AdaptHealth completes acquisition of AeroCare

NASDAQ:AHCO   AdaptHealth Corp.
The Home Medical Equipment and Supply industry saw a tremendous amount of growth in 2020 thanks to the COVID-19 pandemic. Growth was especially strong in home delivered medical supplies. Even as the pandemic gets closer to an end, there is still a lot of growth to be had in the industry.

The aging population of the United States is one area that will continue to provide growth for HME. As the population of 65+ people grows from 56.1m to 73.1m, the accessibility and cost savings of treating common ailments at home will drive demand. There is an estimated 26% of the adult population from 30-70 years with sleep apnea, but around 80% continue to be undiagnosed. Finally, the third area of growth is in the expanding number of Americans diagnosed with diabetes. It's estimated that the disease and it's complications runs up to $327 billion in medical costs annually.

AdaptHealth Corp

AdaptHealth is a provider of home healthcare equipment, supplies and related services in the United State. Most of their product revenue comes from sleep therapy equipment, respiratory equipment and diabetes equipment and supplies. They have a current market cap of $3.8b, ~$800 million of annual revenue (est 2020), and gross margin of 23.26%.

AdaptHealth was launched into the public market via a special purpose acquisition company called DFB Healthcare Acquisitions Corp. The reverse merger was completed on November 8, 2019. Since then, they have continued to add acquisitions of small and mid-size HME, diabetes and supply companies. In the last two years, acquisitions have add $910 million of annual revenues to the company. They estimate that another 6000 small to mid-size HME, diabetes and supply companies are potential future acquisition targets.

On February 1, 2021, AdaptHealth completed the acquisition of AeroCare holdings for approximately $1.1 billion in cash and 31 million shares. As a result of the acquisition, AdaptHealth increased 2021 revenue guidance from $1.30b to $1.40b to a range of $2.05b to $2.20b. AeroCare was previously noted as one of their largest competitors.

Other competitors include Apria Healthcare, Lincare and Rotech.


Market Cap: $3.8B
Gross Margin (TTM): 23.26%
Price/Sales (TTM): 1.98
Price/Book: 15.73
LT Debt/Equity: 161.10% (fund M&A)

EPS last 4 quarters:
12/2019 -0.10
3/2020 -0.01
6/2020 +0.08
9/2020 -0.04

Sales last 4 quarters:
12/2019 149.5m (+38% YoY)
3/2020 191.4m (+60%)
6/2020 232.1m (+87%)
9/2020 284.4m (+108%)


Breakout from Consolidation
39.86 Buy Point (up to 41.85)
New All-time High
New RS Line High (Green dot)
ATR Stop of only 11.06%

Buy Point: 39.86
ATR (x2.7) Stop: 11.06%
Stop Loss: 35.45
Position Size: R9.04


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