AdaptHealth capped a transitional year with Q4 revenue of $846.3 million and full-year revenue of $3.245 billion, both above the midpoint of guidance, on 1.7% organic growth for both the quarter and full year. The company set patient census records across Sleep Health, Respiratory Health, and Wellness at Home and a retention record in Diabetes Health, while Q4 adjusted EBITDA of $163.1 million (19.3% margin) and full-year adjusted EBITDA of $616.7 million (19.0% margin) absorbed a $14.5 million legal settlement and roughly $10 million of accelerated costs to launch its new capitated contract early. Full-year free cash flow of $219.4 million exceeded the top of guidance, funding $250 million of debt reduction and roughly $42 million of acquisitions, and prompted S&P and Moody's credit upgrades. Management went live with the Mid-Atlantic phase of the industry's largest capitated contract in December, ahead of schedule, and reaffirmed 2026 guidance for $3.44-$3.51 billion revenue, $680-$730 million adjusted EBITDA, and $175-$225 million free cash flow. Leadership framed 2025 as hard but necessary work that positions the company for accelerated growth and margin expansion in 2026.
Thank you. good morning, everyone, and welcome to the call. The fourth quarter of 2025 capped a tremendous year of transition for us. Over the course of 2025, we implemented a new operating model that drove standardization and process maturity across our enterprise. We closed the largest capitated contract in the history of the industry, and we honed our portfolio by disposing of non-core assets, using those proceeds and our strong free cash flow to pay down debt and strengthen our balance sheet. The work we completed last year not only positions us for accelerated growth and improved financial performance in 2026 and beyond, but is essential to achieving our aspiration to become the most trusted and reliable partner in home medical equipment and services.
In the fourth quarter, we continued that momentum with broad-based patient census growth and strong revenue performance, along with meaningful operational improvements and commercial progress. Let me walk you through the details. Starting with the financial results, full-year revenue of $3.245 billion and Q4 revenue of $846.3 million, both exceeded the midpoint of our guidance range. Organic revenue growth, which does not include changes in revenue from divestitures or acquisitions, was 1.7% for both the full year and Q4. Underlying this revenue performance, we set patient census records in Sleep Health, Respiratory Health, and Wellness at Home, and a retention record in Diabetes Health. In Sleep Health, new starts were up about 6% year-over-year and just a few hundred shy of the record set in Q1 2023 during the post-Philips recall demand snapback.
Sleep Health patient census grew 4% year-over-year and set another new record. In Respiratory Health, oxygen and vent new starts were up about 4% and 5%, respectively, and patient census for both product lines hit new all-time records, vents for the third consecutive quarter. In Wellness at Home, new starts for wheelchairs and beds were about 6% and 5% year-over-year, respectively, with patient census for both hitting all-time records. In Diabetes Health, patient retention was better than we have ever experienced, driven by the decision we made last year to integrate diabetes resupply into our sleep resupply operations. Diabetes patient census was flat year-over-year as the improved retention rate offset slower new starts.
Turning to profitability, Adjusted EBITDA was $616.7 million for the full year and $163.1 million for Q4. Both periods included a $14.5 million legal settlement and about $10 million of accelerated costs to bring our new capitated arrangement live in December ahead of schedule and to ensure an on-time go-live for the next phase, scheduled for Q1. Excluding these two items, Adjusted EBITDA was in line with our full year 2025 guidance as we continue to demonstrate discipline on labor and operating expenses. The underlying earnings power of our business remains intact. We are maintaining the 2026 guidance previewed on our Q3 earnings call. We continue to make progress on our balance sheet. During the quarter, we reduced our debt balance by another $25 million, bringing the year-to-date total to $250 million.
S&P and Moody's both upgraded our credit ratings, reflecting our focus on debt reduction and our strong Free Cash Flow, which was $219.4 million for the full year. Let me take you behind these financial results to the operational progress that is beginning to show up in our numbers. The patient census growth I highlighted previously reflects our continued focus on rapid service delivery and clinical outcomes that drive physician referrals and patient retention. Central to that focus is the standard operating model implemented in Q3, which realigns our organizational structure and standardized workflows across the company. As part of that transformation, we centralized order intake in Sleep in Q3, and we extended that to Vents in Q4. This change is contributing to improved setup times and order conversion rates.
In sleep, referral to set up improved to nine days, down from 10 days in Q3 and from 23 days a year ago. In respiratory, referral to set up improved by three days year-over-year for both oxygen and vents. We also operationalized new CMS documentation requirements for vents, requirements we believe could be challenging for smaller competitors and a tailwind for our vent share in 2026. We also continue to produce industry-leading clinical outcomes. For example, in sleep, adherence continues to be 10 percentage points above the industry top quartile. We are deploying technology to further enhance service delivery. An AI pilot for sleep order intake significantly reduced processing time, and our conversational AI for PAP self-scheduling meaningfully reduced patient phone time. Given the success of both pilots, we plan to roll them out to additional regions in 2026.
We are also advancing our digital patient engagement capabilities with the self-scheduling feature we introduced in earlier 2025, helping to more than double myAPP users to over 327,000 at year-end. Another element of our operational transformation, the centralized patient services contact center, introduced in Q3, proved critical to successfully onboarding the Mid-Atlantic cohort of patients for our new capitated contract, achieving 98% answer rates. That success is early proof of something that will matter enormously over the coming year: our ability to execute complex, large-scale transitions. Our new capitated contract is a massive undertaking, the largest service transition in the HME industry's history. To put that in context, when fully operational, we'll be serving over 10 million patients nationwide, with approximately 1,200 dedicated employees across 30 locations.
We went live with the three Mid-Atlantic states in December, covering approximately 50,000 members. This was earlier than planned, and the transition has been remarkably smooth, thanks to seven months of preparation by our team and exceptional collaboration with both the incumbent provider and our customer. As I mentioned earlier, we have also been investing in the infrastructure and staffing required for the upcoming start dates. The preparation, collaboration, and forward investment give us confidence in our ability to onboard the remaining patients on schedule in the first half of 2026, while maintaining continuity of care as they transition between providers. It also gives us confidence in our ability to deliver on the contract's performance requirements, responsiveness, and patient satisfaction.
We know we can meet these requirements because they essentially mirror what we've been delivering under the Humana capitated arrangement, which has demonstrated we can execute this model at scale. Turning to our commercial progress, we continued to strengthen our sales organization in the fourth quarter. We deepened sales leadership across the organization and standardized daily management routines, giving our teams aligned data, clear structure, and shared accountability. These are the building blocks of Salesforce maturity. We continue to focus on building our capitated pipeline. Several years of demonstrated performance under our Humana arrangement, combined with the scale of the contract we won last year, have established us as a proven partner for large capitated arrangements. We believe our operational capacity, technology infrastructure, and focus on service excellence uniquely positions us to help payers and integrated delivery networks align incentives and keep patients healthy at the lowest sustainable cost.
On the regulatory front, we received a favorable outcome from CMS on the upcoming round of competitive bidding, with our core sleep and respiratory products excluded from the next round, providing stability and clarity in our longer-term outlook. On the business development front, we closed the acquisition of a Hawaii-based HME provider, expanding our footprint to our 48th state. The deal provides the infrastructure needed to support our capitated contracts in the state and establishes a beachhead for winning other business there. We also completed one divestiture in the fourth quarter, exiting a small remaining infusion asset in our Wellness at Home segment as part of our ongoing effort to sharpen our strategic focus and redeploy capital into our core businesses.
Our acquisition pipeline remains active. We continue to target home medical equipment providers that expand our footprint and increase patient access, excuse me. In summary, as we enter 2026, we believe our house is in the best condition it has ever been. Our operational foundation is stronger, our portfolio is more focused, our balance sheet is healthier, our patient census is growing, and our capitated contract is ramping. The work of 2025 was hard but necessary, and we are confident it has positioned us to deliver on our commitments to patients, partners, and shareholders. We look forward to showing you what we can do. With that, I'll pass the call over to Jason to review our financials.
Thank you, Suzanne. Thanks to everyone for joining our call today. I'll cover our full year and fourth quarter 2025 results, review our balance sheet and capital allocation before finishing with our 2026 guidance. For full year 2025, net revenue of $3.245 billion decreased 0.5% versus the prior year on a reported basis. Organic revenue growth was $56.9 million, or 1.7% over prior year. Full year revenue increased by $19.5 million because of acquisitions, decreased by $92.4 million because of dispositions. The dispositions were primarily attributable to the three businesses we sold within our Wellness at Home segment during 2025.
For the fourth quarter, net revenue of $846.3 million decreased 1.2% versus the prior year quarter, but increased 1.7% on an organic basis, consistent with our full year rate, and was impacted by the disposition actions noted a moment ago. Sleep Health's net revenue was $372.3 million, up 4.4% versus the prior year. New starts were approximately 130,600, up about 6% year-over-year, in just a few hundred shy of the all-time record set in Q1 2023. Sleep Health patient census grew 4% year-over-year to a new record of 1.73 million patients. Respiratory Health net revenue was $178.2 million, up 7.8% versus the prior year.
Oxygen new starts were up about 4% year-over-year, and vent new starts were up about 5%. Oxygen patient census of approximately 335,000 patients set a new all-time record for the third consecutive quarter, and vent patient census also hit a new all-time record. Diabetes Health net revenue was $158.5 million, down 7.4% from the prior year quarter. While new CGM starts remained soft, patient retention hit a new all-time record, the direct result of the changes we made to our resupply operations in late 2024. CGM patient census of approximately 153,000 patients was flat versus the prior year, but the shift in payer mix from commercial insurance to government payers resulted in lower CGM reimbursement per patient.
Pumps and related supplies remained on track, growing patient starts and net revenue over the prior year. Overall, we are pleased with the continuing stabilization of the Diabetes Health segment. Wellness at Home net revenue of $137.3 million declined by 16.1%, driven primarily by the disposition of certain non-core assets completed during 2025. New starts for wheelchairs and beds were up about 6% and 5% year-over-year, respectively, with patient census for both hitting new all-time records. Turning to profitability, full year Adjusted EBITDA was $616.7 million, with an Adjusted EBITDA Margin of 19.0%. Fourth quarter Adjusted EBITDA was $163.1 million, with an Adjusted EBITDA Margin of 19.3%.
As Suzanne Foster noted, both periods were impacted by a $14.5 million legal settlement and over $10 million of accelerated expenses to onboard our new capitated contract faster than we originally anticipated, which together account for the variance to our guidance. Before leaving profitability, I want to note that our Q4 GAAP results include a non-cash goodwill impairment charge of $128 million, recognized as part of our annual goodwill impairment assessment and related to the estimated fair value of the Diabetes Health segment relative to its carrying value. This charge is excluded from Adjusted EBITDA and has no impact on our cash flows or operations. Moving to cash flow. Fourth quarter cash flow from operations was $183.2 million.
Capital expenditures were $103.9 million, or 12.3% of revenue, reflecting continued investment in patient growth as well as forward investment to support the capitated contract ramp. Free cash flow was $79.3 million for the quarter, and for the full year, free cash flow was $219.4 million, meaningfully exceeding the top end of our guidance range. Turning to the balance sheet. We ended the year with $106.1 million in unrestricted cash. Working capital of $16.5 million was lower than normal due to the aforementioned legal settlement and infrastructure expenses. We continued to compress our cash conversion cycle over the course of 2025, and we ended the year at 40.8 days sales outstanding, the lowest since the Change Healthcare outage in 2024.
Net debt stood at $1.694 billion at year-end, with a net leverage ratio of 2.75 times. This is up modestly from 2.68 times at the end of Q3, reflecting the impact of the litigation settlement in pre-revenue contract costs on trailing Adjusted EBITDA. We remain focused on our 2.5 times net leverage target and continue to view debt reduction as among our highest capital allocation priorities, as we believe a strong balance sheet is essential to unlocking and sustaining value for shareholders. We decreased interest expense by approximately $21 million versus the prior year, and the recent credit upgrades from both S&P and Moody's in the fourth quarter reflect the progress we've made as an organization.
On capital allocation, our priorities remain investing to accelerate organic growth, debt reduction, and selective tuck-in acquisitions that expand our geographic footprint and increase patient access. During 2025, we deployed $250 million to debt reduction and approximately $42 million to acquisitions, all funded entirely through our free cash flow and disposition proceeds, recycling capital from non-core assets into businesses with stronger returns and better strategic fit. This disciplined approach to capital allocation is how we intend to drive improved return on invested capital in 2026 and beyond. Turning to guidance, we expect net revenue of $3.44 billion-$3.51 billion, Adjusted EBITDA of $680 million-$730 million, free cash flow of $175 million-$225 million.
Our underlying assumptions for revenue represent 6%-8% growth over 2025. We anticipate that organic growth of 7.5%-9.5% will be offset by about 1.5% compression, net from acquisition and disposition revenue from previously closed deals. We expect 5%-6% growth over 2025 revenue, resulting from a new capitated agreement, and we expect another 2.5%-3.5% growth from the rest of the business. We believe Sleep Health and Respiratory Health will grow faster than that range, offset by generally flat expectations for Diabetes Health and Wellness at Home. For the first quarter of 2026, we expect revenue growth of 2%-3% over the prior year quarter.
Over the course of the year, we expect ramping capitated revenue to result in adding a few points of incremental year-over-year growth each quarter, peaking at low double digits by Q4. Our 2026 midpoint for Adjusted EBITDA translates to approximately 20.3% Adjusted EBITDA Margin, a full percentage point better than 2025. For the first quarter of 2026, we expect Adjusted EBITDA Margin of approximately 16%, as we expect to carry capitated infrastructure expenses in the first part of the quarter prior to revenues ramping in the back half. Similarly, we expect improving margin throughout the year as the capitated revenue ramps, particularly in the back half. Similarly, we expect free cash flow to be -$20 million to -$40 million in the first quarter, with improvement throughout the year as the capitated revenue ramps and the associated infrastructure costs are absorbed.
As usual, we expect to generate approximately one-third of our full-year Free Cash Flow in the first half of the year, with the remainder coming in the back half. I have one last point regarding the infrastructure investments we are making to support our new capitated contract. As you'll note in our forthcoming 10-K, subsequent to December 31st, 2025, we acquired certain assets of a provider of home medical equipment for total consideration of $47.6 million. To support that acquisition and potential similar future acquisitions, we drew $100 million from our revolving credit facility. We believe that these equipment acquisitions will support smooth patient transitions, and we expect to pay down the revolver as Free Cash Flow builds throughout the year. That brings me to the end of my remarks. Operator, will you please open up the call for questions?