AdaptHealth Corp. Common Stock 2026 Jefferies Healthcare Services and Technology Conference

Sure. Let me start with why I chose to come to Adapt. Adapt, market leader, great market positioning, opportunity to grow significantly. No issues to speak of, just pure change of leadership there. I'm excited to come in and provide help to provide that next step of growth for the company. My background, 20-plus years in the public company environment at Luminex Corporation, a biotech company in Austin, Texas. We implemented SOX. We grew the company from zero revenue, took it public, got it up to a couple billion dollar valuation, sold it to DiaSorin. A lot of work there, a lot of similar things to do here when you're on a significant growth trajectory. I look forward to being able to apply all the scars and bruises and scrapes that I built over that time to help Adapt as we move forward.

Sure. Before I start there, I just officially want to welcome Harriss. This is our first appearance together.

Thank you. I also, given this is a webcast, want to say thank you to our prior CFO, Jason Clemens, many of you know, and really brought the company through some very good and difficult times.

I just want to acknowledge his six-plus years of service to Adapt and wish him well, and he says hi to all his friends. I officially welcome my new partner and CFO. The business. 2Q did come with a lot of new news. We have been, over the last couple of years, really transforming Adapt to what its full potential can be. If you think about what we were focused on the last couple of years, it was, one, around the leadership team and talent. We have brought in a significant amount of leadership and talent across the business, which I am very proud of that.

They have all now got a year or two in seat, and you are starting to really see the difference that they are making. The second thing is we got very focused on our portfolio. The first reason we had to do that was obviously we wanted to get serious about paying down our debt, which we have made progress on over the last couple of years, but we also wanted to simplify the business. For those of you that are newer to the Adapt story, it was over 100, I think over 160 acquisitions over a couple of years that came together. Through those acquisitions, each acquisition had a different portfolio. Not different, they had the core products, but they would have these, what I will call little stragglers.

When we looked at our portfolio a couple of years ago, we had a lot of businesses that were not at scale or were not profitable. We set out to clean up our portfolio and to make it focused on sleep, respiratory, and what we call our wellness at home, which is our home medical equipment. That work, once diabetes is divested in the first half of next year, is basically complete. We have pruned the portfolio to a point that we can be super focused on driving the best clinical and economic value for patients in sleep health, respiratory health, and home medical equipment. That was part two. The third part that we have been focused on the last couple of years is what I call acquiring patients, and there are two big moves we have made there.

The first one was we stood up what we call our enterprise commercial team. That is a team that is now calling on big hospital health systems, and we are making great progress there, where we can go into a geography, be the preferred provider for these hospital health systems, and build around that footprint. The other big move we made is we expanded our capitated business. A few years ago, we became the capitated provider, one of two capitated providers for Humana across the country, and that has performed very well for us. We have a handful of other capitated arrangements with patients, but about two quarters, three quarters ago now, we went live with Kaiser Permanente across the entire country, and that has been a big move for us. What it did for us strategically is it allowed us to enter the West Coast.

We were mostly an East Coast, Midwest company, and with the addition of this business, we stood up 40 brand-new locations in California, thousands of people, fleet, and it was a gigantic undertaking. Right now what we are working through is getting that business performing to its expectations, which I am confident it will, and that capitated business, what it does for us is it allows us to take big chunks of patient volume and make it exclusive to AdaptHealth. That is what is driving partly some of the consolidations that is happening in this industry, and we are well prepared now with a national footprint to continue to drive that volume of patients our way.

Contracts like Humana or Kaiser, whatever it may be, they are far and few between, and you take one big one on and you digest it, and then I do not even know if there is another one of that size. We are now digesting that. Small little ones, regional ones, are totally fine right now. But until we, in the spirit of simplifying our business and being methodical, we will get that one right, and then we will think about the next big expansion. But we are open to the smaller ones around that, as evidenced by last quarter when we announced the expansion of Humana into Florida and Texas. Easy for us, digestible, we did it. In terms of how I think about capitation in general as a growth driver. Last quarter, we put up 16% organic growth.

We foresee that this year, because of that contract, we will deliver very nice organic growth, and that was part of the strategy, we had to first get the patients cared for no matter what it took. Think of it this way. This is how these arrangements work, the customer and AdaptHealth get together. We look at data that suggests that for this patient population, this is what you can expect in terms of utilization. It is actually pretty straightforward. When that is an accurate data set, you can forecast utilization. As you get going in the relationship, there is always tweaks. Oh, okay, that data may not have been 100% right on. We have to adjust. In the spirit of partnership, when you have an exclusive relationship with a payer, everybody wants to get it right.

The contract calls for later corridors and all of that, but out of the gate, the partnership wants to get it right. Why? Because the patient is the one who suffers if you do not. You go into this with the spirit of partnership that says, "Okay, this is what we would expect." Then we compare that up against actuals, and then the partnership works to adjust that accordingly. Because if it does not get right, and one of the parties falls down in its responsibility, that patient cannot get discharged. They are missing a discharge from the hospital, which is way more costly, I can tell you than having that patient be transitioned out to our care. 25% of hospital discharges result in some kind of product that comes from a home medical equipment and service provider.