AdaptHealth Corp. (AHCO) Business

Item 1. Business

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. The Company operates under four reportable segments that align with its product categories: (i) Sleep Health, (ii) Respiratory Health, (iii) Diabetes Health, and (iv) Wellness at Home. A description of the products and services provided within each of the Company’s four reportable segments is provided below.

Sleep Health

The Sleep Health segment provides sleep therapy equipment, supplies and related services (including continuous positive airway pressure and BiLevel services) to individuals for the treatment of obstructive sleep apnea.

Respiratory Health

The Respiratory Health segment provides oxygen and home mechanical ventilation equipment and supplies and related chronic therapy services to individuals for the treatment of respiratory diseases, such as chronic obstructive pulmonary disease and chronic respiratory failure.

Diabetes Health

The Diabetes Health segment provides medical devices, including continuous glucose monitors and insulin pumps, and related services to patients for the treatment of diabetes.

Wellness at Home

The Wellness at Home segment provides home medical equipment and services to patients in their homes including those who have been discharged from acute care and other facilities. The segment tailors a service model to patients who are adjusting to new lifestyles or navigating complex disease states by providing essential medical supplies and durable medical equipment.

The Company services beneficiaries of Medicare, Medicaid and commercial insurance payors. As of December 31, 2025, AdaptHealth serviced approximately 4.3 million patients annually in all 50 states through our network of approximately 640 locations in 48 states. The Company's principal executive offices are located at 555 East North Lane, Suite 5075, Conshohocken, Pennsylvania 19428.

Company Operations

Product Offering. AdaptHealth delivers patient-centered, healthcare-at-home solutions including home medical equipment, medical supplies, and related services directly to a patient’s home upon discharge from a hospital and/or receipt of a physician/medical referral. The breadth of AdaptHealth’s products is particularly valuable to acute care hospitals, sleep laboratories and long-term care facilities that discharge patients with complex conditions and multiple product needs.

For resupply sale and one-time sale products, which include those deemed to be consumables, AdaptHealth receives a single payment upon sale of the product. These products, which include positive airway pressure ("PAP") masks and related supplies, continuous glucose monitors ("CGM"), diabetes management supplies, orthopedic bracing, wound care supplies, home medical equipment and related accessories, incontinence supplies, medications, enteral supplies, and other products, accounted for approximately 63% of AdaptHealth’s net revenue for the year ended December 31, 2025.

AdaptHealth is paid a fixed monthly amount for certain HME products as designated by the Centers for Medicare & Medicaid Services (“CMS”) or commercial insurance payors, such as oxygen and home mechanical ventilation equipment, PAP equipment, hospital beds, and other products. These sales accounted for approximately 33% of AdaptHealth’s net revenue for the year ended December 31, 2025.

AdaptHealth 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

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managing a range of healthcare services and associated costs of its members. In at-risk capitation arrangements, AdaptHealth 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. These at-risk capitation arrangements accounted for approximately 4.0% of AdaptHealth’s net revenue for the year ended December 31, 2025.

Supply Chain. AdaptHealth plays an important role in delivering HME products to patients in their homes. Manufacturers of home medical equipment and diabetes medical devices sell and ship their products to AdaptHealth directly. AdaptHealth also contracts with national healthcare distribution companies to ship certain HME products and diabetes medical devices directly to patients’ homes. These distributors invoice AdaptHealth for the cost of shipped products at the time of sale. AdaptHealth receives referrals from a variety of sources, such as acute care hospitals, sleep laboratories, pulmonologist and endocrinologist offices, skilled nursing facilities, hospice operators, and primary care providers, among others. AdaptHealth’s products are either shipped to patients’ homes by AdaptHealth-operated or contracted delivery trucks or shipped using proprietary or third-party distribution services. AdaptHealth invoices payors and patients directly for the products that are delivered and for the services that are provided.

Operating Structure

Management. AdaptHealth is led by a proven management team with experience across a variety of organizations in the healthcare industry. AdaptHealth's management structure is strategically aligned through its four reportable segments, which each have a general manager who are responsible for the operations of each segment. These general managers report to AdaptHealth's Chief Operating Officer. AdaptHealth has a centralized approach for key business processes, including revenue cycle management, purchasing, payor contracting, mergers and acquisitions (“M&A”) activity, finance, compliance, legal, human resources, IT, resupply and sales management. However, AdaptHealth believes that the personalized nature of patient care and referral relationships, characteristic of the home healthcare industry, also requires a focus on operating locally as well. AdaptHealth responds promptly and effectively to local market demands and opportunities through local managers, who are responsible and accountable for maintaining and developing relationships with referral sources and serving patients.

IT. AdaptHealth has established an integrated, technology-enabled, centralized platform, distinguishing itself from many of its competitors that traditionally use less automated processes that are typically complex, can be prone to mistakes and are less efficient. AdaptHealth’s technology enables automated, compliant, and integrated workflow into patients’ delivery of care. AdaptHealth believes that this advanced technology platform provides it with a competitive advantage through its unique components that cater to patients and physicians. AdaptHealth believes that its technology platform has several characteristics that appeal to physicians, including its ease of use, the improved compliance it enables through its integrated systems, and the automated, integrated workflow it provides for patients’ delivery of care. AdaptHealth has formed close relationships with its third-party software providers to optimize its workflow. Additionally, AdaptHealth’s e-prescribing capabilities enhance transparency and reduce transcription and other errors. AdaptHealth believes that patients are also better served due to the efficiency from time of order to delivery and the seamless integration across points of care enabled by AdaptHealth’s platform. The integrated system also provides AdaptHealth management with critical information in a timely manner, allowing them to track performance levels company wide. AdaptHealth utilizes a proprietary mobile delivery technology called OTL, which has many features, including delivery notification, patient satisfaction applications and referral source notifications.

We are deploying innovative programs, which use artificial intelligence, including generative artificial intelligence and similar tools and technologies (collectively, “AI”), to improve or enhance patient and operational workflows. AI deployment involves internal resources as well as strategic partnerships focused on patient experience and operational efficiencies. Any creation, use, or deployment of AI may subject us to additional risks under HIPAA and other laws and regulations governing privacy or AI. To the extent we use personal information to train AI, we are required to comply with laws, regulations, and contractual requirements governing uses and disclosures of personal information, which may require us to obtain patient authorizations or to de-identify personal information or protected health information. In addition, the Federal Trade Commission (“FTC”) has announced that they are taking a closer look at how AI is developed and used, including evaluating claims by companies regarding AI that could be false or misleading, to take appropriate steps to reduce biases. For further discussion on AdaptHealth’s use of AI, see Item 1A, Risk Factors – “The use or anticipated use of artificial intelligence (“AI”) technologies, including generative AI, by us or third parties, could result in reputational harm, competitive harm, and legal liability, and may increase or create new operational risks.”

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See Item 1C, "Cybersecurity", of this Annual Report on Form 10-K, for discussion of AdaptHealth's risk management and strategy and governance relating to cybersecurity.

Revenue Cycle Management. AdaptHealth’s revenue cycle management and billing processes have both automated and manual elements that are designed to maintain the integrity of revenue and accounts receivable. A majority of AdaptHealth's third-party payors can accommodate electronic claims submission, such as Medicare, certain state Medicaid payors and many commercial insurance payors, and are billed electronically on a daily basis. For payors that are unable to accept electronic submissions, AdaptHealth generates paper claims and invoices.

Outsourced Providers

AdaptHealth contracts with business process outsourcing providers to provide certain billing, accounts payable and administrative functions. These providers are primarily based in India and the Philippines, and provide AdaptHealth with the ability to scale its workforce in a cost-effective manner. As of December 31, 2025, approximately 4,400 full-time equivalent personnel were provided to AdaptHealth under such arrangements.

Sales and Marketing

Sales activities are generally carried out by AdaptHealth’s full-time sales representatives with assistance from on-site liaisons in certain markets who interact directly with hospital discharge coordinators and patients. AdaptHealth’s sales team works in close alignment with AdaptHealth’s trained clinical team as part of their sales activities. AdaptHealth primarily acquires new patients through referrals, and also acquires new patients through capitated arrangements with various managed care providers. Sources of referrals include acute care hospitals, sleep laboratories, pulmonologist and endocrinologist offices, skilled nursing facilities, hospice operators, and primary care providers, among others. AdaptHealth’s sales representatives maintain continual contact with medical professionals across these facilities. AdaptHealth believes that its relationships with its referral sources are strong and that these entities will continue to be a source of organic revenue through new patients. While AdaptHealth views its referral sources as fundamental to its business, no single referral source accounted for a material amount of its annual net revenue as of December 31, 2025.

Acquisitions

Continuing to grow through accretive acquisitions remains an element of AdaptHealth’s growth strategy, and AdaptHealth continuously reviews its pipeline of potential acquisition candidates. AdaptHealth also leverages the acquisition of equipment from previous providers to facilitate the transition of patients related to newly awarded at-risk capitated contracts. The revenue related to these newly awarded contracts is considered organic revenue. AdaptHealth leverages its scalable front-end and back-office technology platform to facilitate acquisition integration to help realize short-term cost saving synergies and longer-term revenue growth synergies.

Suppliers

AdaptHealth purchases home healthcare equipment, medical devices and supplies from a variety of suppliers. AdaptHealth purchases these items primarily from two to three suppliers for each of its product categories, including its sleep therapy equipment and supplies, its mobility and home services products (such as hospital beds, wheelchairs, walkers and commodes) and its diabetes services products/CGM products.

Facilities

AdaptHealth does not own any properties and leases its operating locations. As of December 31, 2025, AdaptHealth serviced approximately 4.3 million patients annually in all 50 states through its network of approximately 640 locations in 48 states. During the year ended December 31, 2025, AdaptHealth completed an average of approximately 38,500 equipment and supply deliveries a day. Full-service locations average approximately 5,800 square feet and are usually a combination of office and warehouse space. Many of these facilities are accredited to provide patients with medical products, equipment and related services, and their adjacent warehouse space is used for storage of adequate supplies of equipment and accessories for such patient services. AdaptHealth believes that these facilities are adequate to meet its current needs. AdaptHealth reviews its facility footprint on a regular basis and adds locations as needed to support patient growth.

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Human Capital Resources

As of December 31, 2025, AdaptHealth had approximately 10,900 employees. AdaptHealth’s human capital resources objectives and compensation program include attracting and retaining highly motivated, well-qualified employees and executives. AdaptHealth uses a mix of competitive salaries and other benefits to attract and retain employees and executives. AdaptHealth believes that relations between its management and employees are good, and it is committed to inclusion and policies and procedures to maintain a safe work environment. AdaptHealth is committed to its DIRECT Value Statements: Diversity and Inclusion, Integrity, Respect, Excellence, Compassion and Teamwork.

Talent Development and Retention

Building and strengthening AdaptHealth’s talent pipeline is imperative to its success. AdaptHealth's management team has a dedicated annual performance management review process which provides a platform for feedback conversations around performance and goal setting. Leadership development trainings have been delivered quarterly including topics on change management, conducting critical performance discussions, and talent acquisition practices. This encourages learning among our leaders and continues AdaptHealth’s building of a foundation of excellence. AdaptHealth has also launched AdaptUniversity, a national learning system designed to teach valuable job skills that focus on operational efficiencies and offer pathways for career development.

Competition

The HME market is fragmented and highly competitive. AdaptHealth competes with other large national providers, including Accendra Health, Lincare Holdings Inc., Rotech Healthcare, Inc., Cardinal Health, Inc. and Quipt Home Medical Corp; regional providers, including DASCO Home Medical Equipment, Binson’s Medical Equipment, Inc., Norco, Inc., Protech Home Medical Corp., and Viemed Healthcare, Inc.; and product-specific providers, including Breg, Inc., Inogen, Inc., Acelity L.P., and CCS Medical, as well as numerous other smaller local providers. In addition, AdaptHealth competes with non-HME providers, including CVS and Amazon.

Consolidation of the HME market is a continuing trend, as required technology investments and reduced reimbursements put financial pressure on smaller providers. Larger HME providers with integrated technology and automated processes are generally better positioned to gain market share and more attractive vendor pricing. The Medicare Durable Medical Equipment, Prosthetics, Orthotics, & Supplies (“DMEPOS”) Competitive Bidding Program also emphasizes the importance of relationships with both the payors and referral sources. Because payors typically select a limited number of exclusive suppliers, and physicians typically refer based on timely delivery and consistency, relationships with both are critical to success in the market.

AdaptHealth believes that the most important competitive factors in the regional and local markets are:

•Quality of patient care, including clinical expertise;

•Service quality and an efficient, responsive referral process;

•Differentiated technology platform that provides a superior physician and patient experience;

•Reputation with referral sources, including local physicians and hospital-based professionals;

•Comprehensive offering across the home medical equipment space;

•Broad network of payor contracts and regional insurers; and

•Overall ease of doing business.

AdaptHealth believes that it competes favorably with competitors on the basis of these and other factors.