjustment for this derivative

28

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

instrument is dilutive as a result of the non-cash gains recorded for the change in fair value of this instrument during the periods. For the three months ended September 30, 2022, this adjustment is excluded from the computation of diluted net (loss) income per share under the treasury stock method since its inclusion would have been anti-dilutive.

The table below provides the weighted-average number of potential common shares associated with outstanding securities not included in the Company’s computation of diluted net (loss) income per share for the three and nine months ended September 30, 2023 and 2022 because to do so would be antidilutive (in thousands):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Preferred Stock	12,406	12,406	12,406	12,406
Warrants	—	1,706	—	—
Stock options	3,420	468	3,420	468
Unvested restricted stock	2,057	108	2,057	221
Total	17,883	14,688	17,883	13,095

(12)    Leases

The Company leases its operating locations and office facilities under noncancelable lease agreements which expire at various dates through March 2033. Some of these lease agreements include an option to renew at the end of the term. The Company also leases certain office facilities on a month-to-month basis. In some instances, the Company is also required to pay its pro rata share of real estate taxes and utility costs in connection with the premises. Some of the leases contain fixed annual increases of minimum rent.

The Company’s leases frequently allow for lease payments that could vary based on factors such as inflation and the incurrence of contractual charges such as those for common area maintenance or utilities.

Renewal and/or early termination options are common in the lease arrangements, particularly with respect to real estate leases. The Company’s right-of-use assets and lease liabilities generally include periods covered by renewal options and exclude periods covered by early termination options (based on the conclusion that it is reasonably certain that the Company will exercise such renewal options and not exercise such early termination options).

The Company is also party to certain sublease arrangements related to real estate leases, where the Company acts as the lessee and intermediate lessor.

The Company leases certain of its vehicles through finance leases. The finance lease obligations represent the present value of minimum lease payments under the respective agreement, payable monthly at various interest rates.

29

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

The following table presents information about the Company’s right-of-use assets and lease liabilities as of September 30, 2023 and December 31, 2022 (in thousands):

	Consolidated Balance Sheets Line Item	September 30, 2023		December 31, 2022
Right-of-use (ROU) assets:
Operating lease ROU assets	Operating lease right-of-use assets	$	110,007	$	129,506
Finance lease ROU assets	Finance lease right-of-use assets	21,528		5,423
Finance lease ROU assets	Equipment and other fixed assets, net	—		103
Total ROU assets		$	131,535	$	135,032
Operating lease liabilities:
Current operating lease liabilities	Current portion of operating lease obligations	$	28,736	$	30,001
Noncurrent operating lease liabilities	Operating lease obligations, less current portion	85,700		104,394
Total operating lease liabilities		$	114,436	$	134,395
Finance lease liabilities:
Current finance lease liabilities	Current portion of finance lease obligations	$	5,947	$	2,211
Noncurrent finance lease liabilities	Finance lease obligations, less current portion	15,581		3,950
Total finance lease liabilities		$	21,528	$	6,161

The following table presents information about lease costs and expenses and sublease income for the three and nine months ended September 30, 2023 and 2022 (in thousands). The amounts below are included in cost of net revenue in the accompanying consolidated statements of operations for the periods presented.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Operating lease costs	$	11,114	$	9,248	$	32,186	$	28,547
Finance lease costs:
Amortization of ROU assets	$	1,739	$	640	$	4,746	$	7,266
Other lease costs and income:
Variable leases costs (1)	$	5,373	$	3,728	$	15,932	$	12,680
Sublease income	$	358	$	336	$	1,145	$	1,019

(1)Amounts represent variable costs incurred that were not included in the initial measurement of the lease liability such as common area maintenance and utilities costs associated with leased real estate.

The following table provides the weighted average remaining lease terms and weighted average discount rates for the Company’s leases as of September 30, 2023 and December 31, 2022:

	September 30, 2023		December 31, 2022
Weighted average remaining lease term, weighted based on lease liability balances:
Operating leases	5.7 years		6.2 years
Finance leases	3.6 years		3.7 years
Weighted average discount rate, weighted based on remaining balance of lease payments:
Operating leases	4.2	%	3.9	%

30

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

The following table provides the undiscounted amount of future cash flows related to the Company’s operating and finance leases, as well as a reconciliation of such undiscounted cash flows to the amounts included in the Company’s lease liabilities as of September 30, 2023 (in thousands):

	Operating Leases		Finance Leases
2023 (remaining three months)	$	8,733	$	1,803
2024	31,113		6,938
2025	25,955		6,505
2026	17,959		5,698
2027	12,198		2,008
Thereafter	33,836		925
Total future undiscounted lease payments	$	129,794	$	23,877
Less: amount representing interest	(15,358)		(2,349)
Present value of future lease payments (lease liability)	$	114,436	$	21,528

The following table provides certain cash flow and supplemental non-cash information related to the Company’s lease liabilities for the nine months ended September 30, 2023 and 2022, respectively (in thousands):

	Nine Months Ended September 30,
Cash paid for amounts included in the measurement of lease liabilities:	2023		2022
Operating cash payments for operating leases	$	32,045	$	28,416
Financing cash payments for finance leases	$	4,558	$	14,219
Lease liabilities arising from obtaining right-of-use assets:
Operating leases	$	8,179	$	5,411
Finance leases	$	19,726	$	1,335

(13)    Income Taxes

The Company is subject to U.S. federal, state, and local income taxes. For the three months ended September 30, 2023 and 2022, the Company recorded an income tax benefit of $34.6 million and income tax expense of $5.6 million, respectively. For the nine months ended September 30, 2023 and 2022, the Company recorded an income tax benefit of $30.9 million and income tax expense of $20.0 million, respectively. For the three and nine months ended September 30, 2023, the Company recognized a $39.9 million discrete income tax benefit, and corresponding increase to net deferred tax assets, related to a non-cash goodwill impairment charge of $511.9 million. Refer to Note 5, Goodwill and Identifiable Intangible Assets, for additional details.

As of September 30, 2023 and December 31, 2022, the Company had an unrecognized tax benefit of $6.6 million.

Tax Receivable Agreement

AdaptHealth Corp. is party to a Tax Receivable Agreement ("TRA") with certain current and former members of AdaptHealth Holdings LLC, a Delaware limited liability company ("AdaptHealth Holdings"). The TRA provides for the payment by AdaptHealth Corp. of 85% of the tax savings, if any, that AdaptHealth Corp. realizes (or is deemed to realize in certain circumstances) as a result of (i) certain increases in tax basis resulting from two exchanges of common units representing limited liability company interests in AdaptHealth Holdings and shares of Class B Common Stock, par value $0.0001 per share (which, as of July 28, 2021, no longer exists); (ii) certain tax attributes of the corresponding sellers existing prior to an exchange; (iii) imputed interest deemed to be paid by AdaptHealth Corp. as a result of payments it makes under the TRA; and (iv) certain increases in tax basis resulting from payments AdaptHealth Corp. makes under the TRA.

31

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

During the nine months ended September 30, 2022, the Company recognized an expense of $4.5 million related to changes in the estimated liability related to the TRA as a result of settling the current portion of contingent consideration common shares during that period, which is included in Other loss, net in the accompanying consolidated statement of operations.

At September 30, 2023, the Company's liability relating to the TRA was $294.2 million, of which $2.3 million and $291.9 million is included in other current liabilities and other long-term liabilities, respectively, in the accompanying consolidated balance sheets. At December 31, 2022, the Company's liability relating to the TRA was $297.4 million, of which $3.3 million and $294.1 million is included in other current liabilities and other long-term liabilities, respectively, in the accompanying consolidated balance sheets.

(14)    Commitments and Contingencies

In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business 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. 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 and 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 be affected by limited information. Accordingly, 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 are inherently uncertain, and material adverse outcomes are possible.

On July 25, 2017, AdaptHealth Holdings was served with a subpoena by the U.S. Attorney’s Office for the United States District Court for the Eastern District of Pennsylvania (“EDPA”) pursuant to 18 U.S.C. §3486 to produce certain audit records and internal communications regarding ventilator billing. The investigation focused on billing practices regarding one payor that contracted for bundled payments for certain ventilators. AdaptHealth Holdings has cooperated with investigators and, through agreement with the EDPA, has submitted all information requested in the Company’s possession. An independent third party was retained by AdaptHealth Holdings that identified overpayments and underpayments for ventilator billings related to the payor, and a remittance was sent to reconcile that account. On October 3, 2019, the Company received a follow-up civil investigative demand from the EDPA regarding a document previously produced to the EDPA and patients included in the review by the independent third party. The Company has responded to the EDPA and supplemented its production as requested with any relevant documents in the Company’s possession. During subsequent communications, the EDPA indicated to the Company that the investigation remained ongoing. The EDPA also requested additional information regarding certain patient services and claims refunds processed by the Company in 2017. The Company produced this information in coordination with the EDPA. The EDPA also raised questions regarding other aspects of ventilator billing. On April 21, 2023, the Company entered into a settlement agreement with the EDPA resolving all allegations and claims related to the investigation without a determination of liability on the part of the Company. In connection with the settlement, the Company made a payment of $5.3 million, which was fully accrued as of December 31, 2022, and was not required to enter into any post-settlement agreements related to the settlement.

In March 2019, prior to its acquisition by the Company, AeroCare Holdings, Inc. ("AeroCare") was served with a civil investigative demand (CID) issued by the United States Attorney for the Western District of Kentucky ("WDKY"). The CID seeks to investigate allegations that AeroCare improperly billed, or caused others to improperly bill, for oxygen tank contents that were not delivered to beneficiaries. The WDKY has requested documents related to such oxygen tank content billing as well as other categories of information. AeroCare has cooperated with the WDKY and has produced documents and provided explanations of its billing practices. In September 2020, the WDKY indicated the investigation includes alleged violations of the federal False Claims Act and as well as alleged violations of state Medicaid false claims acts in ten states. AeroCare has cooperated fully with the investigation and has indicated to the WDKY that concerns raised do not accurately identify Medicare coverage criteria and that state Medicaid coverage requirements generally do not provide for separate reimbursement for portable gaseous oxygen contents in the circumstances at issue. On June 23, 2022, the complaint filed in

32

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

connection with this investigation was dismissed by the United States District Court in the Western District of Kentucky with the consent of the WDKY.

On July 29, 2021, Robert Charles Faille Jr., a purported shareholder of the Company, filed a purported class action complaint against the Company and certain of its current and former officers in the United States District Court for the Eastern District of Pennsylvania (the “Complaint”). The Complaint purports to be asserted on behalf of a class of persons who purchased the Company’s stock between November 11, 2019 and July 16, 2021. The Complaint generally alleges that the Company and certain of its current and former officers violated federal securities laws by making allegedly false and misleading statements and/or failing to disclose material information regarding the Company’s organic growth trajectory. The Complaint seeks unspecified damages. On October 14, 2021, the Delaware County Employees Retirement System and the Bucks County Employees Retirement System were named Lead Plaintiffs. Pursuant to the scheduling order, Lead Plaintiffs filed a consolidated complaint on November 22, 2021 (the “Consolidated Complaint”), which asserts substantially the same claim, but adds a number of current and former directors of the Company as additional defendants and a new theory of recovery based on the Company’s alleged failure to disclose information concerning the Company’s former Co-CEO’s alleged tax fraud arising from certain past private activity (the “Consolidated Class Action”). On January 20, 2022, the defendants filed a motion to dismiss the Consolidated Complaint. Lead Plaintiffs’ opposition to defendants’ motion was filed on March 21, 2022, and defendants’ reply was filed April 15, 2022. On June 9, 2022, the court issued an opinion and order denying the defendants’ motion to dismiss the Consolidated Complaint.

On July 15, 2022, the court entered a scheduling order providing for, inter alia, a schedule for completing class certification discovery, as well as setting a briefing schedule for motions for class certification. Pursuant to the scheduling order, Lead Plaintiffs filed their motion for class certification on July 28, 2022. On December 12, 2022, the court entered an amended scheduling order with respect to class certification discovery and remaining briefing on Lead Plaintiffs’ motion for class certification. Pursuant to the amended scheduling order, the defendants filed their opposition to Lead Plaintiffs’ motion for class certification on March 30, 2023, and Lead Plaintiffs filed their reply on May 22, 2023.

On June 7, 2023, the court entered an order staying the Consolidated Class Action pending the outcome of a private mediation between the parties.

The Company intends to vigorously defend against the allegations contained in the Consolidated Complaint, but there can be no assurance that the defense will be successful. The Company is currently in a dispute with its directors and officers liability insurers concerning coverage related to the Complaint, which is proceeding in Delaware Superior Court.

On December 6, 2021, a putative shareholder of the Company, Carol Hessler, filed a shareholder derivative complaint against certain current and former directors and officers of the Company in the United States District Court for the Eastern District of Pennsylvania (the “Derivative Complaint”). The Derivative Complaint generally alleges that the defendants breached their fiduciary duties owed to the Company by allegedly causing or allowing misrepresentations and/or omissions regarding the Company’s organic growth and the Company’s former Co-CEO’s alleged criminal activity, failing to maintain an adequate system of oversight, disclosure controls and procedures, and internal controls over financial reporting and due diligence into the Company’s management team, and engaging in insider trading. The Derivative Complaint also alleges claims for waste of corporate assets and unjust enrichment. Finally, the Derivative Complaint alleges that certain of the individual defendants violated Section 14(a) of the Securities Exchange Act by allegedly negligently issuing, causing to be issued, and participating in the issuance of materially misleading statements to stockholders in the Company’s Proxy Statements on Schedule DEF 14A in connection with a Special Meeting of Stockholders, held on March 3, 2021, and the 2021 Annual Meeting of Stockholders, held on July 27, 2021. The Derivative Complaint seeks, among other things, an award of money damages.

On March 4, 2022, the parties stipulated to stay the Hessler action pending final resolution of the Consolidated Class Action. On March 7, 2022, the court so-ordered the parties’ stipulation.

The Company intends to vigorously defend against the allegations contained in the Derivative Complaint, but there can be no assurance that the defense will be successful.

On May 2, 2022, the U.S. Attorney’s Office for the Southern District of New York issued a civil investigative demand to a subsidiary of the Company, pursuant to the False Claims Act, 31 U.S.C. § 3733 ("FCA") surrounding whether the subsidiary submitted false claims in violation of the FCA related to its billing of, and reimbursements from, federal health

33

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

care programs for ventilators provided to patients from January 1, 2015 to the present. The Company is fully cooperating with the investigation. Given the investigation is in the early stages, it is not possible to determine whether it will have a material adverse effect on the Company.

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 for a Company follow-on offering conducted in January 2021 in the United States District Court for the Eastern District of Pennsylvania (the “Allegheny County Complaint”). The Allegheny County Complaint purports to be asserted on behalf of a class of persons who purchased the Company’s stock between August 4, 2020 and February 27, 2023. The Allegheny County Complaint generally alleges that the defendants 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 segment. The Allegheny County Complaint seeks unspecified damages.

The Company intends to vigorously defend against the allegations contained in the Allegheny County Complaint, but there can be no assurance that the defense will be successful.

(15)    Related Party Transactions

The Company and one of its executive officers and shareholder own an equity interest in a vendor of the Company that provides automated order intake software. The individual’s equity ownership is less than 1%. The expense related to this vendor was $3.1 million and $1.8 million for the three months ended September 30, 2023 and 2022, respectively, and $8.0 million and $4.9 million for the nine months ended September 30, 2023 and 2022, respectively. The Company accounts for this investment under the cost method of accounting based on its level of equity ownership. As of September 30, 2023 and December 31, 2022, the Company had an immaterial outstanding accounts payable balance to this vendor.

A director of the Company serves on the board of directors of a third-party payor that does business with the Company in the normal course of providing services to patients. Net revenue from this third-party payor was less than 0.8% of the Company’s consolidated net revenue during the three and nine months ended September 30, 2023 and 2022. As of September 30, 2023 and December 31, 2022, the Company had an immaterial outstanding accounts receivable balance from this third-party payor.

A director of the Company is an employee of a beneficial owner of more than 5% of the Company’s Common Stock as of September 30, 2023. This beneficial owner is also a minority shareholder of a vendor that provides medical equipment and supplies to the Company in the normal course of business. Purchases from this vendor were $3.5 million and $20.3 million for the three months ended September 30, 2023 and 2022, respectively, and $24.1 million and $49.8 million, for the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023 and December 31, 2022, the Company had an immaterial outstanding accounts payable balance to this vendor.

A former regional manager of the Company is a shareholder of a business which provides contract labor to the Company. Payments to this service provider were $5.4 million and $5.7 million for the three months ended September 30, 2023 and 2022, respectively, and $16.6 million and $16.2 million for the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023 and December 31, 2022, the Company had $0.2 million and $2.2 million, respectively, in outstanding accounts payable to this service provider. The regional manager left the Company effective March 31, 2023 via a separation agreement which provides severance and separation benefits, including a pro rata bonus. Also, the Company and the former employee have entered into a short-term consulting agreement whereby the former employee's services will be available to the Company through March 2024.

(16)    Subsequent Events

Subsequent to September 30, 2023, the Company purchased 2,464,507 shares of the Company’s Common Stock for $19.4 million under the Share Repurchase Program.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with AdaptHealth Corp.’s (“AdaptHealth” or the “Company”) consolidated financial statements and the accompanying notes included in this report. All amounts presented are in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), except as noted. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. Factors that could cause such differences include, but are not limited to, those discussed in Item 1A, “Risk Factors”, in our 2022 Annual Report on Form 10-K filed with the SEC on February 28, 2023. Certain amounts that appear in this section may not sum due to rounding.

AdaptHealth Corp. Overview

AdaptHealth is a national leader in providing patient-centered, healthcare-at-home solutions including home medical equipment (“HME”), medical supplies, and related services. The Company focuses primarily on providing (i) sleep therapy equipment, supplies and related services (including CPAP and bi PAP services) to individuals suffering from obstructive sleep apnea (“OSA”), (ii) medical devices and supplies to patients for the treatment of diabetes (including continuous glucose monitors and insulin pumps), (iii) home medical equipment to patients discharged from acute care and other facilities, (iv) oxygen and related chronic therapy services in the home, and (v) other HME devices and supplies on behalf of chronically ill patients with wound care, urological, incontinence, ostomy and nutritional supply needs. The Company services beneficiaries of Medicare, Medicaid and commercial insurance payors. As of September 30, 2023, AdaptHealth serviced approximately 4.0 million patients annually in all 50 states through its network of approximately 690 locations in 47 states. The Company’s principal executive offices are located at 220 West Germantown Pike, Suite 250, Plymouth Meeting, Pennsylvania 19462.

Impact of Inflation

Current and future inflationary effects may be driven by, among other things, general inflationary cost increases, supply chain disruptions and governmental stimulus or fiscal policies. The cost to manufacture and distribute the equipment and products that AdaptHealth provides to patients is influenced by the cost of materials, labor, and transportation, including fuel costs. AdaptHealth continues to experience inflationary pressure and higher costs as a result of the increasing cost of materials, labor and transportation. The increase in the cost of equipment and products is due in part to higher cost of shipping and general inflationary cost increases. Additionally, it is not certain that AdaptHealth will be able to pass increased costs onto customers to offset inflationary pressures. Continuing increases in inflation could impact the overall demand for AdaptHealth’s products and services, its costs for labor, equipment and products, and the margins it is able to realize on its products, all of which could have an adverse impact on AdaptHealth’s business, financial position, results of operations and cash flows. In addition, future volatility of general price inflation and the impact of inflation on costs and availability of materials, costs for shipping and warehousing and other operational overhead could adversely affect AdaptHealth’s financial results. Although there have been increases in inflation, AdaptHealth cannot predict whether these trends will continue. AdaptHealth’s mitigation efforts relating to these inflationary pressures include utilizing AdaptHealth’s purchasing power in negotiations with vendors and the increased use of technology to drive operating efficiencies and control costs, such as AdaptHealth’s digital platform for prescriptions, orders and delivery. In April 2023, AdaptHealth formalized a cost management program to drive operating efficiencies and implement more simplified and scalable business processes, which was substantially complete as of September 30, 2023. Management has initiated all steps in the program, which included a rationalization of AdaptHealth's real estate footprint, renegotiation of certain supply contracts, workforce reductions, and expanded use of more efficient operating models for certain back-office functions. These changes reflect AdaptHealth's continued strategic focus on process standardization and efficiency across the enterprise through technology and related investments. This program will deliver Adjusted EBITDA improvement in 2023 of approximately $25 million, and will result in approximately $40 million of annualized Adjusted EBITDA improvement in future years. The cost to achieve this program during the nine months ended September 30, 2023 was approximately $12.2 million. In addition, AdaptHealth continues to evaluate all opportunities to rationalize its operating footprint and related cost structure to better align with business needs.

Key Components of Operating Results

Net Revenue. Net revenue is recognized for services that AdaptHealth provides to patients for home healthcare equipment, medical supplies to the home and related services. AdaptHealth' s primary product lines are (i) sleep therapy equipment, supplies and related services (including CPAP and bi PAP services) to individuals suffering from OSA, (ii) medical devices and supplies to patients for the treatment of diabetes (including continuous glucose monitors and insulin

35

pumps), (iii) home medical equipment to patients discharged from acute care and other facilities, (iv) oxygen and related chronic therapy services in the home, and (v) other HME devices and supplies on behalf of chronically ill patients with wound care, urological, incontinence, ostomy and nutritional supply needs. 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), at 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 supply chain issues and inflationary pressures.

Cost of Net Revenue. Cost of net revenue primarily includes the cost of non-capitalized medical equipment and supplies, distribution expenses, labor costs, facilities and vehicle rental costs, revenue cycle management costs and depreciation for capitalized patient equipment. Distribution expenses represent the cost incurred to coordinate and deliver products and services to the patients. Included in distribution expenses are leasing, maintenance, licensing and fuel costs for the vehicle fleet; salaries, benefits and other costs related to drivers and dispatch personnel; and amounts paid to couriers.

General and Administrative Expenses. General and administrative expenses consist of corporate support costs including information technology, human resources, finance, contracting, legal, compliance, equity-based compensation, transaction expenses and other administrative costs.

Depreciation and Amortization, Excluding Patient Equipment Depreciation. Depreciation expense includes depreciation charges for capital assets other than patient equipment (which is included as part of the cost of net revenue). Amortization expense includes amortization of identifiable intangible assets.

Goodwill Impairment. AdaptHealth has a significant amount of goodwill on its balance sheet that resulted from the business acquisitions AdaptHealth has made. Goodwill is not amortized, rather, it is assessed for impairment annually and upon the occurrence of a triggering event or change in circumstances indicating a possible impairment. Such triggering events potentially warranting an annual or interim goodwill impairment assessment include, among other factors, declines in historical or projected revenue, operating income or cash flows, and sustained decreases in AdaptHealth's’s stock price or market capitalization. Such changes in circumstance can include, among others, changes in the legal environment, reimbursement environment, operating performance, and/or future prospects. AdaptHealth performs its annual impairment assessment of goodwill during the fourth quarter of each year. The impairment assessment can be performed on either a quantitative or qualitative basis. AdaptHealth first assesses qualitative factors to determine whether it is necessary to perform a quantitative goodwill impairment analysis. If determined necessary, AdaptHealth applies the quantitative impairment test to identify and measure the amount of impairment, if any. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors, such as estimates of a reporting unit's fair value and judgment about impairment triggering events. As a result, there can be no assurance that the estimates and assumptions made for purposes of the annual or interim goodwill impairment test will prove to be accurate predictions of the future.

Factors Affecting AdaptHealth’s Operating Results

AdaptHealth’s operating results and financial performance are influenced by certain unique events during the periods discussed herein, including the following:

Acquisitions

AdaptHealth accounts for its acquisitions in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 805, Business Combinations, and the operations of the acquired entities are included in the historical results of AdaptHealth for the periods following the closing of the acquisition. Refer to Note 3, Acquisitions, included in our interim consolidated financial statements for the three and nine months ended September 30, 2023 included in this Quarterly Report on Form 10-Q for additional information regarding AdaptHealth’s acquisitions.

36

Seasonality

AdaptHealth’s business experiences some seasonality. Its patients are generally responsible for a greater percentage of the cost of their treatment or therapy during the early months of the year due to co-insurance, co-payments and deductibles, and therefore may defer treatment and services of certain therapies until meeting their annual deductibles. In addition, changes to employer insurance coverage often go into effect at the beginning of each calendar year which may impact eligibility requirements and delay or defer treatment. Also, net revenue generated by the Company’s diabetes product line is typically higher in the fourth quarter compared to the earlier part of the year due to the timing of when patients meet their annual deductibles and their associated reordering patterns. These factors may lead to lower net revenue and cash flow in the early part of the year versus the latter half of the year. Additionally, the increased incidence of respiratory infections during the winter season may result in initiation of additional respiratory services such as oxygen therapy for certain patient populations. AdaptHealth’s quarterly operating results may fluctuate significantly in the future depending on these and other factors.

Goodwill Impairment

During the three months ended September 30, 2023, AdaptHealth experienced a decline in its market capitalization as a result of a sustained decrease in AdaptHealth's stock price and also revised its financial projections. AdaptHealth considered these items to represent a triggering event and performed a goodwill impairment test as of September 30, 2023. Based on the results of the test performed as of that date, it was concluded that the estimated fair value of AdaptHealth's reporting unit was less than its carrying value, as such, AdaptHealth recognized a non-cash goodwill impairment charge of $511.9 million during the three and nine months ended September 30, 2023. If in future periods AdaptHealth were to experience a further decline in its market capitalization or expected results for a sustained period of time, AdaptHealth may be required to perform an additional goodwill impairment test at an interim or annual period and could be required to recognize a non-cash goodwill impairment charge at that time, which could be material.

37

Key Business Metrics

AdaptHealth focuses on Net revenue, EBITDA, Adjusted EBITDA and Free Cash Flow as it reviews its performance. Refer to EBITDA, Adjusted EBITDA and Free Cash Flow included in the Non-GAAP measures section below.

Total net revenue is comprised of net sales revenue and net revenue from fixed monthly equipment reimbursements less implicit price concessions. Net sales revenue consists of revenue recognized at a point in time for the sale of supplies and disposables and revenue recognized in connection with at-risk capitation arrangements. Net revenue from fixed monthly equipment reimbursements consists of revenue recognized over the service period for equipment (including, but not limited to, CPAP machines, oxygen concentrators, ventilators, hospital beds, wheelchairs and other equipment).

	Three Months Ended
	September 30, 2023				September 30, 2022
Net Revenue (dollars in thousands)	Dollars		Revenue Percentage		Dollars		Revenue Percentage
	(Unaudited)
Net sales revenue:
Sleep	$	227,005	28.2	%	$	198,206	26.2	%
Diabetes	157,328		19.6	%	169,075		22.3	%
Supplies to the home	48,349		6.0	%	47,793		6.3	%
Respiratory	8,164		1.0	%	9,734		1.3	%
HME	27,095		3.4	%	29,463		3.9	%
Other	64,184		8.0	%	58,252		7.7	%
Total net sales revenue	$	532,125	66.2	%	$	512,523	67.7	%
Net revenue from fixed monthly equipment reimbursements:
Sleep	$	88,387	11.0	%	$	72,423	9.6	%
Diabetes	2,609		0.3	%	4,211		0.6	%
Respiratory	142,919		17.8	%	130,618		17.3	%
HME	25,087		3.1	%	25,482		3.4	%
Other	12,904		1.6	%	11,238		1.4	%
Total net revenue from fixed monthly equipment reimbursements	$	271,906	33.8	%	$	243,972	32.3	%
Total net revenue:
Sleep	$	315,392	39.2	%	$	270,629	35.8	%
Diabetes	159,937		19.9	%	173,286		22.9	%
Supplies to the home	48,349		6.0	%	47,793		6.3	%
Respiratory	151,083		18.8	%	140,352		18.6	%
HME	52,182		6.5	%	54,945		7.3	%
Other	77,088		9.6	%	69,490		9.1	%
Total net revenue	$	804,031	100.0	%	$	756,495	100.0	%

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	Nine Months Ended
	September 30, 2023				September 30, 2022
Net Revenue (dollars in thousands)	Dollars		Revenue Percentage		Dollars		Revenue Percentage
	(Unaudited)
Net sales revenue:
Sleep	$	656,311	28.0	%	$	585,234	26.7	%
Diabetes	464,893		19.9	%	482,693		22.0	%
Supplies to the home	143,227		6.1	%	131,539		6.0	%
Respiratory	24,284		1.0	%	25,770		1.2	%
HME	82,895		3.5	%	89,828		4.1	%
Other	174,403		7.5	%	166,068		7.6	%
Total net sales revenue	$	1,546,013	66.0	%	$	1,481,132	67.6	%
Net revenue from fixed monthly equipment reimbursements:
Sleep	$	256,092	10.9	%	$	196,022	8.9	%
Diabetes	10,326		0.5	%	12,191		0.6	%
Respiratory	423,531		18.1	%	392,063		17.9	%
HME	71,402		3.0	%	76,754		3.5	%
Other	34,579		1.5	%	32,150		1.5	%
Total net revenue from fixed monthly equipment reimbursements	$	795,930	34.0	%	$	709,180	32.4	%
Total net revenue:
Sleep	$	912,403	38.9	%	$	781,256	35.6	%
Diabetes	475,219		20.4	%	494,884		22.6	%
Supplies to the home	143,227		6.1	%	131,539		6.0	%
Respiratory	447,815		19.1	%	417,833		19.1	%
HME	154,297		6.5	%	166,582		7.6	%
Other	208,982		9.0	%	198,218		9.1	%
Total net revenue	$	2,341,943	100.0	%	$	2,190,312	100.0	%

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Results of Operations

Comparison of Three Months Ended September 30, 2023 and Three Months Ended September 30, 2022.

The following table summarizes AdaptHealth’s consolidated results of operations for the three months ended September 30, 2023 and 2022:

	Three Months Ended September 30,
	2023				2022
	Dollars		Revenue Percentage		Dollars		Revenue Percentage		Increase/(Decrease)
(in thousands, except percentages)									Dollars		Percentage
	(unaudited)
Net revenue	$	804,031	100.0%		$	756,495	100.0%		$	47,536	6.3%
Costs and expenses:
Cost of net revenue	693,488		86.3%		646,714		85.5%		46,774		7.2%
General and administrative expenses	45,198		5.6%		40,681		5.4%		4,517		11.1%
Depreciation and amortization, excluding patient equipment depreciation	14,515		1.8%		16,151		2.1%		(1,636)		(10.1)%
Goodwill impairment	511,866		63.7	%	—		—	%	511,866		NM
Total costs and expenses	1,265,067		157.3%		703,546		93.0%		561,521		79.8%
Operating (loss) income	(461,036)		(57.3)%		52,949		7.0%		(513,985)		(970.7)	%
Interest expense, net	32,306		4.0%		28,521		3.8%		3,785		13.3%
Change in fair value of warrant liability	(9,160)		(1.1)%		1,364		0.2	%	(10,524)		(771.6)%
Other loss, net	3,317		0.4%		257		—	%	3,060		1190.7%
Loss (income) before income taxes	(487,499)		(60.6)%		22,807		3.0%		(510,306)		(2237.5)	%
Income tax expense	(34,578)		(4.3)%		5,580		0.7%		(40,158)		(719.7)%
Net (loss) income	(452,921)		(56.3)%		17,227		2.3%		(470,148)		(2729.1)	%
Income attributable to noncontrolling interest	1,155		0.1%		1,105		0.1	%	50		4.5%
Net (loss) income attributable to AdaptHealth Corp.	$	(454,076)	(56.5)%		$	16,122	2.2%		$	(470,198)	(2916.5)	%

Net Revenue. The comparability of AdaptHealth's net revenue between periods was impacted by certain factors as described below. The table below presents the items that impacted the change in AdaptHealth's net revenue between periods.

	Three Months Ended September 30,
	Variance 2023 vs. 2022
(in thousands, except percentages)	$		%
Revenue change driver:	(Unaudited)
Increase from non-acquired growth	$	45,078	6.0	%
Increase from acquisitions	2,458		0.3	%
Total change in net revenue	$	47,536	6.3	%

Net revenue for the three months ended September 30, 2023 and 2022 was $804.0 million and $756.5 million, respectively, an increase of $47.5 million, or 6.3%. The increase in net revenue was driven by non-acquired growth $45.1 million, and acquisitions, which increased revenue by $2.5 million. Net revenue from AdaptHealth's sleep business increased by $44.8 million, or 16.5%, for the three months ended September 30, 2023 compared to the prior year period, primarily due to increased patient census driven by strong patient demand for sleep products, including CPAP resupply products. Net revenue from AdaptHealth's respiratory business increased by $10.7 million, or 7.6%, for the three months ended September 30, 2023 compared to the prior year period, primarily due to increased patient census driven by strong patient

40

demand for respiratory products. Net revenue from AdaptHealth's diabetes business decreased by $13.3 million, or (7.7)%, for the three months ended September 30, 2023 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, partially offset by an increase in CGM patient census. Additionally, there was lower net revenue from insulin pumps and supplies in the 2023 period compared to the 2022 period 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.

For the three months ended September 30, 2023, net sales revenue comprised 66% of total net revenue, compared to 68% of total net revenue for the three months ended September 30, 2022. For the three months ended September 30, 2023, net revenue from fixed monthly equipment reimbursements comprised 34% of total net revenue, compared to 32% of total net revenue for the three months ended September 30, 2022.

Cost of Net Revenue.

The following table summarizes cost of net revenue for the three months ended September 30, 2023 and 2022:

	Three Months Ended September 30,
	2023				2022
	Dollars		Revenue Percentage		Dollars		Revenue Percentage		Increase/(Decrease)
(in thousands, except percentages)									Dollars		Percentage
	(unaudited)
Cost of products and supplies	$	331,448	41.2	%	$	299,532	39.6	%	$	31,916	10.7	%
Salaries, labor and benefits	195,975		24.4	%	195,669		25.9	%	306		0.2	%
Patient equipment depreciation	82,796		10.3	%	76,180		10.1	%	6,616		8.7	%
Other operating expenses	64,571		8.0	%	56,965		7.5	%	7,606		13.4	%
Rent and occupancy	17,643		2.2	%	16,789		2.2	%	854		5.1	%
Equity-based compensation	1,055		0.1	%	1,579		0.2	%	(524)		(33.2)	%
Total cost of net revenue	$	693,488	86.3	%	$	646,714	85.5	%	$	46,774	7.2	%

Cost of net revenue for the three months ended September 30, 2023 and 2022 was $693.5 million and $646.7 million, respectively, an increase of $46.8 million or 7.2%. Costs of products and supplies increased by $31.9 million primarily as a result of increased net sales revenue and general inflationary cost increases. Salaries, labor and benefits slightly increased by $0.3 million, primarily due to increased benefits costs and annual merit increases, partially offset by cost savings actions. Patient equipment depreciation was 10.3% of net revenue in the 2023 period compared to 10.1% in the 2022 period, primarily as a result of higher medical equipment prices and rental counts.

General and Administrative Expenses. General and administrative expenses for the three months ended September 30, 2023 and 2022 were $45.2 million and $40.7 million respectively, an increase of $4.5 million or 11.1%. This increase is primarily due to higher professional fees, partially offset by lower transaction costs and lower equity-based compensation expense. General and administrative expenses as a percentage of net revenue was 5.6% in the 2023 period, compared to 5.4% in the 2022 period. General and administrative expenses in the 2023 period included $3.5 million of equity-based compensation expense, $0.3 million of transaction costs, and other non-recurring expenses of $7.0 million, primarily related to expenses associated with litigation and consulting expenses associated with systems implementation activities. General and administrative expenses in the 2022 period included $4.0 million of equity-based compensation expense, $1.2 million of transaction costs, and other non-recurring expenses of $8.5 million, primarily related to expenses associated with litigation, and consulting expenses associated with systems implementation activities and post-implementation support services.

Depreciation and amortization, excluding patient equipment depreciation. Depreciation and amortization, excluding patient equipment depreciation, for the three months ended September 30, 2023 and 2022 was $14.5 million and $16.2 million, respectively, a decrease of $1.6 million, primarily related to lower intangible amortization expense.

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Goodwill Impairment. 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. Refer to Note 5, Goodwill and Identifiable Intangible Assets, for additional details.

Interest Expense, net. Interest expense, net for the three months ended September 30, 2023 and 2022 was $32.3 million and $28.5 million, respectively, an increase of $3.8 million. Interest expense related to AdaptHealth's credit agreement increased by $5.5 million in the 2023 period compared to the 2022 period as a result of higher interest rates, offset by lower average outstanding borrowings in the 2023 period compared to the 2022 period. Interest expense related to the Company's senior unsecured notes decreased by $0.1 million in the 2023 period compared to the 2022 period. These increases were offset by a reduction in interest expense of $1.6 million related to AdaptHealth's interest rate swap agreements.

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, 2023 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 2023 period and a non-cash charge in the 2022 period for the change in the estimated fair value of such liability during the respective periods.

Other Loss, net. Other loss, net for the three months ended September 30, 2023 consisted of $3.5 million of lease termination costs associated with a cost management program and a $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. Other loss, net for the three months ended September 30, 2022 consisted of $0.2 million of expenses associated with legal settlements and $0.1 million of other charges.

Income Tax Benefit/Expense. Income tax benefit and income tax expense for the three months ended September 30, 2023 and 2022 was $34.6 million and $5.6 million, respectively. Income tax expense on ordinary income decreased due to lower pre-tax income net of warrant liability fair value adjustments. Additionally, the Company recognized a $39.9 million discrete income tax benefit, and corresponding increase to net deferred tax assets, related to the non-cash goodwill impairment charge of $511.9 million recognized during the three months ended September 30, 2023. Refer to Note 5, Goodwill and Identifiable Intangible Assets, for additional details.

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Comparison of Nine Months Ended September 30, 2023 and Nine Months Ended September 30, 2022.

The following table summarizes AdaptHealth’s consolidated results of operations for the nine months ended September 30, 2023 and 2022:

	Nine Months Ended September 30,
	2023				2022
	Dollars		Revenue Percentage		Dollars		Revenue Percentage		Increase/(Decrease)
(in thousands, except percentages)									Dollars		Percentage
	(unaudited)
Net revenue	$	2,341,943	100.0	%	$	2,190,312	100.0	%	$	151,631	6.9	%
Costs and expenses:
Cost of net revenue	2,022,281		86.4	%	1,853,847		84.6	%	168,434		9.1	%
General and administrative expenses	142,797		6.1	%	124,673		5.7	%	18,124		14.5	%
Depreciation and amortization, excluding patient equipment depreciation	45,596		1.9	%	48,113		2.2	%	(2,517)		(5.2)	%
Goodwill impairment	511,866		21.9	%	—		—	%	511,866		NM
Total costs and expenses	2,722,540		116.3	%	2,026,633		92.5	%	695,907		34.3	%
Operating (loss) income	(380,597)		(16.3)	%	163,679		7.5	%	(544,276)		(332.5)	%
Interest expense, net	96,813		4.1	%	78,905		3.6	%	17,908		22.7	%
Change in fair value of warrant liability	(31,886)		(1.4)	%	(17,145)		(0.8)	%	(14,741)		86.0	%
Other loss, net	6,574		0.3	%	7,179		0.3	%	(605)		(8.4)	%
Loss (income) before income taxes	(452,098)		(19.3)	%	94,740		4.4	%	(546,838)		(577.2)	%
Income tax (benefit) expense	(30,893)		(1.3)	%	20,036		0.9	%	(50,929)		(254.2)	%
Net (loss) income	(421,205)		(18.0)	%	74,704		3.5	%	(495,909)		(663.8)	%
Income attributable to noncontrolling interest	3,187		0.1	%	2,800		0.1	%	387		13.8	%
Net (loss) income attributable to AdaptHealth Corp.	$	(424,392)	(18.1)	%	$	71,904	3.4	%	$	(496,296)	(690.2)	%

Net Revenue. The comparability of AdaptHealth's net revenue between periods was impacted by certain factors as described below. The table below presents the items that impacted the change in AdaptHealth's net revenue between periods.

	Nine Months Ended September 30,
	Variance 2023 vs. 2022
(in thousands, except percentages)	$		%
Revenue change driver:	(Unaudited)
Increase from non-acquired growth	$	141,622	6.5	%
Increase from acquisitions	10,009		0.5	%
Total change in net revenue	$	151,631	6.9	%

Net revenue for the nine months ended September 30, 2023 and 2022 was $2,341.9 million and $2,190.3 million, respectively, an increase of $151.6 million, or 6.9%. The increase in net revenue was driven by non-acquired growth $141.6 million, and acquisitions, which increased revenue by $10.0 million. Net revenue from AdaptHealth's sleep business increased by $131.1 million, or 16.8%, for the nine months ended September 30, 2023 compared to the prior year period, primarily due to increased patient census driven by strong patient demand for sleep products, including CPAP resupply products. Net revenue from AdaptHealth's respiratory business increased by $30.0 million, or 7.2%, for the nine months ended September 30, 2023 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 business decreased by $19.7 million, or

43

4.0%, for the nine months ended September 30, 2023 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, partially offset by an increase in CGM patient census. Additionally, the decrease was due to 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.

For the nine months ended September 30, 2023, net sales revenue comprised 66% of total net revenue, compared to 68% of total net revenue for the nine months ended September 30, 2022. For the nine months ended September 30, 2023, net revenue from fixed monthly equipment reimbursements comprised 34% of total net revenue, compared to 32% of total net revenue for the nine months ended September 30, 2022.

Cost of Net Revenue.

The following table summarizes cost of net revenue for the nine months ended September 30, 2023 and 2022:

	Nine Months Ended September 30,
	2023				2022
	Dollars		Revenue Percentage		Dollars		Revenue Percentage		Increase/(Decrease)
(in thousands, except percentages)									Dollars		Percentage
	(unaudited)
Cost of products and supplies	$	966,021	41.2	%	$	871,072	39.8	%	$	94,949	10.9	%
Salaries, labor and benefits	581,288		24.8	%	557,898		25.5	%	23,390		4.2	%
Patient equipment depreciation	244,824		10.5	%	200,722		9.2	%	44,102		22.0	%
Other operating expenses	177,216		7.6	%	171,904		7.8	%	5,312		3.1	%
Rent and occupancy	51,393		2.2	%	46,978		2.1	%	4,415		9.4	%
Equity-based compensation	1,539		0.1	%	5,273		0.2	%	(3,734)		(70.8)	%
Total cost of net revenue	$	2,022,281	86.4	%	$	1,853,847	84.6	%	$	168,434	9.1	%

Cost of net revenue for the nine months ended September 30, 2023 and 2022 was $2,022.3 million and $1,853.8 million, respectively, an increase of $168.4 million or 9.1%. Costs of products and supplies increased by $94.9 million primarily as a result of increased net sales revenue and general inflationary cost increases. Salaries, labor and benefits increased by $23.4 million, primarily due to increased benefits costs, annual merit increases, and workforce wage pressure driven by inflation, partially offset by cost savings actions. Patient equipment depreciation was 10.5% of net revenue in the 2023 period compared to 9.2% in the 2022 period, primarily as a result of higher medical equipment prices and rental counts.

General and Administrative Expenses. General and administrative expenses for the nine months ended September 30, 2023 and 2022 were $142.8 million and $124.7 million, respectively, an increase of $18.1 million or 14.5%. This increase is primarily due to higher professional fees and higher equity-based compensation expense, partially offset by lower transaction costs. General and administrative expenses as a percentage of net revenue was 6.1% in the 2023 period, compared to 5.7% in the 2022 period. General and administrative expenses in the 2023 period included $15.8 million of equity-based compensation expense, $0.6 million of transaction costs, and other non-recurring expenses of $24.2 million, primarily related to expenses associated with litigation, severance, and consulting expenses associated with systems implementation activities and cost savings initiatives. General and administrative expenses in the 2022 period included $11.5 million of equity-based compensation expense, $5.8 million of transaction costs, and other non-recurring expenses of $11.9 million, primarily related to expenses associated with litigation, and consulting expenses associated with systems implementation activities and post-implementation support services.

Depreciation and amortization, excluding patient equipment depreciation. Depreciation and amortization, excluding patient equipment depreciation, for the nine months ended September 30, 2023 and 2022 was $45.6 million and $48.1 million, respectively, a decrease of $2.5 million, primarily related to lower intangible amortization expense.

Goodwill Impairment. 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

44

value, as such, the Company recognized a non-cash goodwill impairment charge of $511.9 million. Refer to Note 5, Goodwill and Identifiable Intangible Assets, for additional details.

Interest Expense, net. Interest expense, net for the nine months ended September 30, 2023 and 2022 was $96.8 million and $78.9 million, respectively, an increase of $17.9 million. Interest expense related to AdaptHealth's credit agreement increased by $24.3 million in the 2023 period compared to the 2022 period as a result of higher interest rates, offset by lower average outstanding borrowings in the 2023 period compared to the 2022 period. This increase was offset by a reduction in interest expense of $6.4 million related to AdaptHealth's interest rate swap agreements.

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, 2023 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 2023 and 2022 periods for the change in the estimated fair value of such liability during the respective periods.

Other Loss, net. Other loss, net for the nine months ended September 30, 2023 consisted 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, and a $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. Other loss, net for the nine months ended September 30, 2022 consisted of a $4.5 million expense related to changes in AdaptHealth’s estimated TRA liability, $1.2 million of expenses associated with legal settlements, $0.8 million loss related to the write-off of an investment, and $0.7 million of expenses associated with lease terminations.

Income Tax Benefit/Expense. Income tax benefit and income tax expense for the nine months ended September 30, 2023 and 2022 was $30.9 million and $20.0 million, respectively. Income tax expense on ordinary income decreased due to lower pre-tax income net of warrant liability fair value adjustments. Additionally, the Company recognized a $39.9 million discrete income tax benefit, and corresponding increase to net deferred tax assets, related to the non-cash goodwill impairment charge of $511.9 million recognized during the nine months ended September 30, 2023. Refer to Note 5, Goodwill and Identifiable Intangible Assets, for additional details.

EBITDA and Adjusted EBITDA

AdaptHealth uses EBITDA and Adjusted EBITDA, 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.

AdaptHealth defines EBITDA as net income (loss) attributable to AdaptHealth Corp., plus net income (loss) attributable to noncontrolling interests, interest expense, net, income tax expense (benefit), and depreciation and amortization, including patient equipment depreciation.

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

AdaptHealth believes Adjusted EBITDA is useful to investors in evaluating AdaptHealth’s financial performance. AdaptHealth uses this metric as the profitability measure in its incentive compensation plans that have a profitability component and to evaluate acquisition opportunities, where it is most often used for purposes of contingent consideration arrangements.

EBITDA and Adjusted EBITDA should not be considered as measures of financial performance under U.S. GAAP, and the items excluded from EBITDA and Adjusted EBITDA are significant components in understanding and assessing financial performance. Accordingly, these key business metrics have limitations as an analytical tool. They should not be considered as an alternative to net income or any other performance measures derived in accordance with U.S. GAAP or as an alternative to cash flows from operating activities as a measure of AdaptHealth’s liquidity.

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The following unaudited table presents the reconciliation of net income attributable to AdaptHealth to EBITDA and Adjusted EBITDA for the three and nine months ended September 30, 2023 and 2022:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
	(Unaudited)
Net (loss) income attributable to AdaptHealth Corp.	$	(454,076)	$	16,122	$	(424,392)	$	71,904
Income attributable to noncontrolling interest	1,155		1,105		3,187		2,800
Interest expense, net	32,306		28,521		96,813		78,905
Income tax (benefit) expense	(34,578)		5,580		(30,893)		20,036
Depreciation and amortization, including patient equipment depreciation	97,310		92,331		290,419		248,835
EBITDA	(357,883)		143,659		(64,866)		422,480
Equity-based compensation expense (a)	4,521		5,562		17,284		16,784
Transaction costs (b)	337		519		621		5,832
Change in fair value of warrant liability (c)	(9,160)		1,364		(31,886)		(17,145)
Goodwill impairment (d)	511,866		—		511,866		—
Other non-recurring expenses, net (e)	11,486		9,059		33,157		19,863
Adjusted EBITDA	$	161,167	$	160,163	$	466,176	$	447,814
Net (loss) income attributable to AdaptHealth Corp. as a percentage of net revenue	(56.5)%		2.1%		(18.1)%		3.3%
Adjusted EBITDA as a percentage of net revenue	20.0%		21.2%		19.9%		20.4%

(a)Represents equity-based compensation expense for awards granted to employees and non-employee directors.

(b)Represents transaction costs and expenses related to integration efforts related to acquisitions.

(c)Represents a non-cash charge or gain for the change in the estimated fair value of the warrant liability. Refer to Note 10, Stockholders’ Equity, included in the accompanying notes to the interim consolidated financial statements for the three and nine months ended September 30, 2023 for additional discussion of such non-cash charge or gain.

(d)Represents a non-cash goodwill impairment charge as a result of the fair value of the Company’s reporting unit being less than its carrying value. Refer to Note 5, Goodwill and Identifiable Intangible Assets, included in the accompanying notes to the interim consolidated financial statements for the three and nine months ended September 30, 2023 for additional discussion of such impairment charge.

(e)The 2023 year-to-date period consists of $12.5 million of expenses associated with litigation, $6.3 million of severance charges (of which $2.9 million relates 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 $5.5 million of other non-recurring expenses. The 2022 year-to-date period consists of a $9.0 million of consulting expenses associated with systems implementation activities and post-implementation support services, a $4.5 million expense related to changes in AdaptHealth's estimated liability related to its Tax Receivable Agreement, $3.8 million of expenses associated with litigation, claims and settlements, $0.7 million of lease termination costs, a $0.8 million loss related to the write-off of an investment, and $1.1 million of net other non-recurring expenses.

Free Cash Flow

AdaptHealth uses free cash flow, which is a financial measure that is not in accordance with U.S. GAAP, in its operational and financial decision-making and believes free cash flow is useful to investors because similar measures are frequently used by securities analysts, investors, ratings agencies and other interested parties to evaluate AdaptHealth's

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competitors and to measure the ability of companies to service their debt. AdaptHealth's presentation of free cash flow should not be construed as a measure of liquidity or discretionary cash available to AdaptHealth to fund its cash needs, including investing in the growth of its business and meeting its obligations.

AdaptHealth defines free cash flow as net cash provided by operating activities less cash paid for purchases of equipment and other fixed assets. For further discussion on free cash flow, including a reconciliation from cash flows provided by operating activities, refer to Liquidity and Capital Resources - Free Cash Flow below.

Liquidity and Capital Resources

AdaptHealth’s principal sources of liquidity are its operating cash flows, borrowings under its credit agreements and other debt arrangements, 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 and debt service, and to fund share repurchases. In addition, AdaptHealth continues to make operational changes that management believes will continue to improve accounts receivable collections in the future. AdaptHealth’s future capital expenditure requirements will depend on many factors, including its patient volume and revenue growth rates.

AdaptHealth’s capital expenditures are made in advance of patients beginning service. Certain operating costs are incurred at the beginning of the equipment service period and during initial patient set up.

AdaptHealth believes that its expected operating cash flows, together with its existing cash and amounts available under its existing credit agreement, will continue to be sufficient to fund its operations and growth strategies for at least the next twelve months.

AdaptHealth may seek additional equity or debt financing in connection with the growth of its business, primarily for acquisitions. In addition, economic conditions may cause disruption in the capital markets, which could make financing more difficult and/or expensive. In the event that additional financing is required from outside sources, AdaptHealth may not be able to raise it on acceptable terms or at all. If additional capital is unavailable when desired, AdaptHealth’s business, results of operations, and financial condition would be materially adversely affected.

As of September 30, 2023, AdaptHealth had approximately $56.1 million of cash.

At September 30, 2023, AdaptHealth had $740 million outstanding under its existing credit facility. In January 2021, AdaptHealth entered into a credit agreement, as amended, (the "2021 Credit Agreement"). The 2021 Credit Agreement consists of a $800 million secured term loan (the “2021 Term Loan”) and $450 million in commitments for revolving credit loans with a $55 million letter of credit sublimit (the “2021 Revolver”), both with maturities in January 2026. The borrowing under the 2021 Term Loan requires quarterly principal repayments of $5 million beginning June 30, 2021 through March 31, 2023, increasing to $10 million beginning June 30, 2023 through December 31, 2025, and the unpaid principal balance is due at maturity in January 2026. 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. As of September 30, 2023, and the date of this filing, there were no outstanding borrowings under the 2021 Revolver. At September 30, 2023, based on the financial debt covenants under the 2021 Credit Agreement, the maximum borrowings available pursuant to the 2021 Revolver was $144.3 million. Amounts borrowed under the 2021 Credit Agreement bear interest quarterly at variable rates based upon the sum of (a) the Secured Overnight Financing Rate ("Term SOFR") (subject to a zero percent floor) equal to Term SOFR (as defined) for the applicable interest period multiplied by the statutory reserve rate, plus (b) an applicable margin (as defined) ranging from 1.50% to 3.25% per annum based on the Consolidated Senior Secured Leverage Ratio (as defined), plus (c) a Term SOFR Adjustment (as defined) of 0.1%. On March 31, 2023, the Company amended the 2021 Credit Agreement to change the variable interest rate under the agreement to be based on Term SOFR 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 based on the Consolidated Senior Secured Leverage Ratio.

Under the 2021 Credit Agreement, AdaptHealth is subject to a number of restrictive covenants that, among other things, impose operating and financial restrictions on AdaptHealth. Financial covenants include a Consolidated Total Leverage Ratio and a Consolidated Interest Coverage Ratio, both as defined in the 2021 Credit Agreement. The 2021 Credit

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Agreement also contains certain customary events of default, including, among other things, failure to make payments when due thereunder, failure to observe or perform certain covenants, cross-defaults, bankruptcy and insolvency-related events, and non-compliance with healthcare laws. Any borrowing 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 not reinvested, unpermitted debt transactions, and excess cash flow, as defined, if certain leverage tests are not met. AdaptHealth was in compliance with all debt covenants as of September 30, 2023.

At September 30, 2023, AdaptHealth had $1,450.0 million outstanding under its existing unsecured senior notes. In August 2021, AdaptHealth LLC issued $600 million aggregate principal amount of 5.125% senior unsecured notes (the “5.125% Senior Notes”). The 5.125% Senior Notes will mature on March 1, 2030. Interest on the 5.125% Senior Notes is payable on March 1st and September 1st of each year, beginning on March 1, 2022. The 5.125% Senior Notes will be redeemable at AdaptHealth’s option, in whole or in part, at any time on or after March 1, 2025, and the redemption price for the 5.125% Senior Notes if redeemed during the 12 months beginning (i) March 1, 2025 is 102.563%, (ii) March 1, 2026 is 101.281%, (iii) March 1, 2027 and thereafter is 100.00%, in each case together with accrued and unpaid interest. AdaptHealth may also redeem some or all of the 5.125% Senior Notes before March 1, 2025 at a redemption price of 100% of the principal amount of the 5.125% 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 5.125% Senior Notes before March 1, 2025 with the proceeds from certain equity offerings at a redemption price equal to 105.125% of the principal amount of the 5.125% Senior Notes, together with accrued and unpaid interest. Furthermore, AdaptHealth may be required to make an offer to purchase the 5.125% Senior Notes upon the sale of certain assets or upon specific kinds of changes of control.

In January 2021, AdaptHealth LLC issued $500 million aggregate principal amount of 4.625% senior unsecured notes (the “4.625% Senior Notes”). The 4.625% Senior Notes will mature on August 1, 2029. Interest on the 4.625% Senior Notes is payable on February 1st and August 1st of each year, beginning on August 1, 2021. The 4.625% Senior Notes will be redeemable at AdaptHealth’s option, in whole or in part, at any time on or after February 1, 2024, and the redemption price for the 4.625% Senior Notes if redeemed during the 12 months beginning (i) February 1, 2024 is 102.313%, (ii) February 1, 2025 is 101.156%, and (iii) February 1, 2026 and thereafter is 100.00% in each case together with accrued and unpaid interest. AdaptHealth may also redeem some or all of the 4.625% Senior Notes before February 1, 2024 at a redemption price of 100% of the principal amount of the 4.625% 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 4.625% Senior Notes before February 1, 2024 with the proceeds from certain equity offerings at a redemption price equal to 104.625% of the principal amount of the 4.625% Senior Notes, together with accrued and unpaid interest. Furthermore, AdaptHealth may be required to make an offer to purchase the 4.625% Senior Notes upon the sale of certain assets or upon specific kinds of changes of control.

In July 2020, AdaptHealth LLC issued $350 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, beginning on February 1, 2021. 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.

As of September 30, 2023 and December 31, 2022, AdaptHealth had working capital of $136.9 million and $129.1 million, respectively. A significant portion of AdaptHealth’s assets consists of accounts receivable from third-party payors that are responsible for payment for the products and services that AdaptHealth provides.

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Cash Flow. The following table presents selected data from AdaptHealth’s consolidated statements of cash flows for the nine months ended September 30, 2023 and 2022:

	Nine Months Ended September 30,
(in thousands)	2023		2022
	(unaudited)
Net cash provided by operating activities	$	325,400	$	276,947
Net cash used in investing activities	(266,861)		(265,376)
Net cash used in financing activities	(48,668)		(50,460)
Net increase (decrease) in cash	9,871		(38,889)
Cash at beginning of period	46,272		149,627
Cash at end of period	$	56,143	$	110,738

Net cash provided by operating activities for the nine months ended September 30, 2023 and 2022 was $325.4 million and $276.9 million, respectively, an increase of $48.5 million. The increase was the result of a $495.9 million reduction in net (loss) income, a net increase of $498.0 million in non-cash charges, primarily from a goodwill impairment charge, 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, payments of contingent consideration related to acquisitions of $2.5 million in the 2022 period, and a net $43.9 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.

Net cash used in investing activities for the nine months ended September 30, 2023 and 2022 was $266.9 million and $265.4 million, respectively. 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. The use of funds in the 2022 period consisted of $248.5 million for equipment and other fixed asset purchases, $16.1 million for business acquisitions, and $0.7 million for other investments.

Net cash used in financing activities for the nine months ended September 30, 2023 and 2022 was $48.7 million and $50.5 million, respectively. 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. Net cash used in financing activities for the nine months ended September 30, 2022 consisted of repayments of $29.2 million on long-term debt and finance lease liabilities, payments of 5.6 million for contingent consideration and deferred purchase price in connection with acquisitions, a payment of 14.0 million for Common Stock purchases under a share repurchase program, a payment of $2.0 million for a distribution to the noncontrolling interest, and payments of $2.7 million for tax withholdings associated with equity-based compensation and stock option exercises, offset by proceeds of $1.6 million in connection with the employee stock purchase plan and proceeds of $1.4 million relating to stock option exercises.

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Free Cash Flow

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, 2023 and 2022:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Net cash provided by operating activities	$	98,833	$	107,023	$	325,400	$	276,947
Purchases of equipment and other fixed assets	(77,086)		(94,171)		(248,816)		(248,511)
Free cash flow	$	21,747	$	12,852	$	76,584	$	28,436

Free cash flow was $21.7 million for the three months ended September 30, 2023 compared to $12.9 million for the three months ended September 30, 2022. The increase in free cash flow was primarily due to a decrease in, and timing of, purchases of patient medical equipment for operating requirements, offset by lower net cash provided by operating activities, primarily relating to an increase in cash paid for interest in the 2023 period compared to the 2022 period.

Free cash flow was $76.6 million for the nine months ended September 30, 2023 compared to $28.4 million for the nine months ended September 30, 2022. The increase in free cash flow was primarily due to higher net cash provided by operating activities due to a net decrease in the use of cash from operating assets and liabilities, primarily from accounts receivable, inventory and accounts payable and accrued expenses, offset by an increase in cash paid for interest in the 2023 period compared to the 2022 period.

Critical Accounting Policies and Critical Estimates

The discussion and analysis of the Company’s financial condition and results of operations is based upon the Company’s consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of the Company’s consolidated financial statements requires its management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosures of contingent assets and liabilities. The Company’s management bases its estimates, assumptions and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Different assumptions and judgments would change the estimates used in the preparation of the Company’s consolidated financial statements which, in turn, could change the results from those reported. In addition, actual results may differ from these estimates and such differences could be material to the Company’s financial position and results of operations.

Critical accounting policies and critical estimates are those that the Company’s management considers the most important to the portrayal of the Company’s financial condition and results of operations because they require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. The Company’s critical accounting policies and critical estimates in relation to its consolidated financial statements include those related to revenue recognition, valuation of accounts receivable (implicit price concession), and valuation of goodwill and long-lived assets. There have been no material changes in the Company’s critical accounting policies and critical estimates as compared to the critical accounting policies and critical estimates described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Commitments and Contingencies

In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business 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. 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

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material accruals related to lawsuits, claims, investigations and 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 be affected by limited information. Accordingly, 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 are inherently uncertain, and material adverse outcomes are possible.

On July 25, 2017, AdaptHealth Holdings LLC, a Delaware limited liability company (AdaptHealth Holdings), was served with a subpoena by the U.S. Attorney’s Office for the United States District Court for the Eastern District of Pennsylvania (“EDPA”) pursuant to 18 U.S.C. §3486 to produce certain audit records and internal communications regarding ventilator billing. The investigation focused on billing practices regarding one payor that contracted for bundled payments for certain ventilators. AdaptHealth Holdings has cooperated with investigators and, through agreement with the EDPA, has submitted all information requested in the Company’s possession. An independent third party was retained by AdaptHealth Holdings that identified overpayments and underpayments for ventilator billings related to the payor, and a remittance was sent to reconcile that account. On October 3, 2019, the Company received a follow-up civil investigative demand from the EDPA regarding a document previously produced to the EDPA and patients included in the review by the independent third party. The Company has responded to the EDPA and supplemented its production as requested with any relevant documents in the Company’s possession. During subsequent communications, the EDPA indicated to the Company that the investigation remained ongoing. The EDPA also requested additional information regarding certain patient services and claims refunds processed by the Company in 2017. The Company produced this information in coordination with the EDPA. The EDPA also raised questions regarding other aspects of ventilator billing. On April 21, 2023, the Company entered into a settlement agreement with the EDPA resolving all allegations and claims related to the investigation without a determination of liability on the part of the Company. In connection with the settlement, the Company made a payment of $5.3 million, which was fully accrued as of December 31, 2022, and was not required to enter into any post-settlement agreements related to the settlement.

In March 2019, prior to its acquisition by the Company, AeroCare was served with a civil investigative demand (CID) issued by the United States Attorney for the Western District of Kentucky (WDKY). The CID seeks to investigate allegations that AeroCare improperly billed, or caused others to improperly bill, for oxygen tank contents that were not delivered to beneficiaries. The WDKY has requested documents related to such oxygen tank content billing as well as other categories of information. AeroCare has cooperated with the WDKY and has produced documents and provided explanations of its billing practices. In September 2020, the WDKY indicated the investigation includes alleged violations of the federal False Claims Act and as well as alleged violations of state Medicaid false claims acts in ten states. AeroCare has cooperated fully with the investigation and has indicated to the WDKY that concerns raised do not accurately identify Medicare coverage criteria and that state Medicaid coverage requirements generally do not provide for separate reimbursement for portable gaseous oxygen contents in the circumstances at issue. On June 23, 2022, the complaint filed in connection with this investigation was dismissed by the United States District Court in the Western District of Kentucky with the consent of the WDKY.

On July 29, 2021, Robert Charles Faille Jr., a purported shareholder of the Company, filed a purported class action complaint against the Company and certain of its current and former officers in the United States District Court for the Eastern District of Pennsylvania (the “Complaint”). The Complaint purports to be asserted on behalf of a class of persons who purchased the Company’s stock between November 11, 2019 and July 16, 2021. The Complaint generally alleges that the Company and certain of its current and former officers violated federal securities laws by making allegedly false and misleading statements and/or failing to disclose material information regarding the Company’s organic growth trajectory. The Complaint seeks unspecified damages. On October 14, 2021, the Delaware County Employees Retirement System and the Bucks County Employees Retirement System were named Lead Plaintiffs. Pursuant to the scheduling order, Lead Plaintiffs filed a consolidated complaint on November 22, 2021 (the “Consolidated Complaint”), which asserts substantially the same claim, but adds a number of current and former directors of the Company as additional defendants and a new theory of recovery based on the Company’s alleged failure to disclose information concerning the Company’s former Co-CEO’s alleged tax fraud arising from certain past private activity (the “Consolidated Class Action”). On January 20, 2022, the defendants filed a motion to dismiss the Consolidated Complaint. Lead Plaintiffs’ opposition to defendants’ motion was filed on March 21, 2022, and defendants’ reply was filed April 15, 2022. On June 9, 2022, the court issued an opinion and order denying the defendants’ motion to dismiss the Consolidated Complaint.

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On July 15, 2022, the court entered a scheduling order providing for, inter alia, a schedule for completing class certification discovery, as well as setting a briefing schedule for motions for class certification. Pursuant to the scheduling order, Lead Plaintiffs filed their motion for class certification on July 28, 2022. On December 12, 2022, the court entered an amended scheduling order with respect to class certification discovery and remaining briefing on Lead Plaintiffs’ motion for class certification. Pursuant to the amended scheduling order, the defendants filed their opposition to Lead Plaintiffs’ motion for class certification on March 30, 2023, and Lead Plaintiffs filed their reply on May 22, 2023.

On June 7, 2023, the court entered an order staying the Consolidated Class Action pending the outcome of a private mediation between the parties.

The Company intends to vigorously defend against the allegations contained in the Consolidated Complaint, but there can be no assurance that the defense will be successful. The Company is currently in a dispute with its directors and officers liability insurers concerning coverage related to the Complaint, which is proceeding in Delaware Superior Court.

On December 6, 2021, a putative shareholder of the Company, Carol Hessler, filed a shareholder derivative complaint against certain current and former directors and officers of the Company in the United States District Court for the Eastern District of Pennsylvania (the “Derivative Complaint”). The Derivative Complaint generally alleges that the defendants breached their fiduciary duties owed to the Company by allegedly causing or allowing misrepresentations and/or omissions regarding the Company’s organic growth and the Company’s former Co-CEO’s alleged criminal activity, failing to maintain an adequate system of oversight, disclosure controls and procedures, and internal controls over financial reporting and due diligence into the Company’s management team, and engaging in insider trading. The Derivative Complaint also alleges claims for waste of corporate assets and unjust enrichment. Finally, the Derivative Complaint alleges that certain of the individual defendants violated Section 14(a) of the Securities Exchange Act by allegedly negligently issuing, causing to be issued, and participating in the issuance of materially misleading statements to stockholders in the Company’s Proxy Statements on Schedule DEF 14A in connection with a Special Meeting of Stockholders, held on March 3, 2021, and the 2021 Annual Meeting of Stockholders, held on July 27, 2021. The Derivative Complaint seeks, among other things, an award of money damages.

On March 4, 2022, the parties stipulated to stay the Hessler action pending final resolution of the Consolidated Class Action. On March 7, 2022, the court so-ordered the parties’ stipulation.

The Company intends to vigorously defend against the allegations contained in the Derivative Complaint, but there can be no assurance that the defense will be successful.

On May 2, 2022, the U.S. Attorney’s Office for the Southern District of New York issued a civil investigative demand to a subsidiary of the Company, pursuant to the False Claims Act, 31 U.S.C. § 3733 (FCA) surrounding whether the subsidiary submitted false claims in violation of the FCA related to it’s billing of, and reimbursements from, federal health care programs for ventilators provided to patients from January 1, 2015 to the present. The Company is fully cooperating with the investigation. Given the investigation is in the early stages, it is not possible to determine whether it will have a material adverse effect on the Company.

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 for a Company follow-on offering conducted in January 2021 in the United States District Court for the Eastern District of Pennsylvania (the “Allegheny County Complaint”). The Allegheny County Complaint purports to be asserted on behalf of a class of persons who purchased the Company’s stock between August 4, 2020 and February 27, 2023. The Allegheny County Complaint generally alleges that the defendants 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 segment. The Allegheny County Complaint seeks unspecified damages.

The Company intends to vigorously defend against the allegations contained in the Allegheny County Complaint, but there can be no assurance that the defense will be successful.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our exposure to market risk relates to fluctuations in interest rates from borrowings under the 2021 Credit Agreement. The interest accrued on our debt borrowings is based on a variable rate which is tied to the Secured Overnight Financing Rate plus an applicable margin and therefore is exposed to changes in interest rates. As of September 30, 2023, there was $740.0 million outstanding under the 2021 Term Loan, no outstanding borrowings under the 2021 Revolver, $21.6 million outstanding under letters of credit, and based on the financial debt covenants under the 2021 Credit Agreement, the maximum borrowings available pursuant to the 2021 Revolver was $144.3 million.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of September 30, 2023. Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports are recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, during the period covered by this Quarterly Report, our disclosure controls and procedures were not effective due to material weaknesses in internal control over financial reporting as further described below in Management’s Report on Internal Control Over Financial Reporting.

As previously disclosed in Part II, Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, management identified material weaknesses in internal control over financial reporting relating to an insufficient complement of resources to complete risk assessment which resulted in a lack of implementation and ineffectiveness of both process level controls in substantially all processes and the general information technology controls that support our financial statements and reporting.

Notwithstanding the identified material weaknesses, management, including our principal executive officer and principal financial officer, believes the consolidated financial statements included in this Quarterly Report on Form 10-Q fairly represent in all material respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with U.S. GAAP.

Remediation of Previously Reported Material Weaknesses in Internal Control Over Financing Reporting

With respect to the material weaknesses identified in 2022, management continues to take steps to remediate such material weaknesses, including (1) implementing a system to provide real time visibility for process and control owners to the remediation of internal control matters, (2) expanding the number of management and third-party consultants with expertise in process mapping and internal controls; (3) completing an entity wide risk assessment including process mapping for each of the Company’s business cycles to identify relevant process risk points, service and sub-service organizations, information technology systems and information used in the operation of controls, (4) identifying manual and automated controls responsive to the process risk points for significant processes, and (5) implementing an enterprise resource planning system in 2022 and continuing implementing additional technology and processes to enhance control environment. While management has completed the risk assessment to identify controls, the material weaknesses cannot be considered remediated until the enhanced controls have been fully implemented and determined to be operating effectively for a sufficient period of time.

Changes in Internal Control over Financial Reporting

Except with respect to the changes in connection with the implementation of the initiatives to remediate the material weaknesses noted above, there were no changes in the Company’s internal control over financial reporting that occurred during the quarter ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

See Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Commitments and Contingencies”.

Item 1A. Risk Factors

Factors that could cause our actual results to differ materially from those in this report are any of the risks disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 28, 2023. Any of those factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

We had no sales of unregistered equity securities during the period covered by this report that were not previously reported in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.

There were no purchases of our Common Stock made during the three months ended September 30, 2023 by us or any of our “affiliated purchasers” as defined in Rule 10b-18(a)(3) under the Exchange Act.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

During the three months ended September 30, 2023, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933).

Item 6. Exhibits

See Exhibit Index for documents filed or furnished herewith and incorporated herein by reference.

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EXHIBIT INDEX

Exhibit Number	Description
3.1	Third Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K, filed with the SEC on July 29, 2021).
3.2	Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K, filed with the SEC on November 14, 2019).
3.3	Certificate of Designation of Preferences, Rights and Limitations of Series B-1 Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 26, 2020).
10.1†	Employment Agreement between AdaptHealth Corp. and Albert Prast, dated July 24, 2023. (incorporated by reference to Exhibit 10.1 of the Company's Current Report on form 8-K, filed with the SEC on July 27, 2023).
10.2†	Amendment to Letter Agreement between AdaptHealth Corp. and Richard Barasch, dated August 29, 2023. (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K, filed with the SEC on August 29, 2023).
10.3†	Second Amendment to Letter Agreement between AdaptHealth Corp. and Richard Barasch, dated October 26, 2023. (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the SEC on October 31, 2023).
31.1*	Certification of Chief Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32**	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS***	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH***	XBRL Taxonomy Extension Schema Document
101.CAL***	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF***	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB***	XBRL Taxonomy Extension Label Linkbase Document
101.PRE***	XBRL Taxonomy Extension Presentation Linkbase Document
Exhibit 104 ***	Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

* Filed herewith.

** Furnished herewith.

*** XBRL (eXtensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

† Management contract or compensatory plan or arrangement.

55

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	AdaptHealth Corp.
November 7, 2023	By:	/s/ Richard Barasch
		Richard Barasch
		Interim Chief Executive Officer and Chairman of the Board
		(Principal Executive Officer)
November 7, 2023	By:	/s/ Jason Clemens
		Jason Clemens
		Chief Financial Officer
		(Principal Financial Officer)
November 7, 2023	By:	/s/ Christine Archbold
		Christine Archbold
		Chief Accounting Officer
		(Principal Accounting Officer)

56

EX-31.1

Exhibit 31.1

CERTIFICATION

PURSUANT TO RULES 13A-14 AND 15D-14

UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Richard Barasch, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of AdaptHealth Corp.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements and other financial information included in this report, fairly present, in all material respects, the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 7, 2023	/s/ Richard Barasch
	Richard Barasch
	Interim Chief Executive Officer and Chairman of the Board
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

PURSUANT TO RULES 13A-14 AND 15D-14

UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Jason Clemens, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of AdaptHealth Corp.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements and other financial information included in this report, fairly present, in all material respects, the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 7, 2023	/s/ Jason Clemens
	Jason Clemens
	Chief Financial Officer
	(Principal Financial Officer)

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS REQUIRED BY

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of AdaptHealth Corp. (the “Company”) on Form 10-Q for the quarter ended September 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certify that to the best of our knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 7, 2023	/s/Richard Barasch	Interim Chief Executive Officer and Chairman of the Board
	Richard Barasch	(Principal Executive Officer)
November 7, 2023	/s/Jason Clemens	Chief Financial Officer
	Jason Clemens	(Principal Financial Officer)

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2023	Nov. 03, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2023
Entity File Number	001-38399
Entity Registrant Name	AdaptHealth Corp.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	82-3677704
Entity Address, Address Line One	220 West Germantown Pike
Entity Address, Address Line Two	Suite 250
Entity Address, City or Town	Plymouth Meeting
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	19462
City Area Code	610
Local Phone Number	424-4515
Title of 12(b) Security	Common Stock, par value $0.0001 per share
Trading Symbol	AHCO
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		136,389,655
Entity Central Index Key	0001725255
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash	$ 56,143	$ 46,272
Accounts receivable	370,740	359,146
Inventory	116,332	127,754
Prepaid and other current assets	41,852	52,136
Total current assets	585,067	585,308
Equipment and other fixed assets, net	490,053	487,079
Operating lease right-of-use assets	110,007	129,506
Finance lease right-of-use assets	21,528	5,423
Goodwill	3,041,446	3,545,297
Identifiable intangible assets, net	135,728	162,773
Other assets	22,504	22,415
Deferred tax assets	318,915	281,786
Total Assets	4,725,248	5,219,587
Current liabilities:
Accounts payable and accrued expenses	314,452	337,498
Current portion of long-term debt	40,000	35,000
Current portion of operating lease obligations	28,736	30,001
Current portion of finance lease obligations	5,947	2,211
Contract liabilities	47,981	31,641
Other liabilities	11,069	19,863
Total current liabilities	448,185	456,214
Long-term debt, less current portion	2,126,803	2,153,267
Operating lease obligations, less current portion	85,700	104,394
Finance lease obligations, less current portion	15,581	3,950
Other long-term liabilities	302,590	305,501
Warrant liability	6,617	38,503
Total Liabilities	2,985,476	3,061,829
Commitments and contingencies (note 14)
Stockholders' Equity:
Common Stock, par value of $0.0001 per share, 300,000,000 shares authorized; 134,991,451 and 134,435,119 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	13	13
Preferred Stock, par value of $0.0001 per share, 5,000,000 shares authorized; 124,060 shares issued and outstanding as of September 30, 2023 and December 31, 2022	1	1
Treasury stock, at cost (1,382,788 and 750,835 shares at September 30, 2023 and December 31, 2022, respectively)	(23,216)	(13,992)
Additional paid-in capital	2,145,376	2,130,148
(Accumulated deficit) Retained earnings	(398,097)	26,295
Accumulated other comprehensive income	8,408	8,693
Total stockholders' equity attributable to AdaptHealth Corp.	1,732,485	2,151,158
Noncontrolling interest in subsidiary	7,287	6,600
Total Stockholders' Equity	1,739,772	2,157,758
Total Liabilities and Stockholders' Equity	$ 4,725,248	$ 5,219,587

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Common Stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common Stock, shares authorized (in shares)	300,000,000	300,000,000
Common Stock, shares issued (in shares)	134,991,451	134,435,119
Common Stock, shares outstanding (in shares)	134,991,451	134,435,119
Preferred Stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred Stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred Stock, shares issued (in shares)	124,060	124,060
Preferred Stock, shares outstanding (in shares)	124,060	124,060
Treasury stock, at cost (in shares)	1,382,788	750,835

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Statement [Abstract]
Net revenue	$ 804,031	$ 756,495	$ 2,341,943	$ 2,190,312
Revenue, Product and Service [Extensible Enumeration]	Health Care, Patient Service [Member]	Health Care, Patient Service [Member]	Health Care, Patient Service [Member]	Health Care, Patient Service [Member]
Costs and expenses:
Cost of net revenue	$ 693,488	$ 646,714	$ 2,022,281	$ 1,853,847
Cost, Product and Service [Extensible Enumeration]	Health Care, Patient Service [Member]	Health Care, Patient Service [Member]	Health Care, Patient Service [Member]	Health Care, Patient Service [Member]
General and administrative expenses	$ 45,198	$ 40,681	$ 142,797	$ 124,673
Depreciation and amortization, excluding patient equipment depreciation	14,515	16,151	45,596	48,113
Goodwill impairment (note 5)	511,866	0	511,866	0
Total costs and expenses	1,265,067	703,546	2,722,540	2,026,633
Operating (loss) income	(461,036)	52,949	(380,597)	163,679
Interest expense, net	32,306	28,521	96,813	78,905
Change in fair value of warrant liability (note 10)	(9,160)	1,364	(31,886)	(17,145)
Other loss, net	3,317	257	6,574	7,179
(Loss) income before income taxes	(487,499)	22,807	(452,098)	94,740
Income tax (benefit) expense	(34,578)	5,580	(30,893)	20,036
Net (loss) income	(452,921)	17,227	(421,205)	74,704
Income attributable to noncontrolling interest	1,155	1,105	3,187	2,800
Net (loss) income attributable to AdaptHealth Corp.	$ (454,076)	$ 16,122	$ (424,392)	$ 71,904
Weighted average common shares outstanding - basic (in shares)	134,825	134,227	134,549	134,186
Weighted average common shares outstanding - diluted (in shares)	134,982	137,583	135,202	138,599
Basic net income (loss) per share (note 11) (in dollars per share)	$ (3.37)	$ 0.11	$ (3.15)	$ 0.49
Diluted net income (loss) per share (note 11) (in dollars per share)	$ (3.43)	$ 0.11	$ (3.37)	$ 0.35

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Statement of Comprehensive Income [Abstract]
Net (loss) income	$ (452,921)	$ 17,227	$ (421,205)	$ 74,704
Other comprehensive income (loss):
Gain (loss) on interest rate swap agreements, inclusive of reclassification adjustment, net of tax	66	7,757	(285)	15,348
Comprehensive (loss) income	(452,855)	24,984	(421,490)	90,052
Income attributable to noncontrolling interest	1,155	1,105	3,187	2,800
Comprehensive (loss) income attributable to AdaptHealth Corp.	$ (454,010)	$ 23,879	$ (424,677)	$ 87,252

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock	Preferred Stock	Treasury Stock	Additional paid-in capital	Retained earnings (Accumulated deficit)	Accumulated other comprehensive income (loss)	Noncontrolling interest in subsidiary
Common Stock, beginning balance (in shares) at Dec. 31, 2021		133,844,000
Preferred Stock, beginning balance (in shares) at Dec. 31, 2021			124,000
Treasury Stock, beginning balance (in shares) at Dec. 31, 2021				0
Balance at beginning of period at Dec. 31, 2021	$ 2,066,689	$ 13	$ 1	$ 0	$ 2,107,267	$ (43,021)	$ (2,354)	$ 4,783
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity-based compensation (in shares)		187,000
Equity-based compensation	5,502				5,502
Exercise of stock options (in shares)		184,000
Exercise of stock options	723				723
Payments for tax withholdings from restricted stock vesting and stock option exercises	(1,269)				(1,269)
Common Stock issued in connection with employee stock purchase plan (in shares)		31,000
Common Stock issued in connection with employee stock purchase plan	753				753
Net income	42,230					41,750		480
Change in fair value of interest rate swaps, inclusive of reclassification adjustment	5,998						5,998
Common Stock, ending balance (in shares) at Mar. 31, 2022		134,246,000
Preferred Stock, ending balance (in shares) at Mar. 31, 2022			124,000
Treasury Stock, ending balance (in shares) at Mar. 31, 2022				0
Balance at end of period at Mar. 31, 2022	2,120,626	$ 13	$ 1	$ 0	2,112,976	(1,271)	3,644	5,263
Common Stock, beginning balance (in shares) at Dec. 31, 2021		133,844,000
Preferred Stock, beginning balance (in shares) at Dec. 31, 2021			124,000
Treasury Stock, beginning balance (in shares) at Dec. 31, 2021				0
Balance at beginning of period at Dec. 31, 2021	2,066,689	$ 13	$ 1	$ 0	2,107,267	(43,021)	(2,354)	4,783
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of stock options	$ 1,400
Shares purchased under share repurchase program (in shares)	750,835
Shares purchased under share repurchase program	$ (14,000)
Reclassification of warrant liability to equity for exercised warrants (in shares)	87,553
Reclassification of warrant liability to equity for exercised warrants	$ 2,103
Net income	74,704
Common Stock, ending balance (in shares) at Sep. 30, 2022		134,723,000
Preferred Stock, ending balance (in shares) at Sep. 30, 2022			124,000
Treasury Stock, ending balance (in shares) at Sep. 30, 2022				751,000
Balance at end of period at Sep. 30, 2022	2,159,950	$ 13	$ 1	$ (13,992)	2,126,468	28,883	12,994	5,583
Common Stock, beginning balance (in shares) at Mar. 31, 2022		134,246,000
Preferred Stock, beginning balance (in shares) at Mar. 31, 2022			124,000
Treasury Stock, beginning balance (in shares) at Mar. 31, 2022				0
Balance at beginning of period at Mar. 31, 2022	2,120,626	$ 13	$ 1	$ 0	2,112,976	(1,271)	3,644	5,263
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity-based compensation (in shares)		117,000
Equity-based compensation	5,720				5,720
Exercise of stock options (in shares)		43,000
Payments for tax withholdings from restricted stock vesting and stock option exercises	(613)				(613)
Shares purchased under share repurchase program (in shares)				199,000
Shares purchased under share repurchase program	(3,375)			$ (3,375)
Reclassification of warrant liability to equity for exercised warrants (in shares)		19,000
Reclassification of warrant liability to equity for exercised warrants	495				495
Distribution to non-controlling interest	(2,000)							(2,000)
Net income	15,247					14,032		1,215
Change in fair value of interest rate swaps, inclusive of reclassification adjustment	1,593						1,593
Common Stock, ending balance (in shares) at Jun. 30, 2022		134,425,000
Preferred Stock, ending balance (in shares) at Jun. 30, 2022			124,000
Treasury Stock, ending balance (in shares) at Jun. 30, 2022				199,000
Balance at end of period at Jun. 30, 2022	2,137,693	$ 13	$ 1	$ (3,375)	2,118,578	12,761	5,237	4,478
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity-based compensation (in shares)		83,000
Equity-based compensation	5,562				5,562
Exercise of stock options (in shares)		99,000
Exercise of stock options	665				665
Payments for tax withholdings from restricted stock vesting and stock option exercises	(808)				(808)
Common Stock issued in connection with employee stock purchase plan (in shares)		47,000
Common Stock issued in connection with employee stock purchase plan	863				863
Shares purchased under share repurchase program (in shares)				552,000
Shares purchased under share repurchase program	(10,617)			$ (10,617)
Reclassification of warrant liability to equity for exercised warrants (in shares)		69,000
Reclassification of warrant liability to equity for exercised warrants	1,608				1,608
Net income	17,227					16,122		1,105
Change in fair value of interest rate swaps, inclusive of reclassification adjustment	7,757						7,757
Common Stock, ending balance (in shares) at Sep. 30, 2022		134,723,000
Preferred Stock, ending balance (in shares) at Sep. 30, 2022			124,000
Treasury Stock, ending balance (in shares) at Sep. 30, 2022				751,000
Balance at end of period at Sep. 30, 2022	$ 2,159,950	$ 13	$ 1	$ (13,992)	2,126,468	28,883	12,994	5,583
Common Stock, beginning balance (in shares) at Dec. 31, 2022	134,435,119	134,435,000
Preferred Stock, beginning balance (in shares) at Dec. 31, 2022	124,060		124,000
Treasury Stock, beginning balance (in shares) at Dec. 31, 2022	750,835			751,000
Balance at beginning of period at Dec. 31, 2022	$ 2,157,758	$ 13	$ 1	$ (13,992)	2,130,148	26,295	8,693	6,600
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity-based compensation (in shares)		292,000
Equity-based compensation	5,916				5,916
Payments for tax withholdings from restricted stock vesting and stock option exercises	(1,883)				(1,883)
Common Stock issued in connection with employee stock purchase plan (in shares)		53,000
Common Stock issued in connection with employee stock purchase plan	1,021				1,021
Shares purchased under share repurchase program (in shares)		632,000		632,000
Shares purchased under share repurchase program	(9,224)			$ (9,224)
Net income	16,675					15,707		968
Change in fair value of interest rate swaps, inclusive of reclassification adjustment	(2,805)						(2,805)
Common Stock, ending balance (in shares) at Mar. 31, 2023		134,148,000
Preferred Stock, ending balance (in shares) at Mar. 31, 2023			124,000
Treasury Stock, ending balance (in shares) at Mar. 31, 2023				1,383,000
Balance at end of period at Mar. 31, 2023	$ 2,167,458	$ 13	$ 1	$ (23,216)	2,135,202	42,002	5,888	7,568
Common Stock, beginning balance (in shares) at Dec. 31, 2022	134,435,119	134,435,000
Preferred Stock, beginning balance (in shares) at Dec. 31, 2022	124,060		124,000
Treasury Stock, beginning balance (in shares) at Dec. 31, 2022	750,835			751,000
Balance at beginning of period at Dec. 31, 2022	$ 2,157,758	$ 13	$ 1	$ (13,992)	2,130,148	26,295	8,693	6,600
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of stock options (in shares)	1,542,000
Exercise of stock options	$ 500
Shares purchased under share repurchase program (in shares)	631,953
Shares purchased under share repurchase program	$ (9,200)
Net income	$ (421,205)
Common Stock, ending balance (in shares) at Sep. 30, 2023	134,991,451	134,991,000
Preferred Stock, ending balance (in shares) at Sep. 30, 2023	124,060		124,000
Treasury Stock, ending balance (in shares) at Sep. 30, 2023	1,382,788			1,383,000
Balance at end of period at Sep. 30, 2023	$ 1,739,772	$ 13	$ 1	$ (23,216)	2,145,376	(398,097)	8,408	7,287
Common Stock, beginning balance (in shares) at Mar. 31, 2023		134,148,000
Preferred Stock, beginning balance (in shares) at Mar. 31, 2023			124,000
Treasury Stock, beginning balance (in shares) at Mar. 31, 2023				1,383,000
Balance at beginning of period at Mar. 31, 2023	2,167,458	$ 13	$ 1	$ (23,216)	2,135,202	42,002	5,888	7,568
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity-based compensation (in shares)		156,000
Equity-based compensation	6,847				6,847
Exercise of stock options (in shares)		214,000
Payments for tax withholdings from restricted stock vesting and stock option exercises	(2,229)				(2,229)
Distribution to non-controlling interest	(2,500)							(2,500)
Net income	15,041					13,977		1,064
Change in fair value of interest rate swaps, inclusive of reclassification adjustment	2,454						2,454
Common Stock, ending balance (in shares) at Jun. 30, 2023		134,518,000
Preferred Stock, ending balance (in shares) at Jun. 30, 2023			124,000
Treasury Stock, ending balance (in shares) at Jun. 30, 2023				1,383,000
Balance at end of period at Jun. 30, 2023	2,187,071	$ 13	$ 1	$ (23,216)	2,139,820	55,979	8,342	6,132
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity-based compensation (in shares)		176,000
Equity-based compensation	4,521				4,521
Exercise of stock options (in shares)		215,000
Exercise of stock options	538				538
Payments for tax withholdings from restricted stock vesting and stock option exercises	(513)				(513)
Common Stock issued in connection with employee stock purchase plan (in shares)		82,000
Common Stock issued in connection with employee stock purchase plan	1,010				1,010
Net income	(452,921)					(454,076)		1,155
Change in fair value of interest rate swaps, inclusive of reclassification adjustment	$ 66						66
Common Stock, ending balance (in shares) at Sep. 30, 2023	134,991,451	134,991,000
Preferred Stock, ending balance (in shares) at Sep. 30, 2023	124,060		124,000
Treasury Stock, ending balance (in shares) at Sep. 30, 2023	1,382,788			1,383,000
Balance at end of period at Sep. 30, 2023	$ 1,739,772	$ 13	$ 1	$ (23,216)	$ 2,145,376	$ (398,097)	$ 8,408	$ 7,287

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash flows from operating activities:
Net (loss) income	$ (421,205)	$ 74,704
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including patient equipment depreciation	290,419	248,835
Goodwill impairment	511,866	0
Equity-based compensation	17,284	16,784
Change in fair value of warrant liability	(31,886)	(17,145)
Reduction in the carrying amount of operating lease right-of-use assets	26,309	16,924
Reduction in the carrying amount of finance lease right-of-use assets	3,821	0
Deferred income tax (benefit) expense	(37,033)	18,058
Change in fair value of interest rate swaps, net of reclassification adjustment	(1,394)	(2,202)
Amortization of deferred financing costs	3,926	3,926
Other	350	(2,023)
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable	(10,043)	2,357
Inventory	12,769	(3,992)
Prepaid and other assets	10,956	4,211
Operating lease obligations	(26,959)	(16,794)
Operating liabilities	(23,780)	(66,696)
Net cash provided by operating activities	325,400	276,947
Cash flows from investing activities:
Purchases of equipment and other fixed assets	(248,816)	(248,511)
Payments for business acquisitions, net of cash acquired	(17,917)	(16,134)
Payments for cost method investments	(128)	(731)
Net cash used in investing activities	(266,861)	(265,376)
Cash flows from financing activities:
Proceeds from borrowings on long-term debt	50,000	0
Repayments on long-term debt	(75,000)	(15,000)
Repayments of finance lease liabilities	(4,558)	(14,219)
Payments for shares purchased under share repurchase program	(9,224)	(13,992)
Proceeds from the exercise of stock options	538	1,388
Proceeds received in connection with employee stock purchase plan	2,031	1,616
Payments relating to the Tax Receivable Agreement	(3,202)	0
Distributions to noncontrolling interest	(2,500)	(2,000)
Payments for tax withholdings from restricted stock vesting and stock option exercises	(5,253)	(2,690)
Payments of contingent consideration and deferred purchase price from acquisitions	(1,500)	(5,563)
Net cash used in financing activities	(48,668)	(50,460)
Net increase (decrease) in cash	9,871	(38,889)
Cash at beginning of period	46,272	149,627
Cash at end of period	56,143	110,738
Supplemental disclosures:
Cash paid for interest	113,083	97,389
Cash paid for income taxes	5,727	10,490
Noncash investing and financing activities:
Equipment acquired under finance lease obligations	0	1,335
Unpaid equipment and other fixed asset purchases at end of period	32,481	50,864
Assets subject to operating lease obligations	8,179	5,411
Operating lease obligations	(8,179)	(5,411)
Assets subject to finance lease obligations	19,726	0
Finance lease obligations	(19,726)	0
Deferred purchase price in connection with acquisitions	$ 50	$ 422

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General Information

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

General Information

General Information

AdaptHealth Corp. and subsidiaries ("AdaptHealth" or the "Company"), is a national leader in providing patient-centered, healthcare-at-home solutions including home medical equipment ("HME"), medical supplies, and related services. AdaptHealth focuses primarily on providing (i) sleep therapy equipment, supplies and related services (including CPAP and bi PAP services) to individuals suffering from obstructive sleep apnea ("OSA"), (ii) medical devices and supplies to patients for the treatment of diabetes (including continuous glucose monitors ("CGM") and insulin pumps), (iii) home medical equipment to patients discharged from acute care and other facilities, (iv) oxygen and related chronic therapy services in the home, and (v) other HME devices and supplies on behalf of chronically ill patients with wound care, urological, incontinence, ostomy and nutritional supply needs. AdaptHealth services beneficiaries of Medicare, Medicaid and commercial insurance payors.

As previously disclosed, by mutual agreement with the Company, effective June 30, 2023, Stephen Griggs resigned as Chief Executive Officer and did not stand for reelection as a member of the Company’s Board of Directors (the “Board”) at the Company’s annual meeting. As previously disclosed, Richard Barasch, Chairman of the Board of the Company and Interim Chief Executive Officer will continue to serve as Interim Chief Executive Officer until a successor chief executive officer is appointed.

The interim consolidated financial statements are unaudited, but reflect all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Interim results are not necessarily indicative of the results for a full year.

There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

(a)    Basis of Presentation

The interim consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). In the opinion of management, the interim consolidated financial statements include all necessary adjustments for a fair presentation of the financial position and results of operations for the periods presented.

(b)    Basis of Consolidation

The accompanying interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

(c)    Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash.

(d)    Accounting Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and reported amounts of revenues and expenses during the reporting period. Management bases these estimates and assumptions upon historical experience, existing and known circumstances, authoritative accounting pronouncements and other factors that management believes to be reasonable. Significant areas requiring the use of management estimates relate to revenue recognition and the valuation of accounts

receivable (implicit price concession), income taxes and the tax receivable agreement, equity-based compensation, warrant liability, long-lived assets, including goodwill and identifiable intangible assets, and contingencies. Actual results could differ from those estimates.

(e)    Valuation of Goodwill

The Company has a significant amount of goodwill on its balance sheet that resulted from the business acquisitions the Company has made. Goodwill is not amortized, rather, it is assessed for impairment annually and upon the occurrence of a triggering event or change in circumstances indicating a possible impairment. Such triggering events potentially warranting an annual or interim goodwill impairment assessment include, among other factors, declines in historical or projected revenue, operating income or cash flows, and sustained decreases in the Company’s stock price or market capitalization. Such changes in circumstance can include, among others, changes in the legal environment, reimbursement environment, operating performance, and/or future prospects. The Company performs its annual impairment assessment of goodwill during the fourth quarter of each year. The impairment assessment can be performed on either a quantitative or qualitative basis. The Company first assesses qualitative factors to determine whether it is necessary to perform a quantitative goodwill impairment analysis. If determined necessary, the Company applies the quantitative impairment test to identify and measure the amount of impairment, if any. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors, such as estimates of a reporting unit's fair value and judgment about impairment triggering events. As a result, there can be no assurance that the estimates and assumptions made for purposes of the annual or interim goodwill impairment test will prove to be accurate predictions of the future. During the quarters ended March 31, 2023 and June 30, 2023, the Company experienced a decline in its market capitalization as a result of a sustained decrease in the Company’s stock price. The Company considered such sustained decreases to represent a triggering event and performed goodwill impairment tests as of March 31, 2023 and June 30, 2023. During the three months ended September 30, 2023, the Company experienced a further decline in its market capitalization as a result of a sustained decrease in the Company’s stock price and also revised its financial projections. The Company considered these items to represent a triggering event and performed a goodwill impairment test as of September 30, 2023. The Company did not recognize any impairment charges of goodwill during the six months ended June 30, 2023 and the nine months ended September 30, 2022. The Company recognized a non-cash goodwill impairment charge of $511.9 million during the three and nine months ended September 30, 2023. Refer to Note 5, Goodwill and Identifiable Intangible Assets, for additional details.

(f)    Long-Lived Assets

The Company’s long-lived assets, such as equipment and other fixed assets, operating lease right-of-use assets, finance lease right-of-use assets and definite-lived identifiable intangible assets, are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Definite-lived identifiable intangible assets consist of tradenames, payor contracts, contractual rental agreements and developed technology. These assets are amortized using the straight-line method over their estimated useful lives, which reflects the pattern in which the economic benefits of the assets are expected to be consumed. In addition to consideration of impairment upon the events or changes in circumstances described above, management regularly evaluates the remaining useful lives of its long-lived assets. The following table summarizes the useful lives of the Company’s identifiable intangible assets:

Tradenames	5 to 10 years
Payor contracts	10 years
Contractual rental agreements	2 years
Developed technology	5 years

The Company did not recognize any impairment charges on long-lived assets for the three and nine months ended September 30, 2023 and 2022.

(g)    Equity-based Compensation

The Company accounts for its equity-based compensation in accordance with FASB ASC Topic 718, Compensation Stock Compensation, which establishes accounting for share-based awards exchanged for employee services and requires companies to expense the estimated fair value of these awards over the requisite employee service period. Equity-based compensation expense related to these grants is included within general and administrative expenses and cost of net revenue in the accompanying consolidated statements of operations. The Company measures and recognizes equity-based compensation expense for such awards based on their estimated fair values on the date of grant. For share-based awards with service only or service and performance conditions, the value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service period in the Company’s consolidated financial statements. For share-based awards with only a service condition, equity-based compensation expense is recognized on a straight-line basis over the requisite service period. For awards with performance conditions, equity-based compensation expense is recognized straight-line on a tranche-by-tranche basis over the employees’ requisite service period subject to management’s estimation of the probability of vesting of such awards. If management determines that the performance conditions are no longer probable of achievement, the Company will reverse the previously recognized equity-based compensation expense in the period of determination. For awards with market conditions, the grant-date fair value is estimated using a monte-carlo simulation analysis, which is recognized straight-line on a tranche-by-tranche basis over the employees’ requisite service period regardless of whether or the extent to which the awards ultimately vest. Refer to Note 10, Stockholders’ Equity, for additional information regarding the Company’s equity-based compensation expense.

(h)    Business Segment

Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”) for the purposes of allocating resources and evaluating financial performance. The Company’s CODM is its Interim Chief Executive Officer, who reviews financial information on a consolidated level for purposes of allocating resources and evaluating financial performance, and as such, the Company’s operations constitute one operating segment and one reportable segment.

(i)    Accounting for Leases

The Company accounts for its leases in accordance with FASB Accounting Standards Codification Topic 842, Leases (ASC 842). ASC 842 requires the Company to recognize a lease liability, which represents the discounted obligation to make future minimum lease payments, and a corresponding right-of-use ("ROU") asset on its consolidated balance sheet for most leases, and disclose key information about leasing arrangements. ASC 842 applies to a number of arrangements to which the Company is a party.

Whenever the Company enters into a new arrangement, it must determine, at the inception date, whether the arrangement is or contains a lease. This determination generally depends on whether the arrangement conveys to the Company the right to control the use of an explicitly or implicitly identified asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and obtain substantially all the economic benefits from the use of the underlying asset.

If a lease exists, the Company must then determine the separate lease and non-lease components of the arrangement. Each right to use an underlying asset conveyed by a lease arrangement should generally be considered a separate lease component if it both: (i) can benefit the Company without depending on other resources not readily available to the Company and (ii) does not significantly affect and is not significantly affected by other rights of use conveyed by the lease. Aspects of a lease arrangement that transfer other goods or services to the Company but do not meet the definition of lease components are considered non-lease components. The consideration owed by the Company pursuant to a lease arrangement is generally allocated to each lease and non-lease component for accounting purposes. However, the Company has elected, for all of its leases, to not separate lease and non-lease components. Each lease component is accounted for separately from other lease components, but together with the associated non-lease components.

For each lease, the Company must then determine the lease term, the present value of lease payments and the classification of the lease as either an operating or finance lease.

The lease term is the period of the lease not cancellable by the Company, together with periods covered by: (i) renewal options the Company is reasonably certain to exercise, (ii) termination options the Company is reasonably certain not to exercise, and (iii) renewal or termination options that are controlled by the lessor.

The present value of lease payments is calculated based on:

•Lease payments – lease payments include fixed and certain variable payments, less lease incentives, together with amounts probable of being owed by the Company under residual value guarantees and, if reasonably certain of being paid, the cost of certain renewal options and early termination penalties set forth in the lease arrangement. Lease payments exclude consideration that is not related to the transfer of goods and services of the Company.

•Discount rate – the discount rate must be determined based on information available to the Company upon the commencement of the lease. Lessees are required to use the rate implicit in the lease whenever such rate is readily available; however, as the implicit rate in the Company’s leases is generally not readily determinable, the Company generally uses the hypothetical incremental borrowing rate it would have to pay to borrow an amount equal to the lease payments, on a collateralized basis, over a timeframe similar to the lease term.

In making the determination of whether a lease is an operating lease or a finance lease, the Company considers the lease term in relation to the economic life of the leased asset, the present value of lease payments in relation to the fair value of the leased asset and certain other factors, including the lessee’s and lessor’s rights, obligations, and economic incentives over the term of the lease.

Generally, upon the commencement of a lease, the Company will record a lease liability and a ROU asset. However, the Company has elected, for all underlying leases with initial terms of twelve months or less (known as short-term leases), to not recognize a lease liability or ROU asset. Lease liabilities are initially recorded at lease commencement as the present value of future lease payments. ROU assets are initially recorded at lease commencement as the initial amount of the lease liability, together with the following, if applicable: (i) initial direct costs incurred by the lessee and (ii) lease payments made to the lessor net of lease incentives received, prior to lease commencement.

Over the lease term, the Company generally increases its lease liabilities using the effective interest method and decreases its lease liabilities for lease payments made. For finance leases, amortization and interest expense are recognized separately in the consolidated statements of operations, with amortization expense generally recorded on a straight-line basis over the lease term and interest expense recorded using the effective interest method. For operating leases, a single lease cost is generally recognized in the consolidated statements of operations on a straight-line basis over the lease term unless an impairment has been recorded with respect to a leased asset. Lease costs for short-term leases not recognized in the consolidated balance sheets are recognized in the consolidated statements of operations on a straight-line basis over the lease term. Variable lease costs not initially included in the lease liability and ROU asset impairment charges are expensed as incurred. ROU assets are assessed for impairment, similar to other long-lived assets. Refer to Note 12, Leases, for additional information.

(j)    Recently Adopted Accounting Pronouncements

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform ("Topic 848"), which provides optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. Specifically, the guidance permits an entity, when certain criteria are met, to consider amendments to contracts made to comply with reference rate reform to meet the definition of a modification under U.S. GAAP. It further allows hedge accounting to be maintained and a one-time transfer or sale of qualifying held-to-maturity securities. The expedients and exceptions provided by the amendments are permitted to be adopted any time through December 31, 2024, with early adoption permitted, and do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for certain optional expedients elected for certain hedging relationships existing as of December 31, 2022. The Company adopted this standard during the nine months ended September 30, 2023, which did not have a material impact on its consolidated financial statements and related disclosures.

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Revenue Recognition and Accounts Receivable

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Revenue Recognition and Accounts Receivable

Revenue Recognition and Accounts Receivable

Revenue Recognition

The Company generates revenues for services and related products that the Company provides to patients for home medical equipment, related supplies, and other items. The Company’s revenues are recognized in the period in which services and related products are provided to customers and are recorded either at a point in time for the sale of supplies and disposables, over the fixed monthly service period for equipment, or in the month in which eligible members are entitled to receive healthcare services in connection with at-risk capitation arrangements.

Revenues are recognized when control of the promised good or service is transferred to customers, in an amount that reflects the consideration to which the Company expects to receive from patients or under reimbursement arrangements with Medicare, Medicaid and third-party payors, in exchange for those goods and services.

The Company determines the transaction price based on contractually agreed-upon amounts or rates, adjusted for estimates of variable consideration, such as implicit price concessions. The Company utilizes the expected value method to determine the amount of variable consideration that should be included to arrive at the transaction price, using contractual agreements and historical reimbursement experience within each payor type. The Company applies constraint to the transaction price, such that net revenue is recorded only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in the future. If actual amounts of consideration ultimately received differ from the Company’s estimates, the Company adjusts these estimates, which would affect net revenue in the period such adjustments become known.

Sales revenue is recognized upon transfer of control of products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. Revenues for the sale of sleep therapy equipment supplies (including CPAP resupply products), home medical equipment and related supplies (including wheelchairs, hospital beds and infusion pumps), diabetic medical devices and supplies (including continuous glucose monitors ("CGM") and insulin pumps), and other HME products and supplies are recognized when control of the promised good or service is transferred to customers, which is generally upon shipment for direct to consumer medical devices and supplies and upon delivery to the home for home medical equipment.

The Company provides certain equipment to patients which is reimbursed periodically in fixed monthly payments for as long as the patient is using the equipment and medical necessity continues (in certain cases, the fixed monthly payments are capped at a certain amount). The equipment provided to the patient is based upon medical necessity as documented by prescriptions and other documentation received from the patient’s physician. The patient generally does not negotiate or select the manufacturer or model of the equipment prescribed by their physician and delivered by the Company. Once initial delivery of this equipment is made to the patient for initial setup, a monthly billing process is established based on the initial setup service date. The Company recognizes the fixed monthly revenue ratably over the service period as earned, less estimated adjustments, and defers revenue for the portion of the monthly bill that is unearned. No separate revenue is earned from the initial setup process. Included in fixed monthly revenue are unbilled amounts for which the revenue recognition criteria had been met as of period-end but were not yet billed to the payor. The estimate of net unbilled fixed monthly revenue recognized is based on historical trends and estimates of future collectability.

The Company receives a per member per month (“PMPM”) fee under certain at-risk capitation arrangements, which refers to a model in which the Company receives a PMPM fee from the third-party payor, and is responsible for managing a range of healthcare services and associated costs of its members. In at-risk capitation arrangements, the Company is responsible for the cost of contracted healthcare services required by those members in accordance with the terms of each agreement. Capitated revenue contracts with payors are generally multi-year arrangements and have a single monthly stand ready performance obligation to provide all aspects of necessary medical care to members for the contracted period in accordance with the scope of the agreements. The Company recognizes revenue in the month in which eligible members are entitled to receive healthcare services during the contract term. The Company’s revenue recognized under its capitation arrangements is included in the “other” product category in net sales revenue in the table below.

The Company’s billing system contains payor-specific price tables that reflect the fee schedule amounts in effect or contractually agreed upon by various government and commercial insurance payors for each item of equipment or supply provided to a customer. Revenues are recorded based on the applicable fee schedule. The Company has established a

contractual allowance to account for adjustments that result from differences between the payment amount received and the expected realizable amount. If the payment amount received differs from the net realizable amount, an adjustment is recorded to revenues in the period that these payment differences are determined. The Company reports revenues in its consolidated financial statements net of such adjustments.

The Company recognizes revenue in the consolidated statements of operations and contract assets on the consolidated balance sheets only when services have been provided. Since the Company has performed its obligation under the contract, it has unconditional rights to the consideration recorded as contract assets and therefore classifies those billed and unbilled contract assets as accounts receivable.

Fixed monthly payments that the Company receives from customers in advance of providing services represent contract liabilities. Such payments primarily relate to patients who are billed monthly in advance and are recognized over the period as earned.

The Company disaggregates net revenue from contracts with customers by payor type and by core product lines. The Company believes that disaggregation of net revenue into these categories depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The payment terms and conditions within the Company’s revenue-generating contracts vary by payor type and payor source.

The composition of net revenue by payor type for the three and nine months ended September 30, 2023 and 2022 are as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Insurance	$	486,136	$	465,625	$	1,397,748	$	1,322,694
Government	220,351		198,841		618,860		576,829
Patient pay	97,544		92,029		325,335		290,789
Net revenue	$	804,031	$	756,495	$	2,341,943	$	2,190,312

The composition of net revenue by core product lines for the three and nine months ended September 30, 2023 and 2022 are as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net sales revenue:
Sleep	$	227,005	$	198,206	$	656,311	$	585,234
Diabetes	157,328		169,075		464,893		482,693
Supplies to the home	48,349		47,793		143,227		131,539
Respiratory	8,164		9,734		24,284		25,770
HME	27,095		29,463		82,895		89,828
Other	64,184		58,252		174,403		166,068
Total net sales revenue	$	532,125	$	512,523	$	1,546,013	$	1,481,132
Net revenue from fixed monthly equipment reimbursements:
Sleep	$	88,387	$	72,423	$	256,092	$	196,022
Diabetes	2,609		4,211		10,326		12,191
Respiratory	142,919		130,618		423,531		392,063
HME	25,087		25,482		71,402		76,754
Other	12,904		11,238		34,579		32,150
Total net revenue from fixed monthly equipment reimbursements	$	271,906	$	243,972	$	795,930	$	709,180
Total net revenue:
Sleep	$	315,392	$	270,629	$	912,403	$	781,256
Diabetes	159,937		173,286		475,219		494,884
Supplies to the home	48,349		47,793		143,227		131,539
Respiratory	151,083		140,352		447,815		417,833
HME	52,182		54,945		154,297		166,582
Other	77,088		69,490		208,982		198,218
Total net revenue	$	804,031	$	756,495	$	2,341,943	$	2,190,312

Accounts Receivable

Due to the continuing changes in the healthcare industry and third-party reimbursement environment, certain estimates are required to record accounts receivable at their net realizable values. Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available. The complexity of third-party billing arrangements and laws and regulations governing Medicare and Medicaid may result in adjustments to amounts originally recorded.

The Company performs a periodic analysis to review the valuation of accounts receivable and collectability of outstanding balances. Management’s evaluation takes into consideration such factors as historical cash collections experience, business and economic conditions, trends in healthcare coverage, other collection indicators and information about specific receivables. The Company’s evaluation also considers the age and composition of the outstanding amounts in determining their estimated net realizable value.

Receivables are considered past due when not collected by established due dates. Specific patient balances are written off after collection efforts have been followed and the account has been determined to be uncollectible. Revisions in receivable estimates are recognized as an adjustment to net revenue in the period of revision.

Included in accounts receivable are earned but unbilled accounts receivables. Billing delays, ranging from several days to several weeks, can occur due to the Company’s policy of compiling required payor specific documentation prior to billing for its services rendered. As of September 30, 2023 and December 31, 2022, the Company’s unbilled accounts receivable was $44.7 million and $38.6 million, respectively.

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Acquisitions

9 Months Ended

Sep. 30, 2023

Business Combination and Asset Acquisition [Abstract]

Acquisitions

Acquisitions

During the nine months ended September 30, 2023 and 2022, the Company completed certain acquisitions to strengthen its current market share in existing markets. Each of the Company’s acquisitions was accounted for using the acquisition method pursuant to the requirements of FASB ASC Topic 805, Business Combinations, and are included in the Company’s consolidated financial statements since the respective acquisition date. The goodwill generated from these acquisitions is attributable to expected growth and cost synergies and the expected contribution of each acquisition to the Company’s overall strategy. The goodwill recorded during the nine months ended September 30, 2023 is expected to be deductible for tax purposes. The estimated fair values of the net assets of acquired businesses as described below are subject to change resulting from such items as final analysis of valuations and working capital adjustments post-acquisition. As a result, the acquisition accounting for certain acquired businesses could change in subsequent periods resulting in adjustments to goodwill once finalized.

Nine Months Ended September 30, 2023

During the nine months ended September 30, 2023, the Company acquired 100% of the equity interests of three providers of home medical equipment ("HME") and acquired certain assets from two providers of home medical equipment. The following table summarizes the consideration paid at closing for all acquisitions during the nine months ended September 30, 2023 (in thousands):

Cash	$	18,173
Deferred payments	50
Total	$	18,223

The Company allocated the consideration paid to the net assets acquired based on their estimated acquisition date fair values. Based upon management’s evaluation, which is preliminary and subject to completion of working capital and other adjustments, the consideration paid for all acquisitions during the nine months ended September 30, 2023 was allocated as follows during the period (in thousands):

Cash	$	256
Accounts receivable	1,798
Inventory	1,413
Prepaid and other current assets	10
Equipment and other fixed assets	9,008
Operating lease right-of-use assets	5,506
Finance lease right-of-use assets	200
Goodwill	7,297
Accounts payable and accrued expenses	(713)
Other current liabilities	(846)
Operating lease liabilities	(5,506)
Finance lease liabilities	(200)
Net assets acquired	$	18,223

Nine Months Ended September 30, 2022

During the nine months ended September 30, 2022, the Company acquired 100% of the equity interests of two providers of HME and acquired certain assets from five providers of home medical equipment.

The following table summarizes the consideration paid at closing for all acquisitions during the nine months ended September 30, 2022 (in thousands):

Cash	$	16,477
Deferred payments	422
Total	$	16,899

The Company allocated the consideration paid to the net assets acquired based on their estimated acquisition date fair values. Based upon management’s evaluation, which was preliminary and subject to completion of working capital and other adjustments, the consideration paid for all acquisitions during the nine months ended September 30, 2022 was allocated as follows during that period (in thousands):

Cash	$	155
Accounts receivable	2,206
Inventory	686
Prepaid and other current assets	16
Equipment and other fixed assets	4,502
Goodwill	11,788
Identifiable intangible assets	500
Accounts payable and accrued expenses	(2,820)
Contract liabilities	(134)
Net assets acquired	$	16,899

During the nine months ended September 30, 2022, the Company received net cash of $0.2 million relating to working capital and other adjustments associated with businesses that were acquired during 2021, which was recorded as a decrease to goodwill within the respective measurement period.

Net revenue and operating income in the period of acquisition since the respective acquisition dates for the acquisitions described above were immaterial for the three and nine months ended September 30, 2023 and 2022.

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Equipment and Other Fixed Assets

9 Months Ended

Sep. 30, 2023

Property, Plant and Equipment [Abstract]

Equipment and Other Fixed Assets

Equipment and Other Fixed Assets

Equipment and other fixed assets as of September 30, 2023 and December 31, 2022 are as follows (in thousands):

	September 30, 2023		December 31, 2022
Patient medical equipment	$	776,366	$	747,985
Computers and Software	92,208		70,897
Delivery vehicles	43,078		35,326
Other	21,159		16,059
Gross carrying value	932,811		870,267
Less accumulated depreciation	(442,758)		(383,188)
Equipment and other fixed assets, net	$	490,053	$	487,079

For the three months ended September 30, 2023 and 2022, the Company recorded depreciation expense of $90.3 million and $82.4 million, respectively. For the nine months ended September 30, 2023 and 2022, the Company recorded depreciation expense of $263.4 million and $218.9 million, respectively.

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Goodwill and Identifiable Intangible Assets

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Identifiable Intangible Assets

Goodwill and Identifiable Intangible Assets

Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. The change in the carrying amount of goodwill for the nine months ended September 30, 2023 was as follows (in thousands):

	Gross carrying amount
Balance at December 31, 2022	$	3,545,297
Goodwill from acquisitions	7,297
Net increase relating to measurement period adjustments	718
Impairment charge	(511,866)
Balance at September 30, 2023	$	3,041,446

Management is required to perform an assessment of the recoverability of goodwill on an annual basis and upon the identification of a triggering event. Triggering events potentially warranting an interim goodwill impairment assessment include, among other factors, declines in historical or projected revenue, operating results or cash flows, and sustained decreases in the Company’s stock price or market capitalization. While management cannot predict if or when future goodwill impairments may occur, a non-cash goodwill impairment charge could have a material adverse effect on the Company’s operating results, net assets and the Company’s cost of, or access to, capital.

During the quarters ended March 31, 2023 and June 30, 2023, the Company experienced a decline in its market capitalization as a result of a sustained decrease in the Company’s stock price. The Company considered such sustained decreases to represent a triggering event and performed goodwill impairment tests as of March 31, 2023 and June 30, 2023. Based on the results of the tests performed as of those dates, it was concluded that the estimated fair value of the Company’s reporting unit was greater than its carrying value, as such, the Company did not recognize a goodwill impairment charge during the periods ended March 31, 2023 and June 30, 2023. During the three months ended September 30, 2023, the Company experienced a further decline in its market capitalization as a result of a sustained decrease in the Company’s stock price and also revised its financial projections. The Company considered these items to represent a triggering event and performed a goodwill impairment test as of September 30, 2023. Based on the results of the test performed as of that date, 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 three and nine months ended September 30, 2023. If in future periods the Company were to experience a further decline in its market capitalization or expected results for a sustained period of time, the Company may be required to perform an additional goodwill impairment test at an interim or annual period and could be required to recognize a non-cash goodwill impairment charge at that time, which could be material.

Identifiable intangible assets that are separable and have determinable useful lives are valued separately and amortized over the period which reflects the pattern in which the economic benefits of the assets are expected to be

consumed. Identifiable intangible assets consisted of the following at September 30, 2023 and December 31, 2022 (dollars in thousands):

	September 30, 2023
			Weighted-Average Remaining Life (Years)
Tradenames, net of accumulated amortization of $35,111	$	77,689	6.8
Payor contracts, net of accumulated amortization of $26,166	55,834		6.8
Developed technology, net of accumulated amortization of $4,095	2,205		1.8
Identifiable intangible assets, net	$	135,728

	December 31, 2022
			Weighted-Average Remaining Life (Years)
Tradenames, net of accumulated amortization of $25,498	$	87,302	7.5
Payor contracts, net of accumulated amortization of $20,016	61,984		7.6
Contractual rental agreements, net of accumulated amortization of $43,863	10,337		0.8
Developed technology, net of accumulated amortization of $3,150	3,150		2.5
Identifiable intangible assets, net	$	162,773

Amortization expense related to identifiable intangible assets, which is included in depreciation and amortization, excluding patient equipment depreciation, in the accompanying statements of operations was $7.0 million and $27.0 million for the three and nine months ended September 30, 2023, respectively, and was $10.0 million and $30.0 million for the three and nine months ended September 30, 2022, respectively.

Future amortization expense related to identifiable intangible assets is estimated to be as follows (in thousands):

Twelve months ending September 30,
2024	$	22,276
2025	21,828
2026	19,617
2027	18,190
2028	17,936
Thereafter	35,881
Total	$	135,728

The Company did not recognize any impairment charges related to identifiable intangible assets during the nine months ended September 30, 2023 and 2022.

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Fair Value of Assets and Liabilities

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value of Assets and Liabilities

Fair Value of Assets and LiabilitiesFASB ASC Topic 820, Fair Value Measurements and Disclosures ("ASC 820"), creates a single definition of fair value, establishes a framework for measuring fair value in U.S. GAAP and expands disclosures about fair value

measurements. Assets and liabilities adjusted to fair value in the balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Level inputs, as defined by ASC 820, are as follows:

Level input	Input Definition
Level 1	Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
Level 2	Inputs, other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data at the measurement date.
Level 3	Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

The following table presents the valuation of the Company’s financial assets and liabilities as of September 30, 2023 and December 31, 2022 measured at fair value on a recurring basis. The fair value estimates presented herein are based on information available to management as of September 30, 2023 and December 31, 2022. These estimates are not necessarily indicative of the amounts the Company could ultimately realize.

(in thousands)	Level 1		Level 2		Level 3
September 30, 2023
Assets
Interest rate swap agreements-short term	$	—	$	6,340	$	—
Interest rate swap agreements-long term	—		4,147		—
Total assets measured at fair value	$	—	$	10,487	$	—
Liabilities
Acquisition-related contingent consideration-short term	$	—	$	—	$	7,850
Warrant liability	—		—		6,617
Total liabilities measured at fair value	$	—	$	—	$	14,467

(in thousands)	Level 1		Level 2		Level 3
December 31, 2022
Assets
Interest rate swap agreements-short term	$	—	$	5,748	$	—
Interest rate swap agreements-long term	—		3,728		—
Total assets measured at fair value	$	—	$	9,476	$	—
Liabilities
Acquisition-related contingent consideration-short term	$	—	$	—	$	7,500
Warrant liability	—		—		38,503
Total liabilities measured at fair value	$	—	$	—	$	46,003

Interest Rate Swaps

The Company uses interest rate swap agreements to manage interest rate risk by converting a portion of its variable rate borrowings to a fixed rate and recognizes these derivative instruments as either assets or liabilities in the accompanying consolidated balance sheets at fair value. The valuation of these derivative instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair value of the Company’s interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected

variable cash payments receipts. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. To comply with the provisions of FASB ASC Topic 820, Fair Value Measurement, the Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with the Company’s derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and the respective counterparties. The Company has determined that the significance of the impact of the credit valuation adjustments made to its derivative contracts, which determination was based on the fair value of each individual contract, was not significant to the overall valuation. As a result, all of the Company’s derivatives held as of September 30, 2023 and December 31, 2022 were classified as Level 2 of the fair value hierarchy. Refer to Note 7, Derivative Instruments and Hedging Activities, for additional information regarding the Company’s derivative instruments.

Acquisition-Related Contingent Consideration

The Company estimates the fair value of acquisition-related contingent consideration liabilities by applying the income approach using a probability-weighted discounted cash flow model. This fair value measurement is based on significant inputs not observed in the market and thus represents a Level 3 measurement. Level 3 instruments are valued based on unobservable inputs that are supported by little or no market activity and reflect the Company’s own assumptions in measuring fair value. Each period, the Company evaluates the fair value of acquisition-related contingent consideration obligations and records any changes in the fair value of such liabilities in other income in the Company’s consolidated statements of operations. At September 30, 2023 and December 31, 2022, contingent consideration liabilities of $7.9 million and $7.5 million were included in other current liabilities, respectively, in the accompanying consolidated balance sheets. A reconciliation of the Company’s contingent consideration liabilities related to acquisitions for the nine months ended September 30, 2023 and 2022 is as follows (in thousands):

Nine Months Ended September 30, 2023	Beginning Balance		Payments		Change in Fair Value		Ending Balance
Contingent consideration - Level 3 liabilities	$	7,500	$	—	$	350	$	7,850
Nine Months Ended September 30, 2022
Contingent consideration - Level 3 liabilities	$	20,300	$	(6,250)	$	477	$	14,527

Warrant Liability

The warrant liability represents the estimated fair value of the Company’s outstanding private warrants. The fair value of the private warrants was estimated using the Black-Scholes option pricing model. Refer to Note 10, Stockholders' Equity, for additional discussion of the warrant liability and the material assumptions leveraged for the pricing model.

Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis

During the nine months ended September 30, 2023 and 2022, other than the non-cash goodwill impairment charge discussed in Note 5, Goodwill and Identifiable Intangible Assets, there were no fair value measurements on a non-recurring basis for the Company’s non-financial assets.

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Derivative Instruments and Hedging Activities

9 Months Ended

Sep. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

Derivative Instruments and Hedging ActivitiesThe Company records all derivatives on its consolidated balance sheet at fair value. As of September 30, 2023, the Company had outstanding interest rate derivatives with third parties in which the Company pays a fixed interest rate and receives a rate equal to the one-month Secured Overnight Financing Rate ("Term SOFR"). As of December 31, 2022, the Company had outstanding interest rate derivatives with third parties in which the Company paid a fixed interest rate and received a rate equal to the one-month LIBOR. During the nine months ended September 30, 2023, the Company amended its interest rate swap agreements to change the benchmark rate under the agreements from LIBOR to Term SOFR. As discussed

in Note 1(j), General Information - Recently Adopted Accounting Pronouncements, during the nine months ended September 30, 2023, the Company adopted ASU No. 2020-04, Reference Rate Reform ("Topic 848"). As a result of the adoption of this standard, the amendments to the Company's interest rate swap agreements did not have an impact on the accounting for such derivative instruments. The notional amount associated with the Company's interest rate swap agreements that were outstanding as of September 30, 2023 was $250 million and have maturity dates in March 2024 and January 2026. In April 2022, the Company entered into forward-dated interest rate swap agreements with third parties. The purpose of these forward-dated interest rate swap agreements is to ensure that the Company operates within its derivatives policy by maintaining a total notional amount of $250 million under the Company’s outstanding interest rate swap agreements through the maturity date of the Company’s current credit agreement. A portion of these forward-dated interest rate swap agreements became effective in February 2023 and a portion will become effective in March 2024, and mature in January 2026. The Company has designated its swaps as effective cash flow hedges of interest rate risk. Accordingly, changes in the fair value of the interest rate swaps are recorded as a component of accumulated other comprehensive income within stockholders’ equity and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings.

The table below presents the fair value of the Company’s derivatives related to its interest rate swap agreements, which are designated as hedging instruments, as well as their classification in the consolidated balance sheets at September 30, 2023 and December 31, 2022 (in thousands):

	September 30, 2023		December 31, 2022
Balance Sheet Location	Asset
Prepaid and other current assets	$	6,340	$	5,748
Other assets	4,147		3,728
Total	$	10,487	$	9,476

During the three months ended September 30, 2023 and 2022, as a result of the effect of cash flow hedge accounting, the Company recognized a gain, net of tax, of $0.5 million and $8.5 million, respectively, in other comprehensive income. In addition, during the three months ended September 30, 2023 and 2022, $0.4 million and $0.8 million, respectively, was reclassified from other comprehensive income and recognized as a reduction to interest expense, net, in the accompanying consolidated statements of operations. During the nine months ended September 30, 2023 and 2022, as a result of the effect of cash flow hedge accounting, the Company recognized a gain, net of tax, of $1.1 million and $17.5 million, respectively, in other comprehensive income. In addition, during the nine months ended September 30, 2023 and 2022, $1.4 million and $2.2 million, respectively, was reclassified from other comprehensive income and recognized as a reduction to interest expense, net, in the accompanying consolidated statements of operations.

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Accounts Payable and Accrued Expenses

9 Months Ended

Sep. 30, 2023

Accounts Payable and Accrued Liabilities, Current [Abstract]

Accounts Payable and Accrued Expenses

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses as of September 30, 2023 and December 31, 2022 consisted of the following (in thousands):

	September 30, 2023		December 31, 2022
Accounts payable	$	205,098	$	222,505
Employee-related accruals	53,273		41,872
Accrued interest	10,051		28,877
Other	46,030		44,244
Total	$	314,452	$	337,498

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Debt

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Debt

Debt

The following is a summary of long term-debt as of September 30, 2023 and December 31, 2022 (in thousands):

	September 30, 2023		December 31, 2022
Secured term loans	$	740,000	$	765,000
Senior unsecured notes	1,450,000		1,450,000
Unamortized deferred financing fees	(23,197)		(26,733)
	2,166,803		2,188,267
Current portion	(40,000)		(35,000)
Long-term portion	$	2,126,803	$	2,153,267

In January 2021, the Company entered into a credit agreement, as amended, (the "2021 Credit Agreement"). The 2021 Credit Agreement included borrowings of $800 million under a secured term loan (the "2021 Term Loan"), and $450 million in commitments for revolving credit loans (the "2021 Revolver"). The 2021 Revolver has a $55 million letter of credit sublimit. The 2021 Term Loan and the 2021 Revolver both have maturities in January 2026. On March 31, 2023, the Company amended the 2021 Credit Agreement to change the variable interest rate under the agreement to be based on Term SOFR. In connection with the amendment, amounts borrowed under the 2021 Credit Agreement bear interest quarterly at variable rates based upon the sum of (a) Term SOFR (subject to a zero percent floor) equal to Term SOFR (as defined) for the applicable interest period multiplied by the statutory reserve rate, plus (b) an applicable margin (as defined) ranging from 1.50% to 3.25% per annum based on the Consolidated Senior Secured Leverage Ratio (as defined), plus (c) a Term SOFR Adjustment (as defined) of 0.1%. Prior to the March 31, 2023 amendment to the Company's credit agreement, the variable interest rate for amounts borrowed under the 2021 Credit Agreement was based on Adjusted LIBOR. 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 average daily undrawn portion of the 2021 Revolver based on the Consolidated Senior Secured Leverage Ratio.

Under the 2021 Credit Agreement, the Company is subject to a number of restrictive covenants that, among other things, impose operating and financial restrictions on the Company. Financial covenants include a Consolidated Total Leverage Ratio and a Consolidated Interest Coverage Ratio, both as defined in the 2021 Credit Agreement. The 2021 Credit Agreement also contains certain customary events of default, including, among other things, failure to make payments when due thereunder, failure to observe or perform certain covenants, cross-defaults, bankruptcy and insolvency-related events, and non-compliance with healthcare laws. Any borrowing 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 not reinvested, unpermitted debt transactions, and excess cash flow, as defined, if certain leverage tests are not met. There were no changes to these restrictive covenants per the March 2023 amendment. The Company was in compliance with all debt covenants as of September 30, 2023.

Secured Term Loans

The borrowings under the 2021 Term Loan require quarterly principal repayments of $5.0 million beginning June 30, 2021 through March 31, 2023, increasing to $10.0 million beginning June 30, 2023 through December 31, 2025, and the unpaid principal balance is due at maturity in January 2026. At September 30, 2023 and December 31, 2022, there was $740 million and $765 million, respectively, outstanding under the 2021 Term Loan. The interest rate under the 2021 Term Loan was 7.43% at September 30, 2023.

Revolving Credit Facility

During the nine months ended September 30, 2023, the Company borrowed $50.0 million under the 2021 Revolver, and repaid $50.0 million during the period. At September 30, 2023, there were no outstanding borrowings under the 2021 Revolver. During the nine months ended September 30, 2022, the Company had no borrowings under the 2021 Revolver. At

September 30, 2023, based on the financial debt covenants under the 2021 Credit Agreement, the maximum borrowings available pursuant to the 2021 Revolver was $144.3 million.

Senior Unsecured Notes

In August 2021, the Company issued $600.0 million aggregate principal amount of 5.125% senior unsecured notes (the "5.125% Senior Notes"). The 5.125% Senior Notes will mature on March 1, 2030. Interest on the 5.125% Senior Notes is payable on March 1st and September 1st of each year, beginning on March 1, 2022. The 5.125% Senior Notes will be redeemable at the Company’s option, in whole or in part, at any time on or after March 1, 2025, and the redemption price for the 5.125% Senior Notes if redeemed during the 12 months beginning (i) March 1, 2025 is 102.563%, (ii) March 1, 2026 is 101.281%, (iii) March 1, 2027 and thereafter is 100.000% , in each case together with accrued and unpaid interest. The Company may also redeem some or all of the 5.125% Senior Notes before March 1, 2025 at a redemption price of 100% of the principal amount of the 5.125% Senior Notes, plus a “make-whole” premium, together with accrued and unpaid interest. In addition, the Company may redeem up to 40% of the original aggregate principal amount of the 5.125% Senior Notes before March 1, 2025 with the proceeds from certain equity offerings at a redemption price equal to 105.125% of the principal amount of the 5.125% Senior Notes, together with accrued and unpaid interest. Furthermore, the Company may be required to make an offer to purchase the 5.125% Senior Notes upon the sale of certain assets or upon specific kinds of changes of control.

In January 2021, the Company issued $500.0 million aggregate principal amount of 4.625% senior unsecured notes (the "4.625% Senior Notes"). The 4.625% Senior Notes will mature on August 1, 2029. Interest on the 4.625% Senior Notes is payable on February 1st and August 1st of each year, beginning on August 1, 2021. The 4.625% Senior Notes will be redeemable at the Company’s option, in whole or in part, at any time on or after February 1, 2024, and the redemption price for the 4.625% Senior Notes if redeemed during the 12 months beginning (i) February 1, 2024 is 102.313%, (ii) February 1, 2025 is 101.156%, (iii) February 1, 2026 and thereafter is 100.000%, in each case together with accrued and unpaid interest. The Company may also redeem some or all of the 4.625% Senior Notes before February 1, 2024 at a redemption price of 100% of the principal amount of the 4.625% Senior Notes, plus a “make-whole” premium, together with accrued and unpaid interest. In addition, the Company may redeem up to 40% of the original aggregate principal amount of the 4.625% Senior Notes before February 1, 2024 with the proceeds from certain equity offerings at a redemption price equal to 104.625% of the principal amount of the 4.625% Senior Notes, together with accrued and unpaid interest. Furthermore, the Company may be required to make an offer to purchase the 4.625% Senior Notes upon the sale of certain assets or upon specific kinds of changes of control.

In July 2020, the Company issued $350.0 million aggregate principal amount of 6.125% senior unsecured notes (the "6.125% Senior Notes"). The 6.125% Senior Notes will mature on August 1, 2028. Interest on the 6.125% Senior Notes is payable on February 1st and August 1st of each year, beginning on February 1, 2021. The 6.125% Senior Notes will be redeemable at the Company’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. The Company 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, the Company 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, the Company may be required to make an offer to purchase the 6.125% Senior Notes upon the sale of certain assets or upon specific kinds of changes of control.

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Stockholders' Equity

9 Months Ended

Sep. 30, 2023

Equity [Abstract]

Stockholders' Equity

Stockholders' EquityUnder the Company's Third Amended and Restated Certificate of Incorporation, there are 300,000,000 shares of authorized Common Stock and 5,000,000 shares of authorized Preferred Stock. Holders of Common Stock are entitled to one vote for each share. The shares of Preferred Stock shall be issued with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors.

Treasury Stock

In May 2022, the Company’s board of directors authorized a share repurchase program for up to $200.0 million of the Company’s Common Stock through December 31, 2023 (the "Share Repurchase Program"). The timing and actual number of shares to be repurchased will depend upon market conditions and other factors. Shares of the Company’s Common Stock may be purchased from time to time on the open market, through privately negotiated transactions or otherwise. Purchases of the Company’s Common Stock may be started or stopped at any time without prior notice depending on market conditions and other factors. During the nine months ended September 30, 2023 and 2022, the Company purchased 631,953 and 750,835 shares of the Company’s Common Stock for $9.2 million and $14.0 million, respectively, under the Share Repurchase Program, which is reflected in Treasury Stock in the accompanying consolidated statements of stockholders’ equity. As of September 30, 2023, there was $176.8 million remaining that may be used to purchase shares under the Share Repurchase Program.

Warrants

As of September 30, 2023, the Company had 3,871,557 warrants outstanding, which have an expiration date of November 20, 2024. Each warrant is exercisable into one share of Common Stock at a price of $11.50 per share. The exercise price and number of shares of Common Stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend, or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for the issuance of Common Stock at a price below its exercise price. There were no warrants exercised during the nine months ended September 30, 2023. During the nine months ended September 30, 2022, 184,870 warrants were exercised in cashless transactions resulting in the issuance of 87,553 shares of Common Stock.

The Company classifies its warrants as a liability in its consolidated balance sheets because of certain terms included in the corresponding warrant agreement. The estimated fair value of the warrants is recorded as a liability, with such fair value reclassified to stockholders’ equity upon the exercise of such warrants. Prior to exercise, the change in the estimated fair value of such warrants each period is recognized as a non-cash charge or gain in the Company’s consolidated statements of operations.

A reconciliation of the changes in the warrant liability during the nine months ended September 30, 2023 and 2022 was as follows (in thousands):

Estimated fair value of warrant liability at December 31, 2022	$	38,503
Change in estimated fair value of the warrant liability	(31,886)
Estimated fair value of warrant liability at September 30, 2023	$	6,617
Estimated fair value of warrant liability at December 31, 2021	$	57,764
Change in estimated fair value of the warrant liability	(17,145)
Reclassification of warrant liability to equity for exercised warrants	(2,103)
Estimated fair value of warrant liability at September 30, 2022	$	38,516

Equity-based Compensation

In connection with the Company’s 2019 Stock Incentive Plan (the "2019 Plan"), the Company provides equity-based compensation to attract and retain employees while also aligning employees’ interest with the interests of its stockholders. The 2019 Plan permits the grant of various equity-based awards to selected employees and non-employee directors. At September 30, 2023, the 2019 Plan permits the grant of up to 10,000,000 shares of Common Stock, subject to certain adjustments and limitations. At September 30, 2023, 1,166,968 shares of the Company’s Common Stock were available for issuance under the 2019 Plan.

Stock Options

There were no stock options granted during the nine months ended September 30, 2023 and 2022. The following table provides the activity regarding the Company’s outstanding stock options during the nine months ended September 30, 2023 that were granted in connection with the 2019 Plan (in thousands, except per share data):

	Number of Options	Weighted-Average Grant Date Fair Value per Share		Weighted-Average Exercise Price per Share		Weighted-Average Remaining Contractual Term
Outstanding, December 31, 2022	2,219	$	3.75	$	19.36
Activity - none	—
Outstanding, September 30, 2023	2,219	$	3.75	$	19.36	5.3 Years

The following table provides the activity for all outstanding stock options during the nine months ended September 30, 2023 (in thousands, except per share data):

	Number of Options	Weighted-Average Exercise Price per Share		Weighted-Average Remaining Contractual Term
Outstanding, December 31, 2022	4,962	$	12.19
Exercised	(1,542)	$	6.25
Outstanding, September 30, 2023	3,420	$	14.86	5.1 Years

During the nine months ended September 30, 2023, 200,000 stock options were exercised resulting in $0.5 million of cash proceeds received by the Company and the issuance of 200,000 shares of the Company’s Common Stock. During the nine months ended September 30, 2023, 1,341,770 stock options were exercised on a cashless basis resulting in the issuance of 228,466 shares of the Company's Common Stock. During the nine months ended September 30, 2022, 194,002 stock options were exercised resulting in $1.4 million of cash proceeds received by the Company and the issuance of 194,002 shares of the Company’s Common Stock. Also, during the nine months ended September 30, 2022, 315,349 stock options were exercised on a cashless basis resulting in the issuance of 131,741 shares of the Company’s Common Stock.

Restricted Stock

During the nine months ended September 30, 2023, the Company granted 286,002 shares of restricted stock to various employees which vest ratably over the three-year period following the vesting commencement date (which is generally the grant date), subject to the employees’ continuous employment through the applicable vesting date. The grant-date fair value of these awards was $3.4 million. During the nine months ended September 30, 2023, the Company granted 139,190 shares of restricted stock to its non-employee directors, which vest approximately one year following the grant date. The grant-date fair value of these awards was $1.4 million. During the nine months ended September 30, 2023, the Company granted 30,841 shares of restricted stock to its interim CEO, which vest on the two-month anniversary following the grant date. The grant-date fair value of these awards was $0.3 million.

During the nine months ended September 30, 2023, the Company granted 327,000 restricted stock units to senior executive management of the Company. These awards vest ratably over the three-year period following the vesting commencement date (February 1, 2023), subject to the employees’ continuous employment through the applicable vesting date. The grant-date fair value of these awards was $4.9 million. In addition, during the nine months ended September 30, 2023, the Company granted 327,000 shares of performance-vested restricted stock units ("Performance RSUs") to senior executive management of the Company which will vest on the third anniversary of the vesting commencement date (February 1, 2023) subject to the achievement of specified goals relative to the Company’s three-year relative total shareholder return

("Relative TSR") performance versus the Company’s defined peer group (the "Peer Group"), which is considered a market condition, and is also subject to the employees’ continuous employment through the vesting date. The grant-date fair value of these awards, using a Monte-Carlo simulation analysis, was $6.6 million, which will be recognized as equity-based compensation expense from the date of grant through the third anniversary of the vesting commencement date, regardless of whether or the extent to which the awards ultimately vest. The payout of shares on the vesting date are as follows based on the Company’s Relative TSR versus the Peer Group (for performance between the stated goals noted below, straight-line interpolation will be applied):

•Less than 25th Percentile – No payout

•Greater than or equal to 25th Percentile – 50% of Performance RSUs

•Equal to 50th Percentile – 100% of Performance RSUs

•Greater than or equal to 75th Percentile – 200% of Performance RSUs

Activity related to the Company’s non-vested restricted stock grants for the nine months ended September 30, 2023 is presented below (in thousands, except per share data):

	Number of Shares of Restricted Stock	Weighted-Average Grant Date Fair Value per Share
Non-vested balance, December 31, 2022	2,261	$	23.90
Granted	1,110	$	14.96
Vested	(808)	$	21.31
Forfeited	(424)	$	26.04
Non-vested balance, September 30, 2023	2,139	$	19.68

Equity-Based Compensation Expense

The Company recognized equity-based compensation expense of $4.5 million during the three months ended September 30, 2023, of which $3.5 million and $1.0 million is included in general and administrative expenses and cost of net revenue, respectively, in the accompanying consolidated statements of operations. The Company recognized equity-based compensation expense of $5.6 million during the three months ended September 30, 2022, of which $4.0 million and $1.6 million is included in general and administrative expenses and cost of net revenue, respectively, in the accompanying consolidated statements of operations. The Company recognized equity-based compensation expense of $17.3 million during the nine months ended September 30, 2023, of which $15.8 million and $1.5 million is included in general and administrative expenses and cost of net revenue, respectively, in the accompanying consolidated statements of operations. The Company recognized equity-based compensation expense of $16.8 million during the nine months ended September 30, 2022, of which $11.5 million and $5.3 million is included in general and administrative expenses and cost of net revenue, respectively, in the accompanying consolidated statements of operations. At September 30, 2023, there was $25.2 million of unrecognized compensation expense related to equity-based compensation awards, which is expected to be recognized over a weighted-average period of 1.8 years.

As previously disclosed, by mutual agreement with the Company, effective June 30, 2023, Stephen Griggs resigned as Chief Executive Officer and did not stand for reelection as a member of the Company's board of directors at the Company's annual shareholder meeting. In connection with Mr. Griggs’ separation, the Company accelerated the vesting of 78,130 unvested stock options and 143,739 unvested shares of restricted stock which were subject to time-based vesting conditions only. In addition, the Company modified the vesting conditions for 159,555 shares of Performance RSU's to allow for vesting based on the achievement of the applicable Relative TSR, but no longer requires continuous employment through the applicable vesting date. In connection with the accelerated vesting and modification, the Company recognized $4.0 million of equity-based compensation expense, which is included in general and administrative expenses in the accompanying consolidated statements of operations for the nine months ended September 30, 2023.

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Earnings Per Share

9 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Earnings Per Share ("EPS") is computed by dividing net (loss) income by the weighted average number of common shares outstanding during the period on a basic and diluted basis. The Company computes diluted net (loss) income per share using the more dilutive of the treasury stock method and the two-class method after giving effect to all potential dilutive Common Stock.

The Company’s potentially dilutive securities include potential common shares related to outstanding warrants, unvested restricted stock, outstanding stock options and outstanding preferred stock. Refer to Note 10, Stockholders' Equity, for additional discussion of these potential dilutive securities.

Diluted net (loss) income per share considers the impact of potentially dilutive securities except when the potential common shares have an antidilutive effect. The Company’s outstanding preferred stock are considered participating securities, thus requiring the two-class method of computing diluted net (loss) income per share. Computation of diluted net (loss) income per share under the two-class method excludes from the numerator any dividends paid or owed on participating securities and any undistributed earnings considered to be attributable to participating securities. The related participating securities are similarly excluded from the denominator.

Computations of basic and diluted net income per share were as follows (in thousands, except per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Numerator
Net (loss) income attributable to AdaptHealth Corp.	$	(454,076)	$	16,122	$	(424,392)	$	71,904
Less: Earnings allocated to participating securities (1)	—		1,360		—		6,079
Net (loss) income for basic EPS	$	(454,076)	$	14,762	$	(424,392)	$	65,825
Change in fair value of warrant liability (2)	(9,160)		—		(31,886)		(17,145)
Net (loss) income for diluted EPS	$	(463,236)	$	14,762	$	(456,278)	$	48,680
Denominator (1) (2)
Basic weighted-average common shares outstanding	134,825		134,227		134,549		134,186
Add: Warrants (2)	157		—		653		1,436
Add: Stock options	—		2,903		—		2,669
Add: Unvested restricted stock	—		453		—		308
Diluted weighted-average common shares outstanding	134,982		137,583		135,202		138,599
Basic net (loss) income per share	$	(3.37)	$	0.11	$	(3.15)	$	0.49
Diluted net (loss) income per share	$	(3.43)	$	0.11	$	(3.37)	$	0.35

(1)The Company’s preferred stock are considered participating securities. Computation of EPS under the two-class method excludes from the numerator any dividends paid or owed on participating securities and any undistributed earnings considered to be attributable to participating securities. The related participating securities are similarly excluded from the denominator. There was no amount allocated to the participating securities during the three and nine months ended September 30, 2023 due to the net loss reported in those periods.

(2)For the nine months ended September 30, 2023 and 2022, and the three months ended September 30, 2023, the impact to earnings from the change in fair value of the Company’s warrant liability is excluded from the numerator, and the corresponding security is included in the denominator, for purposes of computing diluted net (loss) income per share. This adjustment is included as the effect of the numerator and denominator adjustment for this derivative

instrument is dilutive as a result of the non-cash gains recorded for the change in fair value of this instrument during the periods. For the three months ended September 30, 2022, this adjustment is excluded from the computation of diluted net (loss) income per share under the treasury stock method since its inclusion would have been anti-dilutive.

The table below provides the weighted-average number of potential common shares associated with outstanding securities not included in the Company’s computation of diluted net (loss) income per share for the three and nine months ended September 30, 2023 and 2022 because to do so would be antidilutive (in thousands):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Preferred Stock	12,406	12,406	12,406	12,406
Warrants	—	1,706	—	—
Stock options	3,420	468	3,420	468
Unvested restricted stock	2,057	108	2,057	221
Total	17,883	14,688	17,883	13,095

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Leases

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

Leases

Leases

The Company leases its operating locations and office facilities under noncancelable lease agreements which expire at various dates through March 2033. Some of these lease agreements include an option to renew at the end of the term. The Company also leases certain office facilities on a month-to-month basis. In some instances, the Company is also required to pay its pro rata share of real estate taxes and utility costs in connection with the premises. Some of the leases contain fixed annual increases of minimum rent.

The Company’s leases frequently allow for lease payments that could vary based on factors such as inflation and the incurrence of contractual charges such as those for common area maintenance or utilities.

Renewal and/or early termination options are common in the lease arrangements, particularly with respect to real estate leases. The Company’s right-of-use assets and lease liabilities generally include periods covered by renewal options and exclude periods covered by early termination options (based on the conclusion that it is reasonably certain that the Company will exercise such renewal options and not exercise such early termination options).

The Company is also party to certain sublease arrangements related to real estate leases, where the Company acts as the lessee and intermediate lessor.

The Company leases certain of its vehicles through finance leases. The finance lease obligations represent the present value of minimum lease payments under the respective agreement, payable monthly at various interest rates.

The following table presents information about the Company’s right-of-use assets and lease liabilities as of September 30, 2023 and December 31, 2022 (in thousands):

	Consolidated Balance Sheets Line Item	September 30, 2023		December 31, 2022
Right-of-use (ROU) assets:
Operating lease ROU assets	Operating lease right-of-use assets	$	110,007	$	129,506
Finance lease ROU assets	Finance lease right-of-use assets	21,528		5,423
Finance lease ROU assets	Equipment and other fixed assets, net	—		103
Total ROU assets		$	131,535	$	135,032
Operating lease liabilities:
Current operating lease liabilities	Current portion of operating lease obligations	$	28,736	$	30,001
Noncurrent operating lease liabilities	Operating lease obligations, less current portion	85,700		104,394
Total operating lease liabilities		$	114,436	$	134,395
Finance lease liabilities:
Current finance lease liabilities	Current portion of finance lease obligations	$	5,947	$	2,211
Noncurrent finance lease liabilities	Finance lease obligations, less current portion	15,581		3,950
Total finance lease liabilities		$	21,528	$	6,161

The following table presents information about lease costs and expenses and sublease income for the three and nine months ended September 30, 2023 and 2022 (in thousands). The amounts below are included in cost of net revenue in the accompanying consolidated statements of operations for the periods presented.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Operating lease costs	$	11,114	$	9,248	$	32,186	$	28,547
Finance lease costs:
Amortization of ROU assets	$	1,739	$	640	$	4,746	$	7,266
Other lease costs and income:
Variable leases costs (1)	$	5,373	$	3,728	$	15,932	$	12,680
Sublease income	$	358	$	336	$	1,145	$	1,019

(1)Amounts represent variable costs incurred that were not included in the initial measurement of the lease liability such as common area maintenance and utilities costs associated with leased real estate.

The following table provides the weighted average remaining lease terms and weighted average discount rates for the Company’s leases as of September 30, 2023 and December 31, 2022:

	September 30, 2023		December 31, 2022
Weighted average remaining lease term, weighted based on lease liability balances:
Operating leases	5.7 years		6.2 years
Finance leases	3.6 years		3.7 years
Weighted average discount rate, weighted based on remaining balance of lease payments:
Operating leases	4.2	%	3.9	%

The following table provides the undiscounted amount of future cash flows related to the Company’s operating and finance leases, as well as a reconciliation of such undiscounted cash flows to the amounts included in the Company’s lease liabilities as of September 30, 2023 (in thousands):

	Operating Leases		Finance Leases
2023 (remaining three months)	$	8,733	$	1,803
2024	31,113		6,938
2025	25,955		6,505
2026	17,959		5,698
2027	12,198		2,008
Thereafter	33,836		925
Total future undiscounted lease payments	$	129,794	$	23,877
Less: amount representing interest	(15,358)		(2,349)
Present value of future lease payments (lease liability)	$	114,436	$	21,528

The following table provides certain cash flow and supplemental non-cash information related to the Company’s lease liabilities for the nine months ended September 30, 2023 and 2022, respectively (in thousands):

	Nine Months Ended September 30,
Cash paid for amounts included in the measurement of lease liabilities:	2023		2022
Operating cash payments for operating leases	$	32,045	$	28,416
Financing cash payments for finance leases	$	4,558	$	14,219
Lease liabilities arising from obtaining right-of-use assets:
Operating leases	$	8,179	$	5,411
Finance leases	$	19,726	$	1,335

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Income Taxes

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company is subject to U.S. federal, state, and local income taxes. For the three months ended September 30, 2023 and 2022, the Company recorded an income tax benefit of $34.6 million and income tax expense of $5.6 million, respectively. For the nine months ended September 30, 2023 and 2022, the Company recorded an income tax benefit of $30.9 million and income tax expense of $20.0 million, respectively. For the three and nine months ended September 30, 2023, the Company recognized a $39.9 million discrete income tax benefit, and corresponding increase to net deferred tax assets, related to a non-cash goodwill impairment charge of $511.9 million. Refer to Note 5, Goodwill and Identifiable Intangible Assets, for additional details.

As of September 30, 2023 and December 31, 2022, the Company had an unrecognized tax benefit of $6.6 million.

Tax Receivable Agreement

AdaptHealth Corp. is party to a Tax Receivable Agreement ("TRA") with certain current and former members of AdaptHealth Holdings LLC, a Delaware limited liability company ("AdaptHealth Holdings"). The TRA provides for the payment by AdaptHealth Corp. of 85% of the tax savings, if any, that AdaptHealth Corp. realizes (or is deemed to realize in certain circumstances) as a result of (i) certain increases in tax basis resulting from two exchanges of common units representing limited liability company interests in AdaptHealth Holdings and shares of Class B Common Stock, par value $0.0001 per share (which, as of July 28, 2021, no longer exists); (ii) certain tax attributes of the corresponding sellers existing prior to an exchange; (iii) imputed interest deemed to be paid by AdaptHealth Corp. as a result of payments it makes under the TRA; and (iv) certain increases in tax basis resulting from payments AdaptHealth Corp. makes under the TRA.

During the nine months ended September 30, 2022, the Company recognized an expense of $4.5 million related to changes in the estimated liability related to the TRA as a result of settling the current portion of contingent consideration common shares during that period, which is included in Other loss, net in the accompanying consolidated statement of operations.

At September 30, 2023, the Company's liability relating to the TRA was $294.2 million, of which $2.3 million and $291.9 million is included in other current liabilities and other long-term liabilities, respectively, in the accompanying consolidated balance sheets. At December 31, 2022, the Company's liability relating to the TRA was $297.4 million, of which $3.3 million and $294.1 million is included in other current liabilities and other long-term liabilities, respectively, in the accompanying consolidated balance sheets.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business 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. 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 and 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 be affected by limited information. Accordingly, 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 are inherently uncertain, and material adverse outcomes are possible.

On July 25, 2017, AdaptHealth Holdings was served with a subpoena by the U.S. Attorney’s Office for the United States District Court for the Eastern District of Pennsylvania (“EDPA”) pursuant to 18 U.S.C. §3486 to produce certain audit records and internal communications regarding ventilator billing. The investigation focused on billing practices regarding one payor that contracted for bundled payments for certain ventilators. AdaptHealth Holdings has cooperated with investigators and, through agreement with the EDPA, has submitted all information requested in the Company’s possession. An independent third party was retained by AdaptHealth Holdings that identified overpayments and underpayments for ventilator billings related to the payor, and a remittance was sent to reconcile that account. On October 3, 2019, the Company received a follow-up civil investigative demand from the EDPA regarding a document previously produced to the EDPA and patients included in the review by the independent third party. The Company has responded to the EDPA and supplemented its production as requested with any relevant documents in the Company’s possession. During subsequent communications, the EDPA indicated to the Company that the investigation remained ongoing. The EDPA also requested additional information regarding certain patient services and claims refunds processed by the Company in 2017. The Company produced this information in coordination with the EDPA. The EDPA also raised questions regarding other aspects of ventilator billing. On April 21, 2023, the Company entered into a settlement agreement with the EDPA resolving all allegations and claims related to the investigation without a determination of liability on the part of the Company. In connection with the settlement, the Company made a payment of $5.3 million, which was fully accrued as of December 31, 2022, and was not required to enter into any post-settlement agreements related to the settlement.

In March 2019, prior to its acquisition by the Company, AeroCare Holdings, Inc. ("AeroCare") was served with a civil investigative demand (CID) issued by the United States Attorney for the Western District of Kentucky ("WDKY"). The CID seeks to investigate allegations that AeroCare improperly billed, or caused others to improperly bill, for oxygen tank contents that were not delivered to beneficiaries. The WDKY has requested documents related to such oxygen tank content billing as well as other categories of information. AeroCare has cooperated with the WDKY and has produced documents and provided explanations of its billing practices. In September 2020, the WDKY indicated the investigation includes alleged violations of the federal False Claims Act and as well as alleged violations of state Medicaid false claims acts in ten states. AeroCare has cooperated fully with the investigation and has indicated to the WDKY that concerns raised do not accurately identify Medicare coverage criteria and that state Medicaid coverage requirements generally do not provide for separate reimbursement for portable gaseous oxygen contents in the circumstances at issue. On June 23, 2022, the complaint filed in

connection with this investigation was dismissed by the United States District Court in the Western District of Kentucky with the consent of the WDKY.

On July 29, 2021, Robert Charles Faille Jr., a purported shareholder of the Company, filed a purported class action complaint against the Company and certain of its current and former officers in the United States District Court for the Eastern District of Pennsylvania (the “Complaint”). The Complaint purports to be asserted on behalf of a class of persons who purchased the Company’s stock between November 11, 2019 and July 16, 2021. The Complaint generally alleges that the Company and certain of its current and former officers violated federal securities laws by making allegedly false and misleading statements and/or failing to disclose material information regarding the Company’s organic growth trajectory. The Complaint seeks unspecified damages. On October 14, 2021, the Delaware County Employees Retirement System and the Bucks County Employees Retirement System were named Lead Plaintiffs. Pursuant to the scheduling order, Lead Plaintiffs filed a consolidated complaint on November 22, 2021 (the “Consolidated Complaint”), which asserts substantially the same claim, but adds a number of current and former directors of the Company as additional defendants and a new theory of recovery based on the Company’s alleged failure to disclose information concerning the Company’s former Co-CEO’s alleged tax fraud arising from certain past private activity (the “Consolidated Class Action”). On January 20, 2022, the defendants filed a motion to dismiss the Consolidated Complaint. Lead Plaintiffs’ opposition to defendants’ motion was filed on March 21, 2022, and defendants’ reply was filed April 15, 2022. On June 9, 2022, the court issued an opinion and order denying the defendants’ motion to dismiss the Consolidated Complaint.

On July 15, 2022, the court entered a scheduling order providing for, inter alia, a schedule for completing class certification discovery, as well as setting a briefing schedule for motions for class certification. Pursuant to the scheduling order, Lead Plaintiffs filed their motion for class certification on July 28, 2022. On December 12, 2022, the court entered an amended scheduling order with respect to class certification discovery and remaining briefing on Lead Plaintiffs’ motion for class certification. Pursuant to the amended scheduling order, the defendants filed their opposition to Lead Plaintiffs’ motion for class certification on March 30, 2023, and Lead Plaintiffs filed their reply on May 22, 2023.

On June 7, 2023, the court entered an order staying the Consolidated Class Action pending the outcome of a private mediation between the parties.

The Company intends to vigorously defend against the allegations contained in the Consolidated Complaint, but there can be no assurance that the defense will be successful. The Company is currently in a dispute with its directors and officers liability insurers concerning coverage related to the Complaint, which is proceeding in Delaware Superior Court.

On December 6, 2021, a putative shareholder of the Company, Carol Hessler, filed a shareholder derivative complaint against certain current and former directors and officers of the Company in the United States District Court for the Eastern District of Pennsylvania (the “Derivative Complaint”). The Derivative Complaint generally alleges that the defendants breached their fiduciary duties owed to the Company by allegedly causing or allowing misrepresentations and/or omissions regarding the Company’s organic growth and the Company’s former Co-CEO’s alleged criminal activity, failing to maintain an adequate system of oversight, disclosure controls and procedures, and internal controls over financial reporting and due diligence into the Company’s management team, and engaging in insider trading. The Derivative Complaint also alleges claims for waste of corporate assets and unjust enrichment. Finally, the Derivative Complaint alleges that certain of the individual defendants violated Section 14(a) of the Securities Exchange Act by allegedly negligently issuing, causing to be issued, and participating in the issuance of materially misleading statements to stockholders in the Company’s Proxy Statements on Schedule DEF 14A in connection with a Special Meeting of Stockholders, held on March 3, 2021, and the 2021 Annual Meeting of Stockholders, held on July 27, 2021. The Derivative Complaint seeks, among other things, an award of money damages.

On March 4, 2022, the parties stipulated to stay the Hessler action pending final resolution of the Consolidated Class Action. On March 7, 2022, the court so-ordered the parties’ stipulation.

The Company intends to vigorously defend against the allegations contained in the Derivative Complaint, but there can be no assurance that the defense will be successful.

On May 2, 2022, the U.S. Attorney’s Office for the Southern District of New York issued a civil investigative demand to a subsidiary of the Company, pursuant to the False Claims Act, 31 U.S.C. § 3733 ("FCA") surrounding whether the subsidiary submitted false claims in violation of the FCA related to its billing of, and reimbursements from, federal health

care programs for ventilators provided to patients from January 1, 2015 to the present. The Company is fully cooperating with the investigation. Given the investigation is in the early stages, it is not possible to determine whether it will have a material adverse effect on the Company.

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 for a Company follow-on offering conducted in January 2021 in the United States District Court for the Eastern District of Pennsylvania (the “Allegheny County Complaint”). The Allegheny County Complaint purports to be asserted on behalf of a class of persons who purchased the Company’s stock between August 4, 2020 and February 27, 2023. The Allegheny County Complaint generally alleges that the defendants 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 segment. The Allegheny County Complaint seeks unspecified damages.

The Company intends to vigorously defend against the allegations contained in the Allegheny County Complaint, but there can be no assurance that the defense will be successful.

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Related Party Transactions

9 Months Ended

Sep. 30, 2023

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

The Company and one of its executive officers and shareholder own an equity interest in a vendor of the Company that provides automated order intake software. The individual’s equity ownership is less than 1%. The expense related to this vendor was $3.1 million and $1.8 million for the three months ended September 30, 2023 and 2022, respectively, and $8.0 million and $4.9 million for the nine months ended September 30, 2023 and 2022, respectively. The Company accounts for this investment under the cost method of accounting based on its level of equity ownership. As of September 30, 2023 and December 31, 2022, the Company had an immaterial outstanding accounts payable balance to this vendor.

A director of the Company serves on the board of directors of a third-party payor that does business with the Company in the normal course of providing services to patients. Net revenue from this third-party payor was less than 0.8% of the Company’s consolidated net revenue during the three and nine months ended September 30, 2023 and 2022. As of September 30, 2023 and December 31, 2022, the Company had an immaterial outstanding accounts receivable balance from this third-party payor.

A director of the Company is an employee of a beneficial owner of more than 5% of the Company’s Common Stock as of September 30, 2023. This beneficial owner is also a minority shareholder of a vendor that provides medical equipment and supplies to the Company in the normal course of business. Purchases from this vendor were $3.5 million and $20.3 million for the three months ended September 30, 2023 and 2022, respectively, and $24.1 million and $49.8 million, for the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023 and December 31, 2022, the Company had an immaterial outstanding accounts payable balance to this vendor.

A former regional manager of the Company is a shareholder of a business which provides contract labor to the Company. Payments to this service provider were $5.4 million and $5.7 million for the three months ended September 30, 2023 and 2022, respectively, and $16.6 million and $16.2 million for the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023 and December 31, 2022, the Company had $0.2 million and $2.2 million, respectively, in outstanding accounts payable to this service provider. The regional manager left the Company effective March 31, 2023 via a separation agreement which provides severance and separation benefits, including a pro rata bonus. Also, the Company and the former employee have entered into a short-term consulting agreement whereby the former employee's services will be available to the Company through March 2024.

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Subsequent Events	9 Months Ended
	Sep. 30, 2023
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsSubsequent to September 30, 2023, the Company purchased 2,464,507 shares of the Company’s Common Stock for $19.4 million under the Share Repurchase Program.

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Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Pay vs Performance Disclosure
Net (loss) income attributable to AdaptHealth Corp.	$ (454,076)	$ 16,122	$ (424,392)	$ 71,904

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Insider Trading Arrangements	3 Months Ended
	Sep. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

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General Information (Policies)

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of PresentationThe interim consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). In the opinion of management, the interim consolidated financial statements include all necessary adjustments for a fair presentation of the financial position and results of operations for the periods presented.

Basis of Consolidation

Basis of ConsolidationThe accompanying interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Concentration of Credit Risk

Concentration of Credit RiskFinancial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash.

Accounting Estimates

Accounting EstimatesThe preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and reported amounts of revenues and expenses during the reporting period. Management bases these estimates and assumptions upon historical experience, existing and known circumstances, authoritative accounting pronouncements and other factors that management believes to be reasonable. Significant areas requiring the use of management estimates relate to revenue recognition and the valuation of accounts receivable (implicit price concession), income taxes and the tax receivable agreement, equity-based compensation, warrant liability, long-lived assets, including goodwill and identifiable intangible assets, and contingencies. Actual results could differ from those estimates.

Valuation of Goodwill

Valuation of GoodwillThe Company has a significant amount of goodwill on its balance sheet that resulted from the business acquisitions the Company has made. Goodwill is not amortized, rather, it is assessed for impairment annually and upon the occurrence of a triggering event or change in circumstances indicating a possible impairment. Such triggering events potentially warranting an annual or interim goodwill impairment assessment include, among other factors, declines in historical or projected revenue, operating income or cash flows, and sustained decreases in the Company’s stock price or market capitalization. Such changes in circumstance can include, among others, changes in the legal environment, reimbursement environment, operating performance, and/or future prospects. The Company performs its annual impairment assessment of goodwill during the fourth quarter of each year. The impairment assessment can be performed on either a quantitative or qualitative basis. The Company first assesses qualitative factors to determine whether it is necessary to perform a quantitative goodwill impairment analysis. If determined necessary, the Company applies the quantitative impairment test to identify and measure the amount of impairment, if any. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors, such as estimates of a reporting unit's fair value and judgment about impairment triggering events. As a result, there can be no assurance that the estimates and assumptions made for purposes of the annual or interim goodwill impairment test will prove to be accurate predictions of the future.

Long-Lived Assets

Long-Lived Assets

The Company’s long-lived assets, such as equipment and other fixed assets, operating lease right-of-use assets, finance lease right-of-use assets and definite-lived identifiable intangible assets, are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Definite-lived identifiable intangible assets consist of tradenames, payor contracts, contractual rental agreements and developed technology. These assets are amortized using the straight-line method over their estimated useful lives, which reflects the pattern in which the economic benefits of the assets are expected to be consumed. In addition to consideration of impairment upon the events or changes in circumstances described above, management regularly evaluates the remaining useful lives of its long-lived assets. The following table summarizes the useful lives of the Company’s identifiable intangible assets:

Tradenames	5 to 10 years
Payor contracts	10 years
Contractual rental agreements	2 years
Developed technology	5 years

Equity-based Compensation

Equity-based CompensationThe Company accounts for its equity-based compensation in accordance with FASB ASC Topic 718, Compensation Stock Compensation, which establishes accounting for share-based awards exchanged for employee services and requires companies to expense the estimated fair value of these awards over the requisite employee service period. Equity-based compensation expense related to these grants is included within general and administrative expenses and cost of net revenue in the accompanying consolidated statements of operations. The Company measures and recognizes equity-based compensation expense for such awards based on their estimated fair values on the date of grant. For share-based awards with service only or service and performance conditions, the value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service period in the Company’s consolidated financial statements. For share-based awards with only a service condition, equity-based compensation expense is recognized on a straight-line basis over the requisite service period. For awards with performance conditions, equity-based compensation expense is recognized straight-line on a tranche-by-tranche basis over the employees’ requisite service period subject to management’s estimation of the probability of vesting of such awards. If management determines that the performance conditions are no longer probable of achievement, the Company will reverse the previously recognized equity-based compensation expense in the period of determination. For awards with market conditions, the grant-date fair value is estimated using a monte-carlo simulation analysis, which is recognized straight-line on a tranche-by-tranche basis over the employees’ requisite service period regardless of whether or the extent to which the awards ultimately vest. Refer to Note 10, Stockholders’ Equity, for additional information regarding the Company’s equity-based compensation expense.

Business Segment

Business SegmentOperating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”) for the purposes of allocating resources and evaluating financial performance. The Company’s CODM is its Interim Chief Executive Officer, who reviews financial information on a consolidated level for purposes of allocating resources and evaluating financial performance, and as such, the Company’s operations constitute one operating segment and one reportable segment.

Accounting for Leases

Accounting for Leases

The Company accounts for its leases in accordance with FASB Accounting Standards Codification Topic 842, Leases (ASC 842). ASC 842 requires the Company to recognize a lease liability, which represents the discounted obligation to make future minimum lease payments, and a corresponding right-of-use ("ROU") asset on its consolidated balance sheet for most leases, and disclose key information about leasing arrangements. ASC 842 applies to a number of arrangements to which the Company is a party.

Whenever the Company enters into a new arrangement, it must determine, at the inception date, whether the arrangement is or contains a lease. This determination generally depends on whether the arrangement conveys to the Company the right to control the use of an explicitly or implicitly identified asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and obtain substantially all the economic benefits from the use of the underlying asset.

If a lease exists, the Company must then determine the separate lease and non-lease components of the arrangement. Each right to use an underlying asset conveyed by a lease arrangement should generally be considered a separate lease component if it both: (i) can benefit the Company without depending on other resources not readily available to the Company and (ii) does not significantly affect and is not significantly affected by other rights of use conveyed by the lease. Aspects of a lease arrangement that transfer other goods or services to the Company but do not meet the definition of lease components are considered non-lease components. The consideration owed by the Company pursuant to a lease arrangement is generally allocated to each lease and non-lease component for accounting purposes. However, the Company has elected, for all of its leases, to not separate lease and non-lease components. Each lease component is accounted for separately from other lease components, but together with the associated non-lease components.

For each lease, the Company must then determine the lease term, the present value of lease payments and the classification of the lease as either an operating or finance lease.

The lease term is the period of the lease not cancellable by the Company, together with periods covered by: (i) renewal options the Company is reasonably certain to exercise, (ii) termination options the Company is reasonably certain not to exercise, and (iii) renewal or termination options that are controlled by the lessor.

The present value of lease payments is calculated based on:

•Lease payments – lease payments include fixed and certain variable payments, less lease incentives, together with amounts probable of being owed by the Company under residual value guarantees and, if reasonably certain of being paid, the cost of certain renewal options and early termination penalties set forth in the lease arrangement. Lease payments exclude consideration that is not related to the transfer of goods and services of the Company.

•Discount rate – the discount rate must be determined based on information available to the Company upon the commencement of the lease. Lessees are required to use the rate implicit in the lease whenever such rate is readily available; however, as the implicit rate in the Company’s leases is generally not readily determinable, the Company generally uses the hypothetical incremental borrowing rate it would have to pay to borrow an amount equal to the lease payments, on a collateralized basis, over a timeframe similar to the lease term.

In making the determination of whether a lease is an operating lease or a finance lease, the Company considers the lease term in relation to the economic life of the leased asset, the present value of lease payments in relation to the fair value of the leased asset and certain other factors, including the lessee’s and lessor’s rights, obligations, and economic incentives over the term of the lease.

Generally, upon the commencement of a lease, the Company will record a lease liability and a ROU asset. However, the Company has elected, for all underlying leases with initial terms of twelve months or less (known as short-term leases), to not recognize a lease liability or ROU asset. Lease liabilities are initially recorded at lease commencement as the present value of future lease payments. ROU assets are initially recorded at lease commencement as the initial amount of the lease liability, together with the following, if applicable: (i) initial direct costs incurred by the lessee and (ii) lease payments made to the lessor net of lease incentives received, prior to lease commencement.

Over the lease term, the Company generally increases its lease liabilities using the effective interest method and decreases its lease liabilities for lease payments made. For finance leases, amortization and interest expense are recognized separately in the consolidated statements of operations, with amortization expense generally recorded on a straight-line basis over the lease term and interest expense recorded using the effective interest method. For operating leases, a single lease cost is generally recognized in the consolidated statements of operations on a straight-line basis over the lease term unless an impairment has been recorded with respect to a leased asset. Lease costs for short-term leases not recognized in the consolidated balance sheets are recognized in the consolidated statements of operations on a straight-line basis over the lease term. Variable lease costs not initially included in the lease liability and ROU asset impairment charges are expensed as incurred. ROU assets are assessed for impairment, similar to other long-lived assets. Refer to Note 12, Leases, for additional information.

Recent Adopted Accounting Pronouncements

Recently Adopted Accounting PronouncementsIn March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform ("Topic 848"), which provides optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. Specifically, the guidance permits an entity, when certain criteria are met, to consider amendments to contracts made to comply with reference rate reform to meet the definition of a modification under U.S. GAAP. It further allows hedge accounting to be maintained and a one-time transfer or sale of qualifying held-to-maturity securities. The expedients and exceptions provided by the amendments are permitted to be adopted any time through December 31, 2024, with early adoption permitted, and do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for certain optional expedients elected for certain hedging relationships existing as of December 31, 2022. The Company adopted this standard during the nine months ended September 30, 2023, which did not have a material impact on its consolidated financial statements and related disclosures.

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General Information (Tables)

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of useful lives of acquired intangible assets

The following table summarizes the useful lives of the Company’s identifiable intangible assets:

Tradenames	5 to 10 years
Payor contracts	10 years
Contractual rental agreements	2 years
Developed technology	5 years

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Revenue Recognition and Accounts Receivable (Tables)

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Schedule of composition of net revenues by payor type and core service lines

The composition of net revenue by payor type for the three and nine months ended September 30, 2023 and 2022 are as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Insurance	$	486,136	$	465,625	$	1,397,748	$	1,322,694
Government	220,351		198,841		618,860		576,829
Patient pay	97,544		92,029		325,335		290,789
Net revenue	$	804,031	$	756,495	$	2,341,943	$	2,190,312

The composition of net revenue by core product lines for the three and nine months ended September 30, 2023 and 2022 are as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net sales revenue:
Sleep	$	227,005	$	198,206	$	656,311	$	585,234
Diabetes	157,328		169,075		464,893		482,693
Supplies to the home	48,349		47,793		143,227		131,539
Respiratory	8,164		9,734		24,284		25,770
HME	27,095		29,463		82,895		89,828
Other	64,184		58,252		174,403		166,068
Total net sales revenue	$	532,125	$	512,523	$	1,546,013	$	1,481,132
Net revenue from fixed monthly equipment reimbursements:
Sleep	$	88,387	$	72,423	$	256,092	$	196,022
Diabetes	2,609		4,211		10,326		12,191
Respiratory	142,919		130,618		423,531		392,063
HME	25,087		25,482		71,402		76,754
Other	12,904		11,238		34,579		32,150
Total net revenue from fixed monthly equipment reimbursements	$	271,906	$	243,972	$	795,930	$	709,180
Total net revenue:
Sleep	$	315,392	$	270,629	$	912,403	$	781,256
Diabetes	159,937		173,286		475,219		494,884
Supplies to the home	48,349		47,793		143,227		131,539
Respiratory	151,083		140,352		447,815		417,833
HME	52,182		54,945		154,297		166,582
Other	77,088		69,490		208,982		198,218
Total net revenue	$	804,031	$	756,495	$	2,341,943	$	2,190,312

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Acquisitions (Tables)

9 Months Ended

Sep. 30, 2023

Business Combination and Asset Acquisition [Abstract]

Summary of consideration

The following table summarizes the consideration paid at closing for all acquisitions during the nine months ended September 30, 2023 (in thousands):

Cash	$	18,173
Deferred payments	50
Total	$	18,223

The following table summarizes the consideration paid at closing for all acquisitions during the nine months ended September 30, 2022 (in thousands):

Cash	$	16,477
Deferred payments	422
Total	$	16,899

Summary of estimated fair values of the net assets acquired

The Company allocated the consideration paid to the net assets acquired based on their estimated acquisition date fair values. Based upon management’s evaluation, which is preliminary and subject to completion of working capital and other adjustments, the consideration paid for all acquisitions during the nine months ended September 30, 2023 was allocated as follows during the period (in thousands):

Cash	$	256
Accounts receivable	1,798
Inventory	1,413
Prepaid and other current assets	10
Equipment and other fixed assets	9,008
Operating lease right-of-use assets	5,506
Finance lease right-of-use assets	200
Goodwill	7,297
Accounts payable and accrued expenses	(713)
Other current liabilities	(846)
Operating lease liabilities	(5,506)
Finance lease liabilities	(200)
Net assets acquired	$	18,223

Based upon management’s evaluation, which was preliminary and subject to completion of working capital and other adjustments, the consideration paid for all acquisitions during the nine months ended September 30, 2022 was allocated as follows during that period (in thousands):

Cash	$	155
Accounts receivable	2,206
Inventory	686
Prepaid and other current assets	16
Equipment and other fixed assets	4,502
Goodwill	11,788
Identifiable intangible assets	500
Accounts payable and accrued expenses	(2,820)
Contract liabilities	(134)
Net assets acquired	$	16,899

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Equipment and Other Fixed Assets (Tables)

9 Months Ended

Sep. 30, 2023

Property, Plant and Equipment [Abstract]

Schedule of equipment and other fixed assets

Equipment and other fixed assets as of September 30, 2023 and December 31, 2022 are as follows (in thousands):

	September 30, 2023		December 31, 2022
Patient medical equipment	$	776,366	$	747,985
Computers and Software	92,208		70,897
Delivery vehicles	43,078		35,326
Other	21,159		16,059
Gross carrying value	932,811		870,267
Less accumulated depreciation	(442,758)		(383,188)
Equipment and other fixed assets, net	$	490,053	$	487,079

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Goodwill and Identifiable Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of change in the carrying amount of goodwill

The change in the carrying amount of goodwill for the nine months ended September 30, 2023 was as follows (in thousands):

	Gross carrying amount
Balance at December 31, 2022	$	3,545,297
Goodwill from acquisitions	7,297
Net increase relating to measurement period adjustments	718
Impairment charge	(511,866)
Balance at September 30, 2023	$	3,041,446

Schedule of identifiable intangible assets

Identifiable intangible assets consisted of the following at September 30, 2023 and December 31, 2022 (dollars in thousands):

	September 30, 2023
			Weighted-Average Remaining Life (Years)
Tradenames, net of accumulated amortization of $35,111	$	77,689	6.8
Payor contracts, net of accumulated amortization of $26,166	55,834		6.8
Developed technology, net of accumulated amortization of $4,095	2,205		1.8
Identifiable intangible assets, net	$	135,728

	December 31, 2022
			Weighted-Average Remaining Life (Years)
Tradenames, net of accumulated amortization of $25,498	$	87,302	7.5
Payor contracts, net of accumulated amortization of $20,016	61,984		7.6
Contractual rental agreements, net of accumulated amortization of $43,863	10,337		0.8
Developed technology, net of accumulated amortization of $3,150	3,150		2.5
Identifiable intangible assets, net	$	162,773

Schedule of future amortization expense related to identifiable intangible assets

Future amortization expense related to identifiable intangible assets is estimated to be as follows (in thousands):

Twelve months ending September 30,
2024	$	22,276
2025	21,828
2026	19,617
2027	18,190
2028	17,936
Thereafter	35,881
Total	$	135,728

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Fair Value of Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Summary of financial assets and liabilities measured at fair value on a recurring basis

The following table presents the valuation of the Company’s financial assets and liabilities as of September 30, 2023 and December 31, 2022 measured at fair value on a recurring basis. The fair value estimates presented herein are based on information available to management as of September 30, 2023 and December 31, 2022. These estimates are not necessarily indicative of the amounts the Company could ultimately realize.

(in thousands)	Level 1		Level 2		Level 3
September 30, 2023
Assets
Interest rate swap agreements-short term	$	—	$	6,340	$	—
Interest rate swap agreements-long term	—		4,147		—
Total assets measured at fair value	$	—	$	10,487	$	—
Liabilities
Acquisition-related contingent consideration-short term	$	—	$	—	$	7,850
Warrant liability	—		—		6,617
Total liabilities measured at fair value	$	—	$	—	$	14,467

(in thousands)	Level 1		Level 2		Level 3
December 31, 2022
Assets
Interest rate swap agreements-short term	$	—	$	5,748	$	—
Interest rate swap agreements-long term	—		3,728		—
Total assets measured at fair value	$	—	$	9,476	$	—
Liabilities
Acquisition-related contingent consideration-short term	$	—	$	—	$	7,500
Warrant liability	—		—		38,503
Total liabilities measured at fair value	$	—	$	—	$	46,003

Reconciliation of contingent consideration liabilities

A reconciliation of the Company’s contingent consideration liabilities related to acquisitions for the nine months ended September 30, 2023 and 2022 is as follows (in thousands):

Nine Months Ended September 30, 2023	Beginning Balance		Payments		Change in Fair Value		Ending Balance
Contingent consideration - Level 3 liabilities	$	7,500	$	—	$	350	$	7,850
Nine Months Ended September 30, 2022
Contingent consideration - Level 3 liabilities	$	20,300	$	(6,250)	$	477	$	14,527

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Derivative Instruments and Hedging Activities (Tables)

9 Months Ended

Sep. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Summary of fair value of derivative financial instruments as well as their classification on the consolidated balance sheets

The table below presents the fair value of the Company’s derivatives related to its interest rate swap agreements, which are designated as hedging instruments, as well as their classification in the consolidated balance sheets at September 30, 2023 and December 31, 2022 (in thousands):

	September 30, 2023		December 31, 2022
Balance Sheet Location	Asset
Prepaid and other current assets	$	6,340	$	5,748
Other assets	4,147		3,728
Total	$	10,487	$	9,476

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Accounts Payable and Accrued Expenses (Tables)

9 Months Ended

Sep. 30, 2023

Accounts Payable and Accrued Liabilities, Current [Abstract]

Schedule of components accounts payable and accrued expenses

Accounts payable and accrued expenses as of September 30, 2023 and December 31, 2022 consisted of the following (in thousands):

	September 30, 2023		December 31, 2022
Accounts payable	$	205,098	$	222,505
Employee-related accruals	53,273		41,872
Accrued interest	10,051		28,877
Other	46,030		44,244
Total	$	314,452	$	337,498

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Debt (Tables)

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Schedule of summary of long term debt

The following is a summary of long term-debt as of September 30, 2023 and December 31, 2022 (in thousands):

	September 30, 2023		December 31, 2022
Secured term loans	$	740,000	$	765,000
Senior unsecured notes	1,450,000		1,450,000
Unamortized deferred financing fees	(23,197)		(26,733)
	2,166,803		2,188,267
Current portion	(40,000)		(35,000)
Long-term portion	$	2,126,803	$	2,153,267

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Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2023

Equity [Abstract]

Schedule of changes in warrant liability

A reconciliation of the changes in the warrant liability during the nine months ended September 30, 2023 and 2022 was as follows (in thousands):

Estimated fair value of warrant liability at December 31, 2022	$	38,503
Change in estimated fair value of the warrant liability	(31,886)
Estimated fair value of warrant liability at September 30, 2023	$	6,617
Estimated fair value of warrant liability at December 31, 2021	$	57,764
Change in estimated fair value of the warrant liability	(17,145)
Reclassification of warrant liability to equity for exercised warrants	(2,103)
Estimated fair value of warrant liability at September 30, 2022	$	38,516

Schedule of stock option activity

The following table provides the activity regarding the Company’s outstanding stock options during the nine months ended September 30, 2023 that were granted in connection with the 2019 Plan (in thousands, except per share data):

	Number of Options	Weighted-Average Grant Date Fair Value per Share		Weighted-Average Exercise Price per Share		Weighted-Average Remaining Contractual Term
Outstanding, December 31, 2022	2,219	$	3.75	$	19.36
Activity - none	—
Outstanding, September 30, 2023	2,219	$	3.75	$	19.36	5.3 Years

The following table provides the activity for all outstanding stock options during the nine months ended September 30, 2023 (in thousands, except per share data):

	Number of Options	Weighted-Average Exercise Price per Share		Weighted-Average Remaining Contractual Term
Outstanding, December 31, 2022	4,962	$	12.19
Exercised	(1,542)	$	6.25
Outstanding, September 30, 2023	3,420	$	14.86	5.1 Years

Schedule of restricted stock activity

Activity related to the Company’s non-vested restricted stock grants for the nine months ended September 30, 2023 is presented below (in thousands, except per share data):

	Number of Shares of Restricted Stock	Weighted-Average Grant Date Fair Value per Share
Non-vested balance, December 31, 2022	2,261	$	23.90
Granted	1,110	$	14.96
Vested	(808)	$	21.31
Forfeited	(424)	$	26.04
Non-vested balance, September 30, 2023	2,139	$	19.68

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

Schedule of calculation of basic and diluted earnings per share

Computations of basic and diluted net income per share were as follows (in thousands, except per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Numerator
Net (loss) income attributable to AdaptHealth Corp.	$	(454,076)	$	16,122	$	(424,392)	$	71,904
Less: Earnings allocated to participating securities (1)	—		1,360		—		6,079
Net (loss) income for basic EPS	$	(454,076)	$	14,762	$	(424,392)	$	65,825
Change in fair value of warrant liability (2)	(9,160)		—		(31,886)		(17,145)
Net (loss) income for diluted EPS	$	(463,236)	$	14,762	$	(456,278)	$	48,680
Denominator (1) (2)
Basic weighted-average common shares outstanding	134,825		134,227		134,549		134,186
Add: Warrants (2)	157		—		653		1,436
Add: Stock options	—		2,903		—		2,669
Add: Unvested restricted stock	—		453		—		308
Diluted weighted-average common shares outstanding	134,982		137,583		135,202		138,599
Basic net (loss) income per share	$	(3.37)	$	0.11	$	(3.15)	$	0.49
Diluted net (loss) income per share	$	(3.43)	$	0.11	$	(3.37)	$	0.35

(1)The Company’s preferred stock are considered participating securities. Computation of EPS under the two-class method excludes from the numerator any dividends paid or owed on participating securities and any undistributed earnings considered to be attributable to participating securities. The related participating securities are similarly excluded from the denominator. There was no amount allocated to the participating securities during the three and nine months ended September 30, 2023 due to the net loss reported in those periods.

(2)For the nine months ended September 30, 2023 and 2022, and the three months ended September 30, 2023, the impact to earnings from the change in fair value of the Company’s warrant liability is excluded from the numerator, and the corresponding security is included in the denominator, for purposes of computing diluted net (loss) income per share. This adjustment is included as the effect of the numerator and denominator adjustment for this derivative

instrument is dilutive as a result of the non-cash gains recorded for the change in fair value of this instrument during the periods. For the three months ended September 30, 2022, this adjustment is excluded from the computation of diluted net (loss) income per share under the treasury stock method since its inclusion would have been anti-dilutive.

Schedule of antidilutive securities excluded from computation of earnings per share

The table below provides the weighted-average number of potential common shares associated with outstanding securities not included in the Company’s computation of diluted net (loss) income per share for the three and nine months ended September 30, 2023 and 2022 because to do so would be antidilutive (in thousands):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Preferred Stock	12,406	12,406	12,406	12,406
Warrants	—	1,706	—	—
Stock options	3,420	468	3,420	468
Unvested restricted stock	2,057	108	2,057	221
Total	17,883	14,688	17,883	13,095

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Leases (Tables)

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

Right-of-use assets and lease liabilities

The following table presents information about the Company’s right-of-use assets and lease liabilities as of September 30, 2023 and December 31, 2022 (in thousands):

	Consolidated Balance Sheets Line Item	September 30, 2023		December 31, 2022
Right-of-use (ROU) assets:
Operating lease ROU assets	Operating lease right-of-use assets	$	110,007	$	129,506
Finance lease ROU assets	Finance lease right-of-use assets	21,528		5,423
Finance lease ROU assets	Equipment and other fixed assets, net	—		103
Total ROU assets		$	131,535	$	135,032
Operating lease liabilities:
Current operating lease liabilities	Current portion of operating lease obligations	$	28,736	$	30,001
Noncurrent operating lease liabilities	Operating lease obligations, less current portion	85,700		104,394
Total operating lease liabilities		$	114,436	$	134,395
Finance lease liabilities:
Current finance lease liabilities	Current portion of finance lease obligations	$	5,947	$	2,211
Noncurrent finance lease liabilities	Finance lease obligations, less current portion	15,581		3,950
Total finance lease liabilities		$	21,528	$	6,161

The following table presents information about lease costs and expenses and sublease income for the three and nine months ended September 30, 2023 and 2022 (in thousands). The amounts below are included in cost of net revenue in the accompanying consolidated statements of operations for the periods presented.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Operating lease costs	$	11,114	$	9,248	$	32,186	$	28,547
Finance lease costs:
Amortization of ROU assets	$	1,739	$	640	$	4,746	$	7,266
Other lease costs and income:
Variable leases costs (1)	$	5,373	$	3,728	$	15,932	$	12,680
Sublease income	$	358	$	336	$	1,145	$	1,019

(1)Amounts represent variable costs incurred that were not included in the initial measurement of the lease liability such as common area maintenance and utilities costs associated with leased real estate.

Weighted average remaining lease terms and weighted average discount rates

The following table provides the weighted average remaining lease terms and weighted average discount rates for the Company’s leases as of September 30, 2023 and December 31, 2022:

	September 30, 2023		December 31, 2022
Weighted average remaining lease term, weighted based on lease liability balances:
Operating leases	5.7 years		6.2 years
Finance leases	3.6 years		3.7 years
Weighted average discount rate, weighted based on remaining balance of lease payments:
Operating leases	4.2	%	3.9	%

Schedule of operating lease liability maturity

The following table provides the undiscounted amount of future cash flows related to the Company’s operating and finance leases, as well as a reconciliation of such undiscounted cash flows to the amounts included in the Company’s lease liabilities as of September 30, 2023 (in thousands):

	Operating Leases		Finance Leases
2023 (remaining three months)	$	8,733	$	1,803
2024	31,113		6,938
2025	25,955		6,505
2026	17,959		5,698
2027	12,198		2,008
Thereafter	33,836		925
Total future undiscounted lease payments	$	129,794	$	23,877
Less: amount representing interest	(15,358)		(2,349)
Present value of future lease payments (lease liability)	$	114,436	$	21,528

Schedule of finance lease liability maturity

The following table provides the undiscounted amount of future cash flows related to the Company’s operating and finance leases, as well as a reconciliation of such undiscounted cash flows to the amounts included in the Company’s lease liabilities as of September 30, 2023 (in thousands):

	Operating Leases		Finance Leases
2023 (remaining three months)	$	8,733	$	1,803
2024	31,113		6,938
2025	25,955		6,505
2026	17,959		5,698
2027	12,198		2,008
Thereafter	33,836		925
Total future undiscounted lease payments	$	129,794	$	23,877
Less: amount representing interest	(15,358)		(2,349)
Present value of future lease payments (lease liability)	$	114,436	$	21,528

Cash flow and supplemental non-cash information related to our lease liabilities

The following table provides certain cash flow and supplemental non-cash information related to the Company’s lease liabilities for the nine months ended September 30, 2023 and 2022, respectively (in thousands):

	Nine Months Ended September 30,
Cash paid for amounts included in the measurement of lease liabilities:	2023		2022
Operating cash payments for operating leases	$	32,045	$	28,416
Financing cash payments for finance leases	$	4,558	$	14,219
Lease liabilities arising from obtaining right-of-use assets:
Operating leases	$	8,179	$	5,411
Finance leases	$	19,726	$	1,335

XML

General Information - Useful Lives Of Identifiable Intangible Assets (Details)	Sep. 30, 2023
Payor contracts
Property, Plant and Equipment [Line Items]
Useful lives of identifiable intangible assets (in years)	10 years
Contractual rental agreements
Property, Plant and Equipment [Line Items]
Useful lives of identifiable intangible assets (in years)	2 years
Developed technology
Property, Plant and Equipment [Line Items]
Useful lives of identifiable intangible assets (in years)	5 years
Minimum | Tradenames
Property, Plant and Equipment [Line Items]
Useful lives of identifiable intangible assets (in years)	5 years
Maximum | Tradenames
Property, Plant and Equipment [Line Items]
Useful lives of identifiable intangible assets (in years)	10 years

XML

General Information - Narrative (Details)	3 Months Ended				6 Months Ended	9 Months Ended
	Sep. 30, 2023 USD ($)	Jun. 30, 2023 USD ($)	Mar. 31, 2023 USD ($)	Sep. 30, 2022 USD ($)	Jun. 30, 2023 USD ($)	Sep. 30, 2023 USD ($) segment	Sep. 30, 2022 USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Goodwill impairment | $	$ 511,866,000	$ 0	$ 0	$ 0	$ 0	$ 511,866,000	$ 0
Impairment of long-lived assets | $	$ 0			$ 0		$ 0	$ 0
Number of segments, operating | segment						1
Number of segments, reportable | segment						1

XML

Revenue Recognition and Accounts Receivable - Composition of Net Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of Revenue [Line Items]
Total net revenue	$ 804,031	$ 756,495	$ 2,341,943	$ 2,190,312
Transferred at Point in Time
Disaggregation of Revenue [Line Items]
Total net revenue	532,125	512,523	1,546,013	1,481,132
Transferred over Time
Disaggregation of Revenue [Line Items]
Total net revenue	271,906	243,972	795,930	709,180
Sleep
Disaggregation of Revenue [Line Items]
Total net revenue	315,392	270,629	912,403	781,256
Sleep | Transferred at Point in Time
Disaggregation of Revenue [Line Items]
Total net revenue	227,005	198,206	656,311	585,234
Sleep | Transferred over Time
Disaggregation of Revenue [Line Items]
Total net revenue	88,387	72,423	256,092	196,022
Diabetes
Disaggregation of Revenue [Line Items]
Total net revenue	159,937	173,286	475,219	494,884
Diabetes | Transferred at Point in Time
Disaggregation of Revenue [Line Items]
Total net revenue	157,328	169,075	464,893	482,693
Diabetes | Transferred over Time
Disaggregation of Revenue [Line Items]
Total net revenue	2,609	4,211	10,326	12,191
Supplies to the home
Disaggregation of Revenue [Line Items]
Total net revenue	48,349	47,793	143,227	131,539
Supplies to the home | Transferred at Point in Time
Disaggregation of Revenue [Line Items]
Total net revenue	48,349	47,793	143,227	131,539
Respiratory
Disaggregation of Revenue [Line Items]
Total net revenue	151,083	140,352	447,815	417,833
Respiratory | Transferred at Point in Time
Disaggregation of Revenue [Line Items]
Total net revenue	8,164	9,734	24,284	25,770
Respiratory | Transferred over Time
Disaggregation of Revenue [Line Items]
Total net revenue	142,919	130,618	423,531	392,063
HME
Disaggregation of Revenue [Line Items]
Total net revenue	52,182	54,945	154,297	166,582
HME | Transferred at Point in Time
Disaggregation of Revenue [Line Items]
Total net revenue	27,095	29,463	82,895	89,828
HME | Transferred over Time
Disaggregation of Revenue [Line Items]
Total net revenue	25,087	25,482	71,402	76,754
Other
Disaggregation of Revenue [Line Items]
Total net revenue	77,088	69,490	208,982	198,218
Other | Transferred at Point in Time
Disaggregation of Revenue [Line Items]
Total net revenue	64,184	58,252	174,403	166,068
Other | Transferred over Time
Disaggregation of Revenue [Line Items]
Total net revenue	12,904	11,238	34,579	32,150
Insurance
Disaggregation of Revenue [Line Items]
Total net revenue	486,136	465,625	1,397,748	1,322,694
Government
Disaggregation of Revenue [Line Items]
Total net revenue	220,351	198,841	618,860	576,829
Patient pay
Disaggregation of Revenue [Line Items]
Total net revenue	$ 97,544	$ 92,029	$ 325,335	$ 290,789

XML

Revenue Recognition and Accounts Receivable - Narrative (Details) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Revenue from Contract with Customer [Abstract]
Unbilled revenue	$ 44.7	$ 38.6

XML

Acquisitions - Narrative (Details) $ in Millions	9 Months Ended
	Sep. 30, 2023 provider	Sep. 30, 2022 USD ($) provider
Home Medical Equipment Provider Acquired In 2023
Business Acquisition [Line Items]
Percentage of interest acquired	100.00%
Number of home medical equipment providers acquired	3
Number of entities acquired	2
Home Medical Equipment Provider Acquired In 2022
Business Acquisition [Line Items]
Percentage of interest acquired		100.00%
Number of home medical equipment providers acquired		2
Number of entities acquired		5
Significant Acquisitions In 2021
Business Acquisition [Line Items]
Receipt of working capital adjustment from prior year acquisitions | $		$ 0.2

XML

Acquisitions - Consideration and Allocation (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Significant Acquisitions In 2023
Business Acquisition [Line Items]
Cash	$ 18,173
Deferred payments	50
Total	$ 18,223
Significant Acquisitions In 2022
Business Acquisition [Line Items]
Cash		$ 16,477
Deferred payments		422
Total		$ 16,899

XML

Acquisitions - Fair Value of Net Assets Acquired (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022	Sep. 30, 2022
Business Acquisition [Line Items]
Goodwill	$ 3,041,446	$ 3,545,297
Significant Acquisitions In 2023
Business Acquisition [Line Items]
Cash	256
Accounts receivable	1,798
Inventory	1,413
Prepaid and other current assets	10
Equipment and other fixed assets	9,008
Operating lease right-of-use assets	5,506
Finance lease right-of-use assets	200
Goodwill	7,297
Accounts payable and accrued expenses	(713)
Other current liabilities	(846)
Operating lease liabilities	(5,506)
Finance lease liabilities	(200)
Net assets acquired	$ 18,223
Significant Acquisitions In 2022
Business Acquisition [Line Items]
Cash			$ 155
Accounts receivable			2,206
Inventory			686
Prepaid and other current assets			16
Equipment and other fixed assets			4,502
Goodwill			11,788
Identifiable intangible assets			500
Accounts payable and accrued expenses			(2,820)
Contract liabilities			(134)
Net assets acquired			$ 16,899

XML

Equipment and Other Fixed Assets (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Gross carrying value	$ 932,811		$ 932,811		$ 870,267
Less accumulated depreciation	(442,758)		(442,758)		(383,188)
Equipment and other fixed assets, net	490,053		490,053		487,079
Depreciation expense	90,300	$ 82,400	263,400	$ 218,900
Patient medical equipment
Property, Plant and Equipment [Line Items]
Gross carrying value	776,366		776,366		747,985
Computers and Software
Property, Plant and Equipment [Line Items]
Gross carrying value	92,208		92,208		70,897
Delivery vehicles
Property, Plant and Equipment [Line Items]
Gross carrying value	43,078		43,078		35,326
Other
Property, Plant and Equipment [Line Items]
Gross carrying value	$ 21,159		$ 21,159		$ 16,059

XML

Goodwill and Identifiable Intangible Assets - Change in Goodwill (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended	9 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2023	Sep. 30, 2023	Sep. 30, 2022
Goodwill [Roll Forward]
Beginning balance			$ 3,545,297		$ 3,545,297	$ 3,545,297
Goodwill from acquisitions						7,297
Net increase relating to measurement period adjustments						718
Goodwill impairment	$ (511,866)	$ 0	$ 0	$ 0	$ 0	(511,866)	$ 0
Ending balance	$ 3,041,446					$ 3,041,446

XML

Goodwill and Identifiable Intangible Assets - Narrative (Details) - USD ($)	3 Months Ended				6 Months Ended	9 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2023	Sep. 30, 2023	Sep. 30, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill impairment	$ 511,866,000	$ 0	$ 0	$ 0	$ 0	$ 511,866,000	$ 0
Amortization of intangible assets	$ 7,000,000			$ 10,000,000		27,000,000	30,000,000
Impairment charges						$ 0	$ 0

XML

Goodwill and Identifiable Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Total	$ 135,728	$ 162,773
Tradenames
Finite-Lived Intangible Assets [Line Items]
Accumulated amortization	35,111	25,498
Total	$ 77,689	$ 87,302
Weighted-Average Remaining Life (Years)	6 years 9 months 18 days	7 years 6 months
Payor contracts
Finite-Lived Intangible Assets [Line Items]
Accumulated amortization	$ 26,166	$ 20,016
Total	$ 55,834	$ 61,984
Weighted-Average Remaining Life (Years)	6 years 9 months 18 days	7 years 7 months 6 days
Contractual rental agreements
Finite-Lived Intangible Assets [Line Items]
Accumulated amortization		$ 43,863
Total		$ 10,337
Weighted-Average Remaining Life (Years)		9 months 18 days
Developed technology
Finite-Lived Intangible Assets [Line Items]
Accumulated amortization	$ 4,095	$ 3,150
Total	$ 2,205	$ 3,150
Weighted-Average Remaining Life (Years)	1 year 9 months 18 days	2 years 6 months

XML

Goodwill and Identifiable Intangible Assets - Future Amortization Expense of Identified Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
2024	$ 22,276		$ 22,276
2025	21,828		21,828
2026	19,617		19,617
2027	18,190		18,190
2028	17,936		17,936
Thereafter	35,881		35,881
Total	135,728		135,728		$ 162,773
Amortization of intangible assets	$ 7,000	$ 10,000	$ 27,000	$ 30,000

XML

Fair Value of Assets and Liabilities - Valuation of Financial Assets and Liabilities (Details) - Fair Value, Recurring - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Level 1
Assets
Total assets measured at fair value	$ 0	$ 0
Liabilities
Total liabilities measured at fair value	0	0
Level 1 | Acquisition-related contingent consideration-short term
Liabilities
Total liabilities measured at fair value	0	0
Level 1 | Warrant liability
Liabilities
Total liabilities measured at fair value	0	0
Level 1 | Interest rate swap agreements-short term
Assets
Total assets measured at fair value	0	0
Level 1 | Interest rate swap agreements-long term
Assets
Total assets measured at fair value	0	0
Level 2
Assets
Total assets measured at fair value	10,487	9,476
Liabilities
Total liabilities measured at fair value	0	0
Level 2 | Acquisition-related contingent consideration-short term
Liabilities
Total liabilities measured at fair value	0	0
Level 2 | Warrant liability
Liabilities
Total liabilities measured at fair value	0	0
Level 2 | Interest rate swap agreements-short term
Assets
Total assets measured at fair value	6,340	5,748
Level 2 | Interest rate swap agreements-long term
Assets
Total assets measured at fair value	4,147	3,728
Level 3
Assets
Total assets measured at fair value	0	0
Liabilities
Total liabilities measured at fair value	14,467	46,003
Level 3 | Acquisition-related contingent consideration-short term
Liabilities
Total liabilities measured at fair value	7,850	7,500
Level 3 | Warrant liability
Liabilities
Total liabilities measured at fair value	6,617	38,503
Level 3 | Interest rate swap agreements-short term
Assets
Total assets measured at fair value	0	0
Level 3 | Interest rate swap agreements-long term
Assets
Total assets measured at fair value	$ 0	$ 0

XML

Fair Value of Assets and Liabilities - Narrative (Details) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Fair Value Disclosures [Abstract]
Contingent consideration liability	$ 7.9	$ 7.5

XML

Fair Value of Assets and Liabilities - Contingent Consideration Rollforward (Details) - Contingent Consideration Liabilities - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Balance	$ 7,500	$ 20,300
Payments	0	(6,250)
Change in Fair Value	350	477
Ending Balance	$ 7,850	$ 14,527

XML

Derivative Instruments and Hedging Activities - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Derivative [Line Items]
Amount reclassified from other comprehensive income	$ 0.4	$ 0.8	$ 1.4	$ 2.2
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Gain (loss) on interest rate swap agreements, inclusive of reclassification adjustment, net of tax	Gain (loss) on interest rate swap agreements, inclusive of reclassification adjustment, net of tax	Gain (loss) on interest rate swap agreements, inclusive of reclassification adjustment, net of tax	Gain (loss) on interest rate swap agreements, inclusive of reclassification adjustment, net of tax
Cash Flow Hedging
Derivative [Line Items]
Gain in other comprehensive income	$ 0.5	$ 8.5	$ 1.1	$ 17.5
Interest Rate Swap | Designated as Hedging Instrument
Derivative [Line Items]
Notional amount	250.0		250.0
Forward-dated interest rate swap agreements | Designated as Hedging Instrument
Derivative [Line Items]
Notional amount	$ 250.0		$ 250.0		$ 250.0

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Derivative Instruments and Hedging Activities - Financial Instruments (Details) - Designated as Hedging Instrument - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Asset	$ 10,487	$ 9,476
Interest Rate Swap | Prepaid and other current assets
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Asset	6,340	5,748
Interest Rate Swap | Other assets
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Asset	$ 4,147	$ 3,728

XML

Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Accounts Payable and Accrued Liabilities, Current [Abstract]
Accounts payable	$ 205,098	$ 222,505
Employee-related accruals	53,273	41,872
Accrued interest	10,051	28,877
Other	46,030	44,244
Total	$ 314,452	$ 337,498

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Debt - Summary of Long-Term Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Unamortized deferred financing fees	$ (23,197)	$ (26,733)
Net long-term debt	2,166,803	2,188,267
Current portion	(40,000)	(35,000)
Long-term portion	2,126,803	2,153,267
Secured term loans
Debt Instrument [Line Items]
Gross long-term debt	740,000	765,000
Senior unsecured notes
Debt Instrument [Line Items]
Gross long-term debt	$ 1,450,000	$ 1,450,000

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Debt - Narrative (Details) - USD ($) $ in Thousands		1 Months Ended			9 Months Ended
	Mar. 31, 2023	Aug. 31, 2021	Jan. 31, 2021	Jul. 31, 2020	Sep. 30, 2023	Dec. 31, 2022	Sep. 30, 2022
Secured term loans
Debt Instrument [Line Items]
Borrowing capacity			$ 800,000
Debt balance outstanding					$ 740,000	$ 765,000
Credit facility interest rate					7.43%
Secured term loans | First Specified Repayment Period
Debt Instrument [Line Items]
Quarterly principal repayments					$ 5,000
Secured term loans | Second Specified Repayment Period
Debt Instrument [Line Items]
Quarterly principal repayments					10,000
Revolving Credit Loans 2021
Debt Instrument [Line Items]
Borrowing capacity			450,000
Borrowings on lines of credit					50,000
Repayments on lines of credit					50,000
Revolver balance					0		$ 0
Remaining maximum borrowings available					144,300
Letter Of Credit 2021
Debt Instrument [Line Items]
Borrowing capacity			55,000
Credit Agreement 2021 | Minimum
Debt Instrument [Line Items]
Commitment fee (as a percent)	0.25%
Credit Agreement 2021 | Maximum
Debt Instrument [Line Items]
Commitment fee (as a percent)	0.50%
Credit Agreement 2021 | Secured Overnight Financing Rate (SOFR) | Minimum
Debt Instrument [Line Items]
Rate margin (as a percent)	1.50%
Credit Agreement 2021 | Secured Overnight Financing Rate (SOFR) | Maximum
Debt Instrument [Line Items]
Rate margin (as a percent)	3.25%
Credit Agreement 2021 | Term SOFR Adjustment
Debt Instrument [Line Items]
Rate margin (as a percent)	0.10%
Senior Unsecured Notes 5.125 Per Cent Due 2030
Debt Instrument [Line Items]
Face amount		$ 600,000
Debt interest rate		5.125%
Percentage of original principal that may be redeemed		40.00%
Senior Unsecured Notes 5.125 Per Cent Due 2030 | Debt Instrument, Redemption, Period Two
Debt Instrument [Line Items]
Redemption price, as percent of principal		102.563%
Senior Unsecured Notes 5.125 Per Cent Due 2030 | Debt Instrument, Redemption, Period Three
Debt Instrument [Line Items]
Redemption price, as percent of principal		101.281%
Senior Unsecured Notes 5.125 Per Cent Due 2030 | Debt Instrument, Redemption, Period Four
Debt Instrument [Line Items]
Redemption price, as percent of principal		100.00%
Senior Unsecured Notes 5.125 Per Cent Due 2030 | Debt Instrument, Redemption, Period One
Debt Instrument [Line Items]
Redemption price, as percent of principal		100.00%
Redemption price, as percent of principal, proceeds from equity offerings		105.125%
Senior unsecured notes
Debt Instrument [Line Items]
Debt balance outstanding					$ 1,450,000	$ 1,450,000
Face amount			$ 500,000
Debt interest rate			4.625%
Percentage of original principal that may be redeemed			40.00%
Redemption price, as percent of principal, proceeds from equity offerings			104.625%
Senior unsecured notes | Debt Instrument, Redemption, Period Two
Debt Instrument [Line Items]
Redemption price, as percent of principal			102.313%
Senior unsecured notes | Debt Instrument, Redemption, Period Three
Debt Instrument [Line Items]
Redemption price, as percent of principal			101.156%
Senior unsecured notes | Debt Instrument, Redemption, Period Four
Debt Instrument [Line Items]
Redemption price, as percent of principal			100.00%
Senior unsecured notes | Debt Instrument, Redemption, Period One
Debt Instrument [Line Items]
Redemption price, as percent of principal			100.00%
Senior Notes 6.125 Percent Due 2028
Debt Instrument [Line Items]
Face amount				$ 350,000
Debt interest rate				6.125%
Percentage of original principal that may be redeemed				40.00%
Redemption price, as percent of principal, proceeds from equity offerings				106.125%
Senior Notes 6.125 Percent Due 2028 | Debt Instrument, Redemption, Period Two
Debt Instrument [Line Items]
Redemption price, as percent of principal				103.063%
Senior Notes 6.125 Percent Due 2028 | Debt Instrument, Redemption, Period Three
Debt Instrument [Line Items]
Redemption price, as percent of principal				102.042%
Senior Notes 6.125 Percent Due 2028 | Debt Instrument, Redemption, Period Four
Debt Instrument [Line Items]
Redemption price, as percent of principal				101.021%
Senior Notes 6.125 Percent Due 2028 | Debt Instrument, Redemption, Period One
Debt Instrument [Line Items]
Redemption price, as percent of principal				100.00%
Senior Notes 6.125 Percent Due 2028 | Debt Instrument, Redemption, Period Five
Debt Instrument [Line Items]
Redemption price, as percent of principal				100.00%

XML

Stockholders' Equity - Narrative (Details) $ / shares in Units, $ in Thousands		3 Months Ended					9 Months Ended
	Jun. 30, 2023 shares	Sep. 30, 2023 USD ($) $ / shares shares	Mar. 31, 2023 USD ($)	Sep. 30, 2022 USD ($)	Jun. 30, 2022 USD ($)	Mar. 31, 2022 USD ($)	Sep. 30, 2023 USD ($) vote $ / shares shares	Sep. 30, 2022 USD ($) shares	Dec. 31, 2022 shares	May 31, 2022 USD ($)
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Common stock shares authorized (in shares)		300,000,000					300,000,000		300,000,000
Preferred stock, shares authorized (in shares)		5,000,000					5,000,000		5,000,000
Number of votes per share | vote							1
Amount of cash authorized for stock repurchase program | $										$ 200,000
Number of shares purchased under repurchase program (in shares)							631,953	750,835
Value of shares repurchase | $			$ 9,224	$ 10,617	$ 3,375		$ 9,200	$ 14,000
Amount remaining to be repurchased | $		$ 176,800					$ 176,800
Warrants outstanding (in shares)		3,871,557					3,871,557
Common stock for each warrant exercised (in shares)		1					1
Exercise price (in dollars per share) | $ / shares		$ 11.50					$ 11.50
Warrants exercised in cashless transaction, number exercised (in shares)							0	184,870
Reclassification of warrant liability to equity for exercised warrants (in shares)								87,553
Granted (in shares)							0	0
Options exercised in cashless basis (in shares)							1,341,770	315,349
Options exercised cashless basis (in shares)							228,466	131,741
Number of shares issued for options exercised on a cash basis (in shares)							200,000	194,002
Exercise of stock options | $		$ 538		665		$ 723	$ 500	$ 1,400
Equity-based compensation expense | $		4,500		5,600			17,300	16,800
Unrecognized compensation expense | $		25,200					$ 25,200
Recognition period (in years)							1 year 9 months 18 days
General and Administrative Expense
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Equity-based compensation expense | $		3,500		4,000			$ 15,800	11,500
Cost of Sales
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Equity-based compensation expense | $		$ 1,000		$ 1,600			$ 1,500	$ 5,300
Performance Percentage Less Than 25%
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Performance payout percentage							0.00%
Performance Percentage Greater Than or Equal to 25%
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Performance payout percentage							50.00%
Performance Percentage Equal to 50%
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Performance payout percentage							100.00%
Performance Percentage Greater Than or Equal to 75%
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Performance payout percentage							200.00%
Unvested restricted stock
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Granted (in shares)							1,110,000
Various Employees | Unvested restricted stock
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Granted (in shares)							286,002
Vesting period (in years)							3 years
Grant date fair value | $							$ 3,400
Director | Unvested restricted stock
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Granted (in shares)							139,190
Vesting period (in years)							1 year
Grant date fair value | $							$ 1,400
Interim CEO | Unvested restricted stock
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Granted (in shares)							30,841
Vesting period (in years)							2 months
Grant date fair value | $							$ 300
Management | Unvested restricted stock
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Granted (in shares)							327,000
Vesting period (in years)							3 years
Grant date fair value | $							$ 4,900
Management | Performance Based Restricted Stock Unit
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Granted (in shares)							327,000
Vesting period (in years)							3 years
Grant date fair value | $							$ 6,600
Term of relative total shareholder return v. defined peer group (in years)							3 years
Prior CEO
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Equity-based compensation expense | $							$ 4,000
Prior CEO | Unvested restricted stock
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Accelerated vesting (in shares)	143,739
Prior CEO | Stock options
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Accelerated vesting (in shares)	78,130
Prior CEO | Performance Shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Increase in shares (in shares)	159,555
2019 Incentive Plan
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares authorized for issuance (in shares)		10,000,000					10,000,000
Stock available for issuance (in shares)		1,166,968					1,166,968

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Stockholders' Equity - Warrants (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Jun. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Warrant [Roll Forward]
Estimated fair value of warrant liability, beginning				$ 38,503	$ 57,764
Change in estimated fair value of the warrant liability	$ (9,160)	$ 1,364		(31,886)	(17,145)
Reclassification of warrant liability to equity for exercised warrants		(1,608)	$ (495)		(2,103)
Estimated fair value of warrant liability, ending	$ 6,617	$ 38,516		$ 6,617	$ 38,516

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Stockholders' Equity - Stock Option Activity (Details) - $ / shares	9 Months Ended
	Sep. 30, 2023
Number of Options
Outstanding at beginning of period (in shares)	4,962,000
Exercised (in shares)	(1,542,000)
Outstanding at end of period (in shares)	3,420,000
Weighted-Average Exercise Price per Share
Outstanding at beginning of period (in dollars per share)	$ 12.19
Exercised (in dollars per share)	6.25
Outstanding at end of period (in dollars per share)	$ 14.86
Weighted-Average Remaining Contractual Term
Weighted average remaining contractual term (in years)	5 years 1 month 6 days
2019 Incentive Plan
Number of Options
Outstanding at beginning of period (in shares)	2,219,000
Outstanding at end of period (in shares)	2,219,000
Weighted-Average Grant Date Fair Value per Share
Outstanding at beginning of period (in dollars per share)	$ 3.75
Outstanding at end of period (in dollars per share)	3.75
Weighted-Average Exercise Price per Share
Outstanding at beginning of period (in dollars per share)	19.36
Outstanding at end of period (in dollars per share)	$ 19.36
Weighted-Average Remaining Contractual Term
Weighted average remaining contractual term (in years)	5 years 3 months 18 days

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Stockholders' Equity - Restricted Stock (Details) - Unvested restricted stock $ / shares in Units, $ in Millions	9 Months Ended
	Sep. 30, 2023 USD ($) $ / shares shares
Number of Shares of Restricted Stock
Non-vested balance at beginning of period (in shares)	2,261,000
Granted (in shares)	1,110,000
Vested (in shares)	(808,000)
Forfeited (in shares)	(424,000)
Non-vested balance at end of period (in shares)	2,139,000
Weighted-Average Grant Date Fair Value per Share
Non-vested, grant date fair value at beginning of period (in dollars per share) | $ / shares	$ 23.90
Granted (in dollars per share) | $ / shares	14.96
Vested (in dollars per share) | $ / shares	21.31
Forfeited (in dollars per share) | $ / shares	26.04
Non-vested, grant date fair value at end of period (in dollars per share) | $ / shares	$ 19.68
Interim CEO
Number of Shares of Restricted Stock
Granted (in shares)	30,841
Weighted-Average Grant Date Fair Value per Share
Grant date fair value | $	$ 0.3
Various Employees
Number of Shares of Restricted Stock
Granted (in shares)	286,002
Weighted-Average Grant Date Fair Value per Share
Grant date fair value | $	$ 3.4
Director
Number of Shares of Restricted Stock
Granted (in shares)	139,190
Weighted-Average Grant Date Fair Value per Share
Grant date fair value | $	$ 1.4

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Earnings Per Share - Basic and Diluted Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Numerator
Net (loss) income attributable to AdaptHealth Corp.	$ (454,076)	$ 16,122	$ (424,392)	$ 71,904
Less: Earnings allocated to participating securities	0	1,360	0	6,079
Net (loss) income for basic EPS	(454,076)	14,762	(424,392)	65,825
Change in fair value of warrant liability	(9,160)	1,364	(31,886)	(17,145)
Net (loss) income for diluted EPS	$ (463,236)	$ 14,762	$ (456,278)	$ 48,680
Denominator
Basic weighted-average common shares outstanding (in shares)	134,825	134,227	134,549	134,186
Add: Warrants (in shares)	157	0	653	1,436
Diluted weighted-average common shares outstanding (in shares)	134,982	137,583	135,202	138,599
Basic net income (loss) per share (in dollars per share)	$ (3.37)	$ 0.11	$ (3.15)	$ 0.49
Diluted net income (loss) per share (in dollars per share)	$ (3.43)	$ 0.11	$ (3.37)	$ 0.35
Stock options
Denominator
Add: Stock options (in shares)	0	2,903	0	2,669
Unvested restricted stock
Denominator
Add: Unvested restricted stock (in shares)	0	453	0	308

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Earnings Per Share - Antidilutive Securities (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive securities excluded (in shares)	17,883	14,688	17,883	13,095
Preferred Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive securities excluded (in shares)	12,406	12,406	12,406	12,406
Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive securities excluded (in shares)	0	1,706	0	0
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive securities excluded (in shares)	3,420	468	3,420	468
Unvested restricted stock
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive securities excluded (in shares)	2,057	108	2,057	221

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Leases - Right-Of-Use Assets and Lease Liabilities (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Right-of-use (ROU) assets:
Operating lease right-of-use assets	$ 110,007		$ 110,007		$ 129,506
Total ROU assets	131,535		131,535		135,032
Operating lease liabilities:
Current portion of operating lease obligations	28,736		28,736		30,001
Operating lease obligations, less current portion	85,700		85,700		104,394
Total operating lease liabilities	114,436		114,436		134,395
Finance lease liabilities:
Current portion of finance lease obligations	5,947		5,947		2,211
Finance lease obligations, less current portion	15,581		15,581		3,950
Total finance lease liabilities	21,528		21,528		6,161
Operating lease costs	11,114	$ 9,248	32,186	$ 28,547
Finance lease costs:
Amortization of ROU assets			3,821	0
Other lease costs and income:
Variable leases costs	5,373	3,728	15,932	12,680
Sublease income	358	336	1,145	1,019
Cost of Sales
Finance lease costs:
Amortization of ROU assets	1,739	$ 640	4,746	$ 7,266
Finance lease right-of-use assets
Right-of-use (ROU) assets:
Finance lease right-of-use assets	21,528		21,528		5,423
Equipment and other fixed assets, net
Right-of-use (ROU) assets:
Finance lease right-of-use assets	$ 0		$ 0		$ 103

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Leases - Weighted Average Remaining Lease Terms and Discount Rates (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Weighted average remaining lease term, weighted based on lease liability balances:
Operating leases (in years)	5 years 8 months 12 days		5 years 8 months 12 days		6 years 2 months 12 days
Finance leases (in years)	3 years 7 months 6 days		3 years 7 months 6 days		3 years 8 months 12 days
Weighted average discount rate, weighted based on remaining balance of lease payments:
Operating leases	4.20%		4.20%		3.90%
Operating Leased Assets [Line Items]
Reduction in the carrying amount of finance lease right-of-use assets			$ 3,821	$ 0
Cost of Sales
Operating Leased Assets [Line Items]
Reduction in the carrying amount of finance lease right-of-use assets	$ 1,739	$ 640	$ 4,746	$ 7,266

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Leases - Lease Maturity (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Operating Leases
2023 (remaining three months)	$ 8,733
2024	31,113
2025	25,955
2026	17,959
2027	12,198
Thereafter	33,836
Total future undiscounted lease payments	129,794
Less: amount representing interest	(15,358)
Present value of future lease payments (lease liability)	114,436	$ 134,395
Finance Leases
2023 (remaining three months)	1,803
2024	6,938
2025	6,505
2026	5,698
2027	2,008
Thereafter	925
Total future undiscounted lease payments	23,877
Less: amount representing interest	(2,349)
Present value of future lease payments (lease liability)	$ 21,528	$ 6,161

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Leases - Cash Flow and Supplemental Non-Cash Information (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash payments for operating leases	$ 32,045	$ 28,416
Financing cash payments for finance leases	4,558	14,219
Lease liabilities arising from obtaining right-of-use assets:
Operating leases	8,179	5,411
Finance leases	$ 19,726	$ 1,335

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Income Taxes (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended	9 Months Ended		12 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2023	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Income Taxes
Income tax (benefit) expense	$ (34,578)			$ 5,580		$ (30,893)	$ 20,036
Discrete income tax benefit	39,900					39,900
Goodwill impairment	511,866	$ 0	$ 0	$ 0	$ 0	511,866	0
Unrecognized tax benefits	$ 6,600					$ 6,600		$ 6,600
Payout percentage						85.00%
Class B Common Stock par value (in dollars per share)	$ 0.0001					$ 0.0001		$ 0.0001
Expenses recognized related to changes in the estimated TRA liability							$ 4,500
Liability related to TRA						$ 294,200		$ 297,400
Common Class B
Income Taxes
Class B Common Stock par value (in dollars per share)	$ 0.0001					$ 0.0001
Other Current Liabilities
Income Taxes
Liability related to TRA						$ 2,300		3,300
Other Noncurrent Liabilities
Income Taxes
Liability related to TRA						$ 291,900		$ 294,100

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Commitments and Contingencies (Details) $ in Millions	Apr. 21, 2023 USD ($)
AdaptHealth Holdings LLC v.s. United States District Court For The Eastern District Of Pennsylvania (EDPA) | Settled Litigation
Loss Contingencies [Line Items]
Payment on legal proceeding	$ 5.3

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Related Party Transactions (Details) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($) executive	Sep. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Vendor Two
Related Party Transactions
Number of executives | executive			1
Ownership interest, as a percent			1.00%
Expenses, related party	$ 3.1	$ 1.8	$ 8.0	$ 4.9
Third-Party Payor | Maximum
Related Party Transactions
Net revenue related party	0.80%	0.80%	0.80%	0.80%
Vendor Three
Related Party Transactions
Ownership interest, as a percent			5.00%
Expenses, related party	$ 3.5	$ 20.3	$ 24.1	$ 49.8
Business process outsourcing services
Related Party Transactions
Outstanding payables	0.2		0.2		$ 2.2
Purchases from related party	$ 5.4	$ 5.7	$ 16.6	$ 16.2

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Subsequent Events (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended			9 Months Ended
	Nov. 07, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Subsequent Event [Line Items]
Number of shares purchased under repurchase program (in shares)					631,953	750,835
Value of shares repurchase		$ 9,224	$ 10,617	$ 3,375	$ 9,200	$ 14,000
Subsequent Event
Subsequent Event [Line Items]
Number of shares purchased under repurchase program (in shares)	2,464,507
Value of shares repurchase	$ 19,400