Adapthealth Corp. · NASDAQ:AHCO
Adapthealth — Investor Presentation (November 2019)
25 slides from Adapthealth's investor presentation, Nov 20, 2019
Slide 1: Disclaimers and Other Important Information
Disclaimer Disclaimers and Other Important Information This presentation (this “Presentation”) is for informational purposes only and has been prepared to assist interested parties in making their own evaluation with respect to a potential investment in AdaptHealth Corp. (“AdaptHealth” or the “Compa
Slide 2: Largest Provider of HME in the United States
3rd The Largest Provider of HME in the United States + Comprehensive portfolio of HME products for sale and rental + Addressing a growing $12 - $15bn segment within the broader $56bn HME industry + Serve 1mm patients and perform 7,000+ deliveries per day 9 Mo. ‘19 Net Revenue + Successful track reco
Slide 3: AdaptHealth's Nationwide Footprint
AdaptHealth's Nationwide Footprint 150+ Locations servicing 49 States e Corporate HQ - • ++adapthealthI Investor Presentation I November 2019 Page 4
Slide 4: Proven & Experienced Leadership
Proven &Experienced Leadership AdaptHealth Leadership Team Luke McGee Chief Executive Officer • • • Chairman and CEO of AdaptHealth since 2012; built business from $7mm of revenue in first acquisition Led the Company’s proven acquisition track record and developing a scalable platform with robust in
Slide 5: HME Is Critical To Serving Patients At Home
HMEIsCritical ToServing Patients AtHome Industry provides a strategic entry point to patients in the home Why is HME critical to home care? What is HME? Provides for greater patient independence and better outcomes Addresses large, growing medical issues High-touch model creates trusted patient rela
Slide 6: Fully Integrated, Centralized Platform
FullyIntegrated, Centralized Platform Tech-Enabled Infrastructure: Vendor Relationships Tech-Enabled Infrastructure Electronic portal / interface Proprietary workflow technology Proven Sales & Marketing Model AdaptHealth Platform Broad Payor Network Improved efficiency from time of order to delivery
Slide 7: Diverse Product Offering & Payor Mix
Diverse ProductOffering & Payor Mix Revenue Breakdown at 9/30/19 Net Revenue = $380.1mm * Other 9% HME 17% Sleep 57% Product Mix Respiratory 17% 41% HME Product Rentals 59% HME Product Sales Other 2% Commercial 39% MLTC 3% Patient 14% Payor Mix Managed Medicaid 5% FFS Medicaid 2% FFS Medicare 30% Ma
Slide 8: Multiple Growth Levers
Multiple GrowthLevers Targeted combined top line growth of ~20% Platform Diversification 12-15% (1) HME M&A 6-8% Organic Growth Source: Management (1) 12-15% growth through HME M&A is based on $100mm in revenue per year / Investor Presentation/ November 2019 Page 9
Slide 9: Organic Growth: Aging Population
OrganicGrowth: Aging Population Population 65+ is growing 6.5x faster than overall population growth Product & Services US Population (millions) Aged 65+ Needed by Aging Seniors 80 70 60 50 Oxygen Wheelchairs Beds 3.2% CAGR 40 30 20 10 0 Walkers Commodes Ventilation 20162025 Source: CMS Research / I
Slide 10: Organic Growth: Sleep / CPAP
OrganicGrowth: Sleep / CPAP 26% 54mm ~ 80% 24mm (1) AASM; https://aasm.org/rising-prevalence-of-sleep-apnea-in-u-s-threatens-public-health/ (2) ATS Journals; https://www.atsjournals.org/doi/pdf/10.1164/ajrccm-conference.2018.197.1_MeetingAbstracts.A3962 (3) Apnea Hypoxia Index / Investor Presentatio
Slide 11: Organic Growth: Increase HME Mix
OrganicGrowth: IncreaseHME Mix (1) Opportunity to grow HME revenue by $105mm annually in markets outside of NJ, PA & NY Revenue Mix – NJ / PA / NY Revenue Mix – Other Markets 61% 39% 85% 15% Respiratory/Sleep HME/Other Respiratory/Sleep HME/Other Source: Management. YTD September 30, 2019 (1) $105mm
Slide 12: HME M&A: Adapt by The Numbers
HME M&A: Adapt by The Numbers 64 18 $100mm+ Opportunity Source: Management / Investor Presentation/ November 2019 Page 13 Expected to acquire in revenue per year For Future consolidation 5K+ small to mid-size HME companies remain Transactions closed in 2019 Generating ~$110mm in annual revenue Close
Slide 13: HME M&A: AH is a Proven Consolidator
HMEM&A: AHisa Proven Consolidator Cumulative Acquisitions Sample Annual Vendor Cost Savings ($ in millions) & Purchase ($ in millions) Price 64 Company 1 Company 2 8% Savings $4.4 25% Savings $27.5 46 Cumulative Purchase Price $324 18 9 $64 $66 $62 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 YT
Slide 14: HME M&A: Competitive Landscape
HME M&A: Competitive Landscape / Investor Presentation / November 2019 Page 15 Nationals Scaled Regionals Product-Specific Mom & Pops 6K+
Slide 15: Platform Diversification
PlatformDiversification Supplies Respiratory Medications Home Infusion (diabetes, ostomy, Remote Patient Monitoring Home Dialysis urological, wound care) Near Term Long Term Source: Management / Investor Presentation/ November 2019 Page 16
Slide 16: Platform Diversification
Platform Diversification Supplies Respiratory Medications Home Infusion (diabetes, ostomy, Remote Patient Monitoring Home Dialysis urological, wound care) Near Term Long Term Source: Management tadapthealth / Investor Presentation / November 2019 Page 16
Slide 17: Financial Results: Net Revenue
Financial Results: NetRevenue ($ in millions) 160.0 136.5 140.0 119.5 120.0 100.0 80.0 60.0 40.0 20.0 - Q1 '18 Q2 '18 Q3 '18 Q4 '18 Q1 '19 Q2 '19 Q3 '19 Source: Management / Investor Presentation/ November 2019 Page 18 124.2 108.7 102.2 78.5 56.0
Slide 18: Financial Results: Adj EBITDA & Adj EBITDA Less Patient Equipment Capex
Financial Results: Adj EBITDA & Adj E-C Adjusted EBITDA (1) Adjusted EBITDA (1) Less Patient Equipment ($ in millions) Capex ($ in millions) 35.0 20.0 18.7 31.7 18.1 18.0 30.0 28.2 16.0 25.0 14.0 12.0 20.0 10.0 15.0 8.0 6.0 10.0 4.0 5.0 2.0 - - Q1 '18 Q2 '18 Q3 '18Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q1 '18
Slide 19: Financial Projections
Financial Projections ($ In Millions) Acquisition Case Acquisition Case $33.1 2 2018P 2 2016A 2017A F 2019E 2020E 2016A 2017A 2018PF 2019E 2020E Revenue growth driven by organic growth as the Company expands its national patient and referral base Primarily driven by increased net revenue, as operati
Slide 20: 2019E to 2020E Bridge – Base Case
2019Eto2020E Bridge – “Base Case” Adjusted EBITDA Less Patient Equipment Capex (1) Adjusted EBITDA (1) ($ in millions) ($ in millions) Note: “Base Case“ excludes acquisition projection of $100mm of revenue per year at 20% EBITDA margin and 10% EBITDA less Patient Equipment Capex margin. Charts are n
Slide 21: Capital Structure
Capital Structure Equity Debt Legacy AH Holdings shareholders 40,296,166 / Investor Presentation/ November 2019 Page 22 ($ in millions) Term Loan$246.3 Preferred Note$143.5 Other Debt$1.7 Less: Cash on Hand($59.6) Net Debt$331.9 Leverage 2 2.69x Undrawn Capacity Revolver$75.0 Delayed Draw Term Loan$
Slide 22: Pro Forma Adjusted EBITDA Bridge
ProForma AdjustedEBITDA Bridge AdaptHealth Pro Forma Adjusted EBITDA Bridge to Net Income Net Income / (Loss) attributable to AdaptHealth Holdings LLC Plus: Income attributable to noncontrolling interest Plus: Interest expense excluding change in FV of interest rate swaps Plus: Interest expense (inc
Slide 23: Adjusted EBITDA Bridge
AdjustedEBITDA Bridge AdaptHealth Adjusted EBITDA Bridge to Net Income Net Income / (Loss) attributable to AdaptHealth Holdings LLC Plus: Income attributable to noncontrolling interest Plus: Interest expense excluding change in FV of interest rate swaps Plus: Interest expense (income) representing c
Slide 24: Adjusted EBITDA Bridge
Adjusted EBITDA Bridge AdaptHealth Adjusted EBITDA Bridge to Net Income at 218 a3 18 Q4718 Qi719 Q2"19 Net Income / (Loss) attributable to AdaptHealth Holdings LLC $37 $36 $124 $35 $5) (4.4) $3.7) Plus: Income attributable to noncontrolling interest 02 02 os 04 as 04 os Plus: Interest expense exclud
Slide 25: Thank You!
Thank You!