AdaptHealth Corp. Q2 2025 results

Adjusting for revenue disposed to our recent divestiture, revenue was, as expected, in line with the second quarter of the prior year. Our adjusted EBITDA margin was 19.4% at the high end of our balance range. Free cash flow was $73.3 million in the second quarter, ahead of our expectations, and we are on track to meet our free cash flow guidance for FY 2025. Starting with non-acquired growth, we are leveraging our organizational strengths to address payer preference and build a pipeline of new capitated arrangements.

Also, once ramped, this new arrangement will elevate capitated revenue to at least 10% of our total revenue, increasing our mix of recurring revenue. Meanwhile, our diabetes health segment delivered a third consecutive quarter of sequential improvement in new starts and a resupply retention rate that once again outperformed the comparable quarters of the past two years. We are prioritizing initiatives that will drive labor productivity, increase the capacity of our operating assets, expand our adjusted EBITDA margin, and amplify returns on our invested capital. Second, as noted earlier, we are leveraging AI to automate order intake to increase intake efficiency, improve order accuracy, and reduce order cycle time.

Importantly, we expect these initiatives to slow the rate of new hiring that would otherwise be required to support the growth of our business. As a leading strategic player, we have seen a notable increase in inbound opportunities over the past few months, and we have completed two small transactions here to date. Every potential acquisition must meet rigorous financial standards, support the targeted expansion of our geographic footprint, and align with our strengths in sleep and respiratory with meaningful synergies. I'll follow that with the usual review of the balance sheet and our plans for capital allocation and finish up with updates to our guidance for 2025.