Executive Summary

Q1 2025 revenue of $777.9M declined 1.8% YoY, but was $13.1M above the midpoint of company guidance, with strength in Respiratory and improving trends in Diabetes; Adjusted EBITDA of $127.9M came in the upper half of guidance as mix headwinds and Diabetes margin pressure compressed margins to 16.4% .
Management lowered FY25 guidance on May 6 to reflect sale of incontinence assets (revenue to $3.18–$3.32B; adj. EBITDA to $665–$705M; FCF unchanged), and further reduced FY25 ranges on June 30 after closing infusion asset sale (revenue to $3.150–$3.290B; adj. EBITDA to $662–$702M; FCF to $170–$190M) .
Segment trends: Respiratory grew 3.3% on strong flu-driven oxygen setups; Sleep revenue fell 2.8% and faced a non-cash mix shift (~$30M FY headwind, ~half in Q1); Diabetes revenue fell 8.0% but new starts improved for a second straight quarter and attrition was best in two years .
Balance sheet and cash: Operating cash flow rose to $95.5M, capex was $95.6M (12.3% of revenue), net debt was ~$1.96B (2.98x net leverage); dispositions and repayments continue to target ~2.5x net leverage over time .
Management views tariff risk as manageable given Nairobi Protocol exemptions and manufacturer onshoring; Q2 guide implies flat revenue YoY and 18.3–19.3% adj. EBITDA margin, with mix and Diabetes the primary headwinds—key near-term stock catalysts include evidence of sustained Diabetes recovery, Sleep setup acceleration, and progress on capitated payer arrangements .

What Went Well and What Went Wrong

What Went Well
- Respiratory strength: Oxygen setups outperformed amid a severe flu season; Respiratory revenue grew 3.3% YoY to $165.5M and set a first-quarter census record of 325K patients .
- Diabetes healing: Second consecutive quarter of sequential new-start improvements; resupply attrition best in two years; pumps showed growth—management is “confident that the turnaround in diabetes is happening” .
- Deleveraging and focus: Closed/announced asset sales (incontinence, infusion) to sharpen strategy and prepay debt; reiterated capital allocation toward organic growth and debt reduction .
What Went Wrong
- Sleep softness and mix: Sleep revenue down 2.8% to $316.4M with new setups “slightly behind expectations”; non-cash shift from purchase to rental (~$30M FY headwind, ~half in Q1) weighed on margins .
- Margin compression: Adjusted EBITDA margin fell to 16.4% from 20.0% YoY due to Diabetes gross margin pressure and Sleep mix headwinds flowing through to the bottom line .
- Selling-day headwind: Q1 had one fewer selling day (~$8M revenue impact), an extra drag on sales revenue within the quarter .

Financial Results

Metric (USD)	Q1 2024	Q3 2024	Q4 2024	Q1 2025
Revenue ($MM)	$792.5	$805.9	$856.6	$777.9
Adjusted EBITDA ($MM)	$158.5	$164.3	$200.6	$127.9
Adjusted EBITDA Margin (%)	20.0%	20.4%	23.4%	16.4%
Diluted EPS ($)	$(0.02)	$0.15	$0.34	$(0.05)
Cash from Operations ($MM)	$49.0	$144.4	$150.4	$95.5
Free Cash Flow ($MM)	$(38.9)	$84.8	$73.1	$(0.06) (=$58K)
Capital Expenditure ($MM)	$87.9	$59.6	$77.3	$95.6
Capex as % of Revenue	11.1%	7.4%	9.0%	12.3%

Notes: Company did not provide Street consensus in filings; see Estimates Context for S&P Global status. Q1 revenue exceeded company guidance midpoint by $13.1M; adj. EBITDA was in upper half of the guidance range .

Segment Breakdown (Q1 2025)

Segment	Revenue ($MM)	YoY Change
Sleep Health	$316.4	(2.8)%
Respiratory Health	$165.5	+3.3%
Diabetes Health	$138.8	(8.0)%
Wellness at Home	$157.2	+0.7%

KPIs and Operating Metrics (Q1 2025)

KPI	Q1 2025	Prior/Context
Sleep new setups	~113,000	Seasonally lower in Q1; slightly behind expectations
Sleep census	1.68M patients	+19,000 QoQ
Oxygen census (Respiratory)	325,000 patients	First-quarter record
GLP-1 usage in CPAP survey	15.7%	15.3% in Q4 2024
Selling-day headwind	~$8M revenue	1 fewer business day vs prior year
Operating cash flow	$95.5M
Capex	$95.6M; 12.3% of revenue
Free cash flow	≈$0M (−$58K)
Net debt; net leverage	~$1.96B; 2.98x	2.79x in Q4 2024

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2025	$3.22B–$3.36B (2/25/25)	$3.18B–$3.32B (5/6/25)	Lowered (incontinence sale)
Adjusted EBITDA	FY 2025	$670M–$710M (2/25/25)	$665M–$705M (5/6/25)	Lowered (incontinence sale)
Free Cash Flow	FY 2025	$180M–$220M (2/25/25)	$180M–$220M (5/6/25)	Maintained
Revenue	FY 2025	$3.18B–$3.32B (5/6/25)	$3.150B–$3.290B (6/30/25)	Lowered (infusion sale)
Adjusted EBITDA	FY 2025	$665M–$705M (5/6/25)	$662M–$702M (6/30/25)	Lowered (infusion sale)
Free Cash Flow	FY 2025	$180M–$220M (5/6/25)	$170M–$190M (6/30/25)	Lowered (infusion sale, cash taxes)
Revenue	Q2 2025	Flat YoY vs $806M in Q2’24	—	Informational (disposals ~$22M; non-cash mix ~$8M)
Adjusted EBITDA Margin	Q2 2025	18.3%–19.3%	—	Down YoY from 20.5%

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3’24 and Q4’24)	Current Period (Q1’25)	Trend
Tariffs/macro	No Q3 specifics; Q4 set 2025 outlook without tariff detail	Exposure viewed as manageable; Nairobi Protocol exemptions; no surcharge seen; no guidance change for 2025	Reduced concern; monitored
Diabetes recovery	Q3: portfolio optimization; Q4: focus areas incl. delivering organic growth	New starts improved 2nd straight quarter; best attrition in 2 years; pumps grew modestly	Improving
Sleep mix shift / execution	Q3: asset sale (custom rehab); no Sleep mix detail	~$30M FY headwind (purchase→rental), ~half in Q1; setups slightly behind; targeted ops plans to regain speed/share	Headwind in H1; mitigation in progress
Managed care/capitation	Q4: One Adapt, payer progress among focus areas	Growing pipeline of capitated arrangements; Humana a “bright spot”	Building momentum
AI/technology & operating system	Q4: accelerating AI/automation; Adapt Operating System	Automating intake, documentation, scheduling; improving CPAP conversion and patient comms	Execution phase
Portfolio focus/deleveraging	Q3: sold custom rehab; Q4: definitive incontinence sale	Closed incontinence sale; signed infusion sale; debt paydown; later closed infusion (6/30) with further guide update	Continuing

Management Commentary

“First quarter revenue exceeded midpoint of our guidance range by $13.1 million… driven by stronger than anticipated revenues in our Respiratory Health segment as well as in our Diabetes Health segment.” — CEO, Suzanne Foster .
“Adjusted EBITDA was in the upper half of our guidance range… Adjusted EBITDA margin was… 16.4%.” — CEO .
“We reduced our debt balance by another $25 million in Q1… we are steadily tracking toward achieving our target of 2.5x net leverage.” — CFO, Jason Clemens .
“Given our current understanding of tariff policy… we do not currently believe it is necessary to adjust our full-year guidance for tariffs.” — CFO .
“Diabetes… new starts improved sequentially for the second consecutive quarter, and our… attrition rate was the lowest we experienced in 2 years.” — CFO .

Q&A Highlights

Diabetes momentum: Pumps grew modestly; CGM new starts improved sequentially; retention at record levels underpin confidence in turnaround .
Sleep execution and share: Softness was localized; company needs faster setups and better conversion in certain states; detailed remediation plans in place .
Q2 bridge and margin: Flat revenue vs Q2’24 masks underlying 3–4% growth due to ~$22M disposed revenue and ~$8M non-cash mix; these weigh ~1pt on EBITDA margin YoY .
Tariffs/Nairobi protocol: Many products likely exempt; CGM exposure nuanced but manufacturers indicated manageable impact; no 2025 guide change; 2026 exposure commentary improved vs March .
Capex driver: Step-up tied to Respiratory strength (flu season) and patient profile, not tariff pre-buys .
M&A: Pursuing modest tuck-ins, including in Sleep-challenged markets; any deals would be reflected in updated guidance when closed .

Estimates Context

S&P Global consensus for Q1 2025 and Q2 2025 (EPS, revenue, EBITDA) was unavailable via our data connector at the time of this analysis; as a result, we cannot quantify beat/miss vs Street for Q1 or embed Q2 consensus. Values retrieved from S&P Global were unavailable to display here due to data limitations.
Company-reported context: Q1 revenue exceeded the midpoint of company guidance by $13.1M, and Adjusted EBITDA was in the upper half of the company’s guidance range .

Key Takeaways for Investors

Near-term setup: Q2 guide embeds continued mix/Diabetes pressures and disposal headwinds; watch for H2 relief as Sleep mix headwind rolls off and Diabetes normalizes, consistent with management’s implied back-half ramp .
Diabetes is the swing factor: Sequential improvements and record retention suggest a bottoming process; sustained execution could re-accelerate organic growth and expand margins .
Respiratory tailwinds: Strong oxygen demand and elevated census support stable growth and durable rentals; flu season strength validated field sales motion .
Sleep execution fix: Localized share and setup speed issues are operational; progress on conversion/throughput and tuck-in M&A could restore growth against non-cash mix headwinds .
Deleveraging and focus: Portfolio pruning and debt reduction materially de-risk the balance sheet; management reiterates 2.5x leverage target over time .
Tariff risk contained: Nairobi exemptions and onshoring by suppliers reduce 2025 risk; 2026 exposure outlook improved vs March commentary .
Trading lens: Evidence of continued Diabetes recovery, faster Sleep setups, and payer-capitated wins are likely stock catalysts; conversely, a slower Sleep/Diabetes recovery or larger-than-expected mix/tariff impact would be negative .

Supporting Primary Sources (Q1 2025 and Prior)

Q1 2025 8-K (Press release, financial statements, non-GAAP reconciliations): .
Q1 2025 Earnings Call Transcript (prepared remarks, segment detail, guidance, Q&A): .
Q4 2024 8-K (results and initial FY25 outlook): .
Q3 2024 8-K (results; asset sale; FY24 outlook update): .
Other Press Releases (Q1 window and post-Q1 updates): Earnings release (5/6/25) ; earnings release date (4/21/25) ; investor conferences (5/13/25) ; infusion asset sale and FY25 guidance update (6/30/25) .

AdaptHealth Corp. (AHCO)·Q1 2025 Earnings Summary