AdaptHealth (AHCO) 26 Feb 222021 Q4 Earnings call transcript

Greetings, and welcome to the AdaptHealth Fourth Quarter 2021 Financial Results Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. I would now like to turn the call over to Chris Joyce, General Counsel. Thank you.

begin. may You

our a Officer Investor I'd highlight website. full and Corp. operator. XXXX full is Relations year welcome to Chief have well section We'll of not, supplemental the prepared of have everyone Griggs, ended earlier of Josh Financial a the presentation earnings from Thank regarding morning. QX questions. as the this AdaptHealth. call like earnings Clemens, President then for AdaptHealth some If In received should posted Everyone conference results XX, and we'll like and of of moment, Steve on the the Jason open today's Parnes, our December release for Officer AdaptHealth; to you, I'd XXXX. remarks to copy that Chief fourth slide AdaptHealth; year Executive as quarter call release

provided forward-looking differ shall have are factors no obligation Actual those results this SEC update of Corp. remind conference to forward-looking our AdaptHealth on in information statements I'd beyond. Reform begin, that to, and included quarterly call include, everyone Act. subsequent we filings. at events. statements the These within materially financial because statements our release this in Private press number not our projected length and could for of statements a results in meaning like Securities discussed Before comments reflect limited are the XXXX Litigation of in which and from may risk uncertainties, annual to such the but and call regarding constitute to

a such Steve CapEx, This of now EBITDA adjusted we the I'm Officer, will which non-GAAP all call, available EBITDA Executive is and this less be call replay measures. measures on morning's our reference adjusted Chief Griggs. equipment today. will and call recorded, financial to certain later of pleased are being patient introduce morning's EBITDA, Additionally, as financial

a with then to for going an I'm outlook Chris. review begin XXXX. provide and of you, Thank XXXX

in every the part the caused business of reduction the the For doubled order million to and We X proud our and more business. and and has a measured years, now size by very XX% in than XXXX past by our stress than chain-related supplies prospered. to grown increase often XXX% our of has directly and patients AdaptHealth receive net as of Every I'm our any and live their year. higher of life-saving homes. costs success report needed supply the growth able adjusted the resilience each XXX in We By we're I them healthier in across work, day, needs delivery approximately serve all XXXX in thank XX,XXX in this is for metrics, supply in lives February carry Despite and impacted devices, products equipment X.X of significant in EBITDA. CPAP to a patients provide this their AeroCare a It to revenue worldwide more transaction pandemic increase for short-term been a added hard members projected AdaptHealth. merger was of disruptions. most have states. that XX,XXX continued XX always in referral including spite testament to locations of our strives now partners great to with dedication. our AdaptHealth synergies, has achievement driver creativity and the out The XXXX. in team all and their mission, patients

best-in-class the technology financial enhanced together, solutions. both from companies' improvements, brought we Aside also

sources. care value and proposition the for partners and acquisitions merger we enhancing referral AeroCare are we XXXX, did the national XX company, thereby other in now a managed With truly our

direct-to-consumer addition, In also our operations e-commerce we expanded XXXX. in

Since to noting it's worth begin XXXX, July these have and to we debentures. evolved fixed million rate balance acquisitions capital sheet. in structure think fund $XXX raised our our how also to I simplify

that have rise, begun attractive transaction in rates retrospect. to increasingly looks As

Philips expensive had manufacturers to were of but AdaptHealth the acquisitions. our to XXXX been to make robust, products unable needs to the these challenge patients The continues used were the for for reduction originally we we to Philips other the anticipated, continued these contemplated. unable fourth in proceeds fill and we demand to be have This up a The PAP projecting used the all of has balance June shortage. PAP historic of retire business make organic incurred the growth. shortage most XXXX. debt in faced hopefully, company will of effect positioned than for a year. end as in machines, the Some will significant And to by well it in accretive that with face shortfall provide XXXX does, be supply its longer are and device point; to a some continued which the devices quarter of AdaptHealth through was end than and when devices resume be this recall at private unable CPAP originally had our negative new more Unfortunately, resulting on will and

the President, I'll our As to referral taken care are and the well over we've these share gain sources market position Parnes. to of believe and forward. And Josh pass patients we actions taken ensure to situations improve, the going us now made investments call we've

efficiency challenges, environment increased more chain for and operators for even serve improving year In like best-in-class add past I'd annual the AdaptHealth basis. our supply my an of ongoing patients work we their health to of and million the us X.X cost. measured employees to be an and cost important hard the throughout dedication Thank it you, is on their as by to thanks Steve. to

by AeroCare best-in-class months, integrate our teams and side to bring and businesses, the operational together the XX our have and past financial worked AdaptHealth maximize Over technologies side synergies.

for delivery statuses which a an service partners. vital that patients. a patients implemented sales real-time we teams consolidated system better allows measurably to This sales for for continuously updates our patient facility produces order updated customer our well gives and example, For experience as equipment are reporting referral to waiting that enterprise-wide their tracking as platform our physicians

with our Surgical Jason offering York, PA dramatically New will focused XX we're care already million February adding states, business Adapt's patient As of Oracle in headquartered enhancing well the close markets in as HME Community touch also into the equipment Jersey excited services also the Community $XXX XX home the improve sources. also and care referral approximately system Community in I'm leadership. many bit response experience, health a its service levels, visibility time performance deepening experienced and well we further have of complete, will to enterprise-wide robust This executive our revenue. many operational relationships River, provider in transactions with as Jersey. launched outside ERP our New brings to the clinically of New December and as a product sales which history, on merger, largest and Surgical also financial respiratory not of Supply, and acquisition but only Surgical transaction as announce is AeroCare our local Consistent and on later, X, annual expands trends. of surrounding with over AdaptHealth's years acquisition excited Toms strong

last to care. homes workflow coming and million with value-based million and that operating to out thrilled capabilities uniquely in and of patient performance We for only care this expect that on better a team across states, payers to as has and we satisfaction, organizations the through complementary anticipate The both positioned enhance there AdaptHealth high the is models. for technologies transition improved that have health and programs cost continue significantly programs payers integration together. already solutions care known leverage with opportunities $XX XX well over all smooth with strengths the continue but and in and We we of continues with add efficiencies the are brings move will as themselves underway provider more This The us reimbursement approximately the not in company expectations to care. our mile be care outcomes of managed up value-based also shared believe combination value prove X.X innovative these are years well competed as joining patient forces. increase. continuum. patient invest our we years, And and improved based to chain we into XX to as underway, savings

this do connected over the to through continuing work and what that outcomes CFO, the therapies that our I'll Jason? to payer clinical the improve will to with call provide, by pass We partners and our on Jason future we front. and excited that, devices about referral With Clemens. holds are we

XXXX. year our morning, capital Josh. allocation operating XXXX thank conclude fourth flow Thanks, quarter you updated I'll guidance our our for and for the activity the call. and with for full and cash quarter Good joining results, and fourth discuss

representing the December XXX%, XXXX. XXXX, revenue quarter $XXX X.X%, and for For in of non-acquired year-over-year Organic fourth of was February acquisition the ending reported in AeroCare including from quarter was supplement. the outlined our earnings X.X% contribution AdaptHealth growth growth that XX, as growth net closed million,

the As our ahead ability expectations revenue to of despite pleased Steve deliver impact recall. ongoing noted, were Philips we with the of

factors, profitability our by and these However, impacted margin was to negatively leading our expectations. below adjusted EBITDA

for of million EBITDA funds. adjusted in XX.X%, $XX of EBITDA adjusted Specifically, margin quarter, included onetime representing million benefit the $XXX which was PRF the

resupply which goods lower revenue. our PAPs overall related was had rental performance reducing of cost in carry business, diabetes products relative and rental we our the of PAP higher further Even availability cost pressures affected While to some to margin outperformed, a factors, lower-than-expected these businesses manufacturers, margin. these EBITDA though anticipated by from thus resulted significantly

performance consolidation quarter. spike than operations Recall, to integration pleased were the a the flow AeroCare of XXXX side, due the DSOs, of related partly in On was positive see we flow the in temporary third for billing normal connection to in the sequential improvement acquisition. cash quarter to with lower cash

improved from net just $XX collections quarter, third free million to the fourth sequentially, quarter representing up the and flow X% $XX of revenues. significantly quarter in AR fourth expected, million during over As of cash contributing negative

anticipate Additionally, AR the will remain levels elevated increased the and in order to the inventory to term cash convert company over few quarters. disruption, inventory chain we that and continued mitigate supply next short in and levels

funding for year, an reduction flow cash million. the from approximate cash million, $XX represented flow CARES For flow factors million Act was was that $XX free operations other and cash $XXX and estimate year. the recoupment to the of full We

approximately funding, of the in free $XX recoupment of improve of conversion, X% we revenue. million half this with long-term million flow approximately $XX and target the and with CARES other expect expect net free comfortable Even recoupment first of of impacts onetime of cash cash continued to for remain flow final X% XXXX. to our we We Act

year and is that AeroCare, completed environment last we performance multiple remain will exceeded transactions our also synergy. EBITDA XX being rate the was for we under be shareholder adding confident Xx, on acknowledge That outside increasingly that said, acquisition strategy average to allocation escalating XX-month EBITDA X.Xx Note including X.Xx. important net that X significant for was We of value. adjusted the our has the our capital through cash that XX-month and end liquidity revolver. company on just approximately the the under defined XXXX, exercise sheet and trailing At balance decisions. of EBITDA with $XXX the million, leverage covenants under debt was bank leverage discipline to was Available on as an

to Turning XXXX our guidance.

updating outlook across what based seeing lines. developments the we on the are We and our are latest business

now $XXX $X.X billion million billion $XXX prior billion in million prior adjusted press of million. range we revenue $XXX discussed our million of fiscal As our of anticipate $X.XXX to $X.X billion. morning's EBITDA versus versus net to And $XXX XXXX of release, to range $X.XXX to this

CapEx to revenue. net anticipate continue representing We X% of XX% to total

a Although X continuing business fourth X%. about a least we is at schedule of quarter prudent the think is environment we given it believe in normal volume the our points fee at impact the about organic growth X%, growth XXXX midpoint X the from recall, for pricing the organic growth. from the performance from and to in includes That DMEPOS set point of and operating

We discussed revenue also earlier. through added approximately $XXX of the acquisition Community million

and previous and rental This recall are relates our estimating our Community that offset is reduction now mix. we million supply by to previous it resulting challenges $XX EBITDA greater on the in impact the from our acquisition the our partly in contribution PAP guidance. from a Philips was guidance, As not

is the believe XXXX, the Although discussed that shortages assumption this of our it it call with re-base will believe alleviate will to by end we year prior on we PAP the we guidance the appropriate back year. Respironics entire take not that until the main is our equipment the half on before back supplier and of allocations will to return the market, with

I'll turn that acquisitions guidance yet closed. With our Steve. from call back contribution typical, not to the include is have As does that, not over

Q&A, the PAP a situation. Before additional we like about make comments supply I'd start the to few

or the first the country. either provider in of PAPs now second largest are We

of So million this temporary with delivered but us, supply a the estimate of We the that as of will therapy. XXX,XXX who But of will that there OSA, that estimate reduced long receive over X machines, that year. device This shortage PAP of year, begin situation years current we only affect the last XX% patients, will delivery of as typical with supply the are shortage persists. in suggests approximately PAPs their will end only approximately for X.X be waiting XXXX, patients after supply, them. diagnosed PAP prescribed need began to

questions. please sector. we backlog from position expect of and the historic the growth benefit line the in Operator, for organic sleep leadership capture this our industry, the Given share to significant open a of

Chickering come Deutsche Instructions] Our questions first of the Bank. line [Operator Pito with from

the the midpoint -- said XXXX came bridge, I the going by back guess guidance that to to $XX you million. XXXX the down EBITDA

said was sort were of You guys so are good better occurs just here? before? understand of for what the worse. get What million of CPAP the sort Can XXXX $XX that you to actually Just and where of bad we bridge, sort sort guidance. guys we the back

Jason. is Sure, address glad Pito, this I'll to be that.

band help a plus we we in those last supplement. about to million point Slide fell spike hit. I'd we where we trend expectations. patients quarter noise, Philips thought. impact $XX oxygen is had bit faster expect closer The the a to just off saw of tightened really big is, QX that in QX, the to another came $X shine million on reality the I mean and in you million $XX X in a and than is a the our COVID to we just That on line in rental missed sleep really So light

you So sleep might the are piling $X million at Well, rate look rapidly as about that certainly, XXXX, in as $XX that about we But acquisitions it if was QX but declining, million. on have there. is that the because, run million. $XX was it sleep side, rental not appear

expected X% million QX about delivered a sequentially you if been unit So million. $XX to will, rate normal quarter, what we should about portfolio, have million have growth and in X.X% per it closer $XX of should same $XX on to that that

effect there missing within then So resupply. by ended And up $XX million. the sleep is a compounding

by of that's some we're what bridge detail million. So the Yes, as we in of we seeing XXXX. QX gory to $XX brought guide down

the for kind trend most million negative QX, So Community. we of of and saw and and some for the 'XX. we upside the benefits fee of least that of early part $XX DMEPOS continuing And that for schedule have impact the then is then in netted [TAG] recall at

out you in million bridge the midpoint. will that So to $XXX our

it. Got

gets up which when if act Philips their actually, So CPAP I fade mean been going the did not increase fundamentally, headwinds, -- guys so have you ironically, should would the guys together?

November recall neighborhood question. we we quarter, of million. be mean impact would in of had Yes, reported thought without the so Without in the we $XX X, last the question. XXXX I

'XX. 'XX, we PAP of is back kind that in $XX half 'XX. now QX, be bigger $XX in rental in the just thought had So with same million we to impact number of a million that about miss $XX much million And closer would half first

we impact, we disappointing, the up. just without yes, been So but are. would It's it's where have

long-term inflation. we've more raw seeing through any lot Are One you versus push gross push seen and you you trying trying And a Okay. walk quick Can should to to vendors both of about at us to XXXX, wage manufacturers margin contracts price? looking of face you combination in -- increases manufacturers thinking here. question obviously your guys? through a model 'XX, material pricing how

it Yes. Sure, and to know start to mean, pass operationally I'll guys side, the we're Pito. what number on I seeing. the then I'll

the was DMEPOS first, So in mid-December. schedule fee announced

our accounted that line. guidance that for So and we've increase, a was ballpark in the top on X% around

that's So that schedule said. heavily inflation-based very higher certainly which up we're a my heard I fee a a inflation, X good prepared touch seeing as maybe Medicare But we is as thing brought because in you point, you DMEPOS top increase, mean metric, line remarks. about

that, So on materials. there and seeing at inflation will, you they're surcharge downstream, but is the some certainly dollar manufacturer pass-through if of level, raw

Guys, portion hit that sizable COGS. what want to a on so And of our the you will main weigh increase in manufacturers seeing with operationally? you're

seen posted. that Certainly, that public their they deal they the that we Yes. raises with, -- you've have in particular, price ones

So Outside the not we're level we've that gotten. that, their of those. ones too, raised successfully increases to nonpublic of and have is Steve, with tried way. of prices the -- also the that, dealing and Outside the this by

that's good. later So supply on be us. and to certainly as the for increased look passed issues surcharges and been XXXX. of are the would post coming chain stuff. part start the freight being certainly those and we Those expenses XXXX into -- But towards off And freight to be come

second jump this for is here, little a Josh. color. Pito, I'll just one And in

how want us 'XX able expect is of not to air quickly capture of there's back affecting But we issue most referral So conservative during money with fair freight little we what also of to Because we other to and other us expediting we market beyond be this the we or be of strategically fair kind PAPs therefore, a very impact of be from backlog. amount census, to stuck but that, amount able in generally, the to obviously, because of we strategically, positioned 'XX, we're that last feel in coming to recall we and capture But our that feel gates a this half baked was positioned rental to -- baked that on improving the costs to resume. 'XX be going and in to out get with also 'XX incurring didn't sources a to hands we're in and we capture the Philips going want really vendors freight-forwarding that's bit. expensive out whatever on. get to of kind that 'XX for approach spending could shortage but mostly PAPs the only of more product a jump

Okay.

are the that on know just you margins, question do to That's a those believe. because expediting if can the CPAP on margins and expedited diabetes crush X have or you Just are that shipping, shipping. really on that I on Just diabetes? the I thinner

It's We're other supplies just any on access this CPAP right having issues now. with point. not at

come the line Tanquilut Our Jefferies. next questions Brian with from of

I guess the my backlog there's CPAP, how about topic. first question, just building Steve, on talked just here. on staying you

So in are play still And referrals? that recaptured? Or in thoughts a doctors' up mean, system keep there you XXXX? out look on are envision your putting -- of we like past you the do kind how I as will that is showing you being just folks how that track place this obviously, guys of to get as offices. all

backlog told keep being could their in Yes. Yes, to that it's PAP. get They there. of going They're the is be come We patients. Thanks, track Brian. weeks a few those we continue. used before to

them getting global So list." this shorter but period, them, there Now it's tell this going "Well, it are doing the of with time the list." they're the is not And continuing long as any and we a patients unfortunately, And And that to on list, prescribe the supply say, get doctors get job far educating so doing a list. to "Well, chain. as let's I'm [indiscernible] sure on prescribe, the isn't they're on that few of months. we're growing, upfront I want but better list is time to

know is -- the something for So to the reality we decline they happen. going ordered The on this -- higher is now. a delivered, as it's the is, being as likely when longer between when as in long are business list to of going

of need apnea. sleep will cure "Boy, this." that But So doesn't X their patients don't amount decide, I those

So they're have still going it. to

PAP later. out system I million prescription into important let's really will patients So a that be there X But device. get it's with understand the to approximately think back a for really,

for get so they're and be anywhere going solved. somewhere And to looking that

just process, And who be so it's product. get who now, right can to going on that can

our getting So same allocations of all we're demand. historical the

just track them keeping the just as we're we're they done they informed. and and them, of in as queue, So fast fall into can, keep line them and the getting we

that product you. should And little lot just on terms growth-wise? of we guess, question past we then, the because thinking guess, seeing as the earlier. about on on we've follow a categories, in up there bit for about I think CPAP to you're seeing Maybe Pito's but spent already, be then focus what we other from is looking you're margins? And diabetes discussion Got the I a Jason, here. just of what that can one time how

Yes, sure, Brian.

start change So outside our on product I'd within organic sleep, say the there's of each growth of no these categories there. I'll in guidance so

we And at So respiratory will XXXX. that XXXX. grow grow will X% in XXXX. believe, diabetes, in that at grow HME more XX% We and categories in other or the X% we will believe believe

So change on when big sleep down X% year-over-year. think probably a there's picture, about there. We X% or look it's you no

mean at change product if And all of and But of I quarter getting so our weighted where other so it's that, X and I it we'd hands PAPs, feeling outside go. be the think for our about I the categories. recall, we're pretty run you'll right land the systems across mid weren't -- that when the in no points you average all on good mean sleep heading.

that lines -- terms just margin revenue revenue. the sleep as accounting drop doesn't $X again of in well the is rental product rental In the as the line, that comes sales that $X 'XX, and seeing same billing QX margin, so that comes that of and of nuance deterioration into you're of the with as with on the

But of it $X you to revenue all or I because so down. XXX% rental depreciation there. drops probably mean side, XX% drops rental the essentially EBITDA. essentially on got equipment a So little

sales the side. On

to the are, XX% home, margins and between at XX%. on looking diabetes So the if depending those PAP supplies or and gross product, resupply you're

we although mentioned a that's burden cost were resupply and on remarks. great with we lines, those prepared heavy we felt -- my So about coming in very outperformed that, as I

$X.XX to only that that lost dropping XX So and rental big lost And mentioned. depending rental the we on incremental product. miss $X.XX we -- we

take And PRF, by our that's million. all down for missed so basically, accounts out mid $XX you dropping when and --

And so carried is that math XXXX. into forward

You'll it see that low profile. XX%, the overall EBITDA that the in repair our look into margin adjusted push at We've mid. ahead every XX.X% that, 'XX at the upper and 'XX. We're got confidence XXs, will showing to as we exit to

come line Gajuk questions next of from Joanna America. the with Bank Our of

some is on seeing update positions Can actually Courtney This some for seeing on the to you I I think, and there quarter I wage guys back you're you the just inflation delivery guess those is what Joanna. just an shortages that what were minor And personnel. Fondufe last like turning you office back mentioned, inflation for give now? guess, positions staffing like? looking conversation,

the have certainly, has what people, you pay Well, to gone on cost up.

that to because X% And them X% took so in we building there. we're in already of XXXX, built we going forward, but there a most in of care

different On in has able gone some side, as in functions use with available, up XXXX. and the be different beginning personnel and now some things. to with less people had that's out we've the personnel to actually freed year the But challenges PAP of

our but just So in issues. it have far been PAP it's the side, as resupply without XXXX still -- people, personnel need having less we're getting is time would as a than the still hard

that's or can able be the of have more offset good the related out to field. functions certainly kind We the that's to needed the news So perform to people it. in

that, on care technology, And with add things to the efficiencies other people we essentially of much folks a do we're the in as lot a is color this a business. of more is little a of just I'll -- home Josh. as which lot some not business that

revenue -- customer less to management, which other labor. increase we service are use drive there, positions terms in offsets the somewhat impacted office can back So things of cycle technology efficiencies and in

get up efficient, revenue comes as we more and really as a So we're much. not percentage labor labor increase seeing that of

-- any here at that like that's to expect line. on massive So in deterioration net that spot we labor don't of feel terms that's kind story of good good a a have we revenue we the

specific percent as to add And a net our come that. was of down Yes. QX, to that's a actually In XX.X%, some numbers labor revenue touch.

down you'll to see when XX.X%. QX, drops early we're in K the week, So next

specifically some the of of and revenue, that lines. diabetes Now resupply in outperformance is

So again, that. we're in in labor. about that of But holding we feel great terms XX% firm revenue of

So mentioned, And not are revenue. facing growing some we labor level grow pressure. to we're any ideal. But not not same as That's going growing Steve the faster. at we're certainly we're ideally,

That's Yes. last really for I helpful. And guess me. one just X

and You what impact that recall a than is have coming expected, initially the in guys mentioned will worse overhang baking you were than longer it in.

improvement currently assuming So how of could you out? just the are in terms chain plays you supply of largely talk through kind the cadence what of

Yes.

guidance, in so our show from product we And no Philips.

allocation to we for But have ResMed. to to product able guidance. for increase also, able XXXX, our guidance to and produce been historical is an been show our to Philips in do the months. more In new haven't last guidance. from if product historical, would patients So produce that improve If will date, our their than except that few ResMed they that, able is the

permanent will So looking components, how exceed though, manufacturing to have gets hard the you going more beyond out change try figure product before components. If that's increase. do to they to get and have a there. and the share just market it. have there they They into what's to tell working Philips will forward. I are at the will don't they their get ResMed production capacity guidance to get the product people place. They the this, Why? Because out

doing same the desperately At knows they're it. Philips that. time, So

they're trying -- market desperately the market faster, back to get to So too.

you just and those So it. will a it's we of the benefactor will, if X, race between be

it's XXXX be to out. think made PAP every put be put XXXX PAP probably in will in will be I XXXX. realize every and made put important in that out out PAP will made every

the plenty product and patients going related last plenty chain forever. there's of the for I to to there's think So does, supply be a chips when and And it that product. of -- that won't and waiting

come Kevin UBS. Caliendo the with questions next Our line from of

if is it slow I limit around you does for create but to of this that or the supply state acquisition does your isn't think environment. you Can a question term, more When going keep buy? guess of impacts these acquisition issues, want long sort pressures down us steady acquiring about products? the Or plan for prompt to and Like for how my logjam term. you let's to really you of and and chain have kind continue near does strategy? you help it

Yes. going to our strategy. It's definitely affect

So out a provider, there a Philips great were heavy but customer. a Respironics there's let's say that's provider they

don't and So deal have It can we most a I make think players out would they accept. predominantly get of the them And that very smaller would of that creative very, to with Philips. just there are kind thing.

market were share. the that major were at had, look market over share ResMed all what well you think they suppliers the If I in the X

else was provider. means Philips a predominantly that So everybody

So those, you go can't just we out when at do look there and today. those

deal just I can looked great that a Philips, we see don't they had are accept. we make if at, heavy So would they how a we company,

in us. And limits right great leading about that that, our is it's very feel we acquisition Community this we within that great marketplace. then because Josh have that within So it very,

needs, that at specific solve we'll be will markets. in smaller specific So nature, that I looking think be will the deals

yes, I than be that to acquisitions environment, in a we you lot expect higher to think normal a be will them our XXXX. Josh? look So that, in could

both impacted a Yes. in said, of even deals Philips' think because of business of kind and some that I be the I we obviously, think Steve suppliers supply. did essentially, 'XX those deals we our in allocation that of heavy affected some how in 'XX, deals of about mean like Philips those valuation terms bigger total will had their

That even products those have some So whatever feed seeing as hands And allocate why on those PAPs front products. will being to Definitely, strategically respiratory the other geographically kind to say we're business, still to that. that's them. some core opportunities, of digest. opportunities. supply a were wide well. get they wouldn't the I we're the We're we looking these said, in take bought having looking as our at have did not impact we trying we had to of had, that when of and acquisitions on kind acquisitions could have we of market breadth you're providers, with of in to and lot historically at HME the diabetes

a the We deal, million as coming nice up and -- presence $XXX-plus Northeast. have for Community us in geography on

well a in internally of a that focusing we wrap about and and deals really able So any and very anticipate efficiencies. 'XX. of focused we to utilizing really on strategic? being think that our these opportunities are want market arms as are that bit I size. to But embedded I But kind respiratory we Are organizations? around grow about some there teams we kind of -- country, looking more the prudent and operating right, that of fast-growing geographies of focus any would being lot the in being done end all in little of And out where is kind what say extract that also -- we're good in a more to feel that technologies and really of kind terms those clinical definitely at that what's around real synergies feel at and we've of kind our digesting able products density, we're good of

and a our be have cut now. you're for see we to But us right digest going to So work going a still focus active. to definitely out us, lot

Fair think more look out little of of ask I the for your mean the is to back a year year? half If we is year? should how can expectation now weighted starts going the anything I that? better, that backlog follow-up, about when quick there because to get the course bit enough. about modeling should a think cadence we Is

round Kevin, more than this Jason. I But tilted The terms the it's of this is normal. in mean, out. yes, numbers, guys probably may slightly

a maybe XX%, QX to of That I this. due comes a XX% quarter as annual of think about touch to to higher probably kind last point, percent a XX% talked XX% off maybe we revenue.

the everything as Now again, the and normal. systems for rest I is all mean, business, it's go operating of

tilt a percent total rental little this going as bit. to so certainly a of is And us sleep

goes Guys, again, little the have and So lower to on. do year there? a ramping as anything in QX you add

No, that's I think right.

Blackman the Stifel. with from of come Mathew line questions next Our

for of of also it relevant? it or couple growth more give Jason. in also I a to an fourth 'XX, call of were us growth the Jason adjusted get organic exited in normalized quarter, out of you those a sort possible is some number organic you normalized Can more headwind. in a tease if that's Just sort to to and or Philips early the assume The a number? impact contracts

I'd Mat, sure. be Yes, to. glad

the contracts we more million, and prior see per closer So first, QX. might of out early I that beginning from $X that's because say was a the side, guess, expected XXXX we dwindling reaching on year, compression and I'd quarter recall, call you $X It level as know, don't impact now $X 'XX, over in PCS between typically were that in $X probably, I million was normalized contract exited million our supplement, -- at maybe of million those to the we're with 'XX PCS. exited you'll late

$XX there's expected in But a on the Philips. $XX there. a up big miss ended really and bucks talked about couple is that million of QX being million. We So picture

that I more And call growth you're that yes, to that And changes, you prudent to for we'll adjustment. think organic overall at if X% it's -- that XXXX. so X% adding -- it, make provide in going we to back closer be to upper update. again, expect -- a single-digit, mean normal certainly, X%

is or the lower that an gets still eye on on there the one should upper way the some push guidance just EBITDA on? then that the elements other are ranges, to Or that the bounds? to range, And toggle sort that. you keeping we be it other appreciate you mostly I the of or

some and a much. material I margin gee, off so is do know the I right That's to is, to look are "we your our you that. how that?" mean Are I way contemplating like the look think may "Well, say, something coming mean And response toggle. we not." at Yes. cost-out or initiative

just We're that not we here. other initiatives not the reality we Steve if have demonstrated demand and But PAPS over cost in of enough enough to is the run turnaround out we've that think bodies, going trucks, going everything enough I of years come, PCS the talked have meet people. we're enough to the about. need to

think patients do do care trains every And wait business out. day, that's the this the to keep for do right so and mean view. firm, of what is we running I and we taking this whole thing our

we everything that? get to we there's PAPs year, outside contemplate of like as come going if We're But thinking, So if these what lot already in late we of got just we the need something we're through. think where a are. Sure. more further disruption we would

Our [David with next questions Common] come from JPMorgan. the of line

sort subset million. apples-to-apples use on million, but $XXX of I and or maintenance traditional $XXX in new a sort this think, total back around, sort could I patient and whole metric minus is CapEx comment doing we that's updates the of tying patient your to I'm your could as see more of commentary go I you wrapped of EBITDA whether I ticking CapEx wanted if morning. wondered that to of to CapEx the CapEx.

sure. David,

release came So flows. cash statement I'll out that this press the point of you to morning, the

produce will there's have the in press on other you'll million. that every purchases release, cash through has flows, supplement leases. it but addition, the been at That see QX. was time in a at of And I of don't about acquired we that the out $XX assets in call You'll million bottom [indiscernible] of the and bit $XXX statement fixed equipment K it think we a see

and or add maybe it million $XXX So those I'd really numbers call together $XXX million.

of it part we ceasing view we through leases. in a earlier at going the think of $X was when And drops, it's free cleaner that We're to cash note You'll secondly, activity. just One, much the level that manufacturer just deals really had acquired some of provide year. the equipment also K cut we flow.

XXXX. or the then of run CapEx about point, million So we're guiding of for million. maintenance X we $XXX terms overall, maybe in versus terms that's of of kind generally I growth, And XX% in mean revenue $XXX so

patient equipment. X% that from call So would equipment of about be it point from and nonpatient another

be of it that squeeze last much be the it even there. trying just on that there’s growth dime out. supporting extent seems can might be uptick misreading or comment But to to And an nonmaintenance it. X%, Okay. you some not maybe – I’m versus to that every in seems to how I’m well, that

just all, acquire is of misreading I think don’t increasing. surcharge terms the and mean at and That seeing David. of you’re some these to forwarding what this we’re I is activity in freight cost No, units.

not put that this CapEx putting which we’ve of – more up some, in But seeing we got and there. because brought last PAPs. on we get technically noise impacting little But there’s why a a just happy quarter. point want we out a is about Now that mean less benefit mean if to PAPs. freight we’re out I I we’re forwarding in bit line, it in general, we’re surcharge

Hendrix line Markets. Ben come Capital of next Our from RBC with questions the

into looks and acquisition wondering the detail kind and of a of little go acquisition impact briefly with like charts more you could kind on to on Just what regard the if that Surgical X. mix Page you on the Community have business

Josh. I'll that. This take is

of Community They Northeast. ventilation, lot a business very mix very of they a business. of able about have that amount that existing really I'd a which -- the oxygen, it's our so skewed business into also respiratory that program for oxygen feel some kind full So ventilation and respiratory, business, Surgical nice there's service in attractive is and that's sleep opportunities VA but They grow learn kind have business with of a say a is lot a to What's ventilation. and kind also a from potentially is model. us of also that of clinical And nice HME. different perspective, focuses nice business, and be business to on sleep, couple -- we cross-pollination a again, of nice have

couple also but that end resupply So scale. side, challenges we years. the take sleep that sleep talent, of an once expertise good rest of think, for really respiratory clinical of kind we But the Philips the pollinate generally, and help there it across kind good kind high good there. over of side there's team us of growers Adapt can opportunity, next opportunity Good on exit really and to the the us both

excited about it. So we're

come questions Close Richard the Our next line from with Canaccord. of

some Josh, labor the some offsetting of you mentioned technology wage pressures.

guidance? also benefit and any You in XXXX systems associated tracking ERP. of system factored factored? the the into there with mentioned the the those How rollout those Is enterprise are here

these think mean we I to the 'XX management cycle things mark, AeroCare some how think coming systems of after but what only 'XX, I -- I seeing, we that we're necessarily scale as what that operational as to investment are not think revenue do but being And and organization, seeing as thing we you're take it I would think multibillion-dollar both also offsetting Sure. capacity in we didn't had and system delivery labor into support system technology say, in I this about things coming well increases. to further. the generally upgraded numbers, Adapt some is generally, more the

I'll dollars color. give guide claims in what Jason is an And type more in the forefront technologies, kind which engagement efficiencies of labor of which customer Jason a little we brings more business of more of any it's bake that. line, But has we're back labor model -- down inherent what But is, is benefit I of a extremely able exposed hidden increases creep the which up, we're technology more processing, brings more didn't not tries to do, kind to our revenue our efficiencies, to to cycle going think the that being labor to at into for operational kind ask benefiting generally, labor think As I some automated. offset it potentially that. management, office that. from and because we with are with kind particularly And there's of digital opportunity of

Sure.

I'd So here is what the company. that add across as 'XX of full technology integration exit we the we're seeing

about revenue across in common said, we cycle the X, QX, to normalize DSOs platform cycle that as We talked the that platform. fully expected And a were we We so it. QX. probably revenue And got we're as we days. seeing now. exit up We've that integrated X conversion activity

XXX-plus note We're You'll as expected. And DSOs over our a mean running are and X% of down we in I continue increase. revenue, touch back correspondingly, to the days. X is will financials, cash flowing that every we're in live secondly, HCM locations. a fully platform and employee is capital. And Single or the then on XX,XXX HRIS enabled company, all at for in at common platform Oracle human And for finally, plus.

As flowing in work, we placed downstream and POs it's new It's are being of the day all particularly the terms electronically. office. stand payments here matched today, the electronically. are a getting requisitions mean just company we go way there in electronically. I in back

to I'd And $XXX and so the to and $XX We're pegged 'XX, CARES that generation at achieve repayment as have and at is pushing would show over between carriers we mean in XXXX. have the the course cost the of achieve to remarks. about flow plus that the without the cash that's flow I cash really previously, heard in of $XX what cost we that synergy million had talked itself going in that been that you cash without been recoupment. number would looking my million. million generated prepared say

that and and a QX, part looking will we're at QX, million that there's of done as as $XX remaining recoupment out now So will go final. CARES be

a see that we all 'XX be the core think it probably reporting or investments. as lap quarter. cash deal business value $XX in outs. Oracle the such again. of some will million and so you're that, from costs a general misunderstood that, the focus nonrecurring. get to going start ensuring finalize part as huge it's frankly, about And So that these And We in We'll we extracting company. just to We important another was out we flow, our just with of ins every that be won't due

about and we're of and that because we But ins hard where anybody we feel stand for investments the here blame it's outs. about So there great a as heading. lot today, are to we made

on be appreciate that. final I would the And programs. then Okay. question my care value-based

Can go through your that the time? of million. just there, value-based regular with where you was you maybe compared business? associated over number walk just like on that economics I think sort expect to $XX the as to us then care exposure And

Yes. Sure.

things X of we $XX then taking hey, the So somewhere spending kind programs the their or the terms threw like number in could million we business outcomes, is year. and give of We between kind number underwrite a today. of there those delivery And book $XX metrics with that. and to want it now and what you was times of $XXX million. product supply patient full to in saying, terms and plan whole spend It's mixes and it either out of HME essentially, we're satisfaction respiratory different and dollars PMPM right probably of million and want you do

to able it, the it some respiratory that to to sort on in want geographies the able delivery for improved we times. we of our operate So ventilation satisfaction cost take flavor to allows plan to from that whatever to supplies is across really to we to with because in metrics, rehab a into offer -- essentially out essentially engaging I'd payers Every want customer -- focus custom being everything product different. they is be it lot of the us take a of obviously plans, some of out capabilities And and have plans well different mix on terms cost is -- We're does say in. of last and spent U.S. are over plan we're year, essentially, number time some we it. what

So one-size-fits-all we of connected able these homes. are a allow and us have be to in devices at pipes modem. help delivery, provider low-cost connected existing patients being home, outcomes have mile But being as what efficient the the we such not an to obviously last we as and lot mentioned plus that this and essentially, ventilators we what in to a do because Those a is patients' cellular the to situation. these products able is believe CPAPs, CGMs lower drive into cost

the existing with We relationships patients. have

of. doctors, the health came existing plans, that have with the they relationships systems out with with We health the

also positioned able So be we're crossroads we the uniquely sit like to at care the we time. a between only outcome over a stakeholders all better but important take feel out not able provide to very be in health And to cost continuum.

pretty So in going capital going do. into the something figure spend technology that core do human both spend 'XX what to the in it, perspective. that's No. gain to time believe to We're Is as we're we're baking from quickly. of focus that guidance? a it. years a coming out, on and But we like going that investment that it traction we We're could

about excited yet. we're not So but our we're chest thumping it,

at for are like to over would no Steve questions CEO, the comments. call closing I further time. turn to There Griggs, this any back

your your updating support, day. interest Yes. as and forward all and year. it. Thanks Appreciate the great you for a Have progress look to continued to we things throughout

This does appreciate conclude today's teleconference. participation. We your

your day. Enjoy time. of rest this the lines your You at may disconnect