ADAPTHEALTH CORP. : Non-Reliance on Previous Financials, Audits or Interim Review (form 8-K)

About this update from Adapthealth Corp.

Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review. As previously disclosed in the Company's March 4, 2021 press release (the "Earnings Release"), the Company, together with its independent auditors, reevaluated the accounting treatment of the previously disclosed contingent consideration common shares to which the former owners of AdaptHealth Holdings LLC are entitled (the "Contingent Consideration Common Shares") in connection with the 2019 business combination with DFB Healthcare Acquisitions Corp , a special purpose acquisition company ("SPAC"). Due to the fact that the issuance of the Contingent Consideration Common Shares would be accelerated on a change of control regardless of the transaction value, the Company determined to present the Contingent Consideration Common Shares as liability-classified, not equity-classified as previously presented. Accordingly, the fair value of the Contingent Consideration Common Shares is reflected as a liability on the Company's consolidated balance sheets at December 31, 2020 and 2019, and the change in the fair value of such liability in each period is recognized as a non-cash charge in the Company's consolidated statements of operations. The liability does not constitute indebtedness of the Company and will only be satisfied, if earned, by the Company through the issuance of shares of the Company's Class A common stock. When presenting diluted earnings (loss) per share for 2020 and 2019 periods in the Company's Form 10-K for the year ended December 31, 2019 (the "2019 Annual Report") and in the Company's Form 10-Q filings for the 2020 quarterly periods, the Contingent Consideration Common Shares were considered for inclusion in the diluted share count in accordance with U.S. generally accepted accounting principles. The change in fair value in each period is a non-cash charge and has no impact on the Company's historical reported revenues, operating income, Adjusted EBITDA (as defined in the Earnings Release), Adjusted EBITDA less Patient Equipment Capex (as defined in the Earnings Release), or cash flows from operating activities, investing activities, and financing activities for any period. On March 3, 2021 , after discussion with KPMG LLP , the Company's independent registered public accounting firm, the Company's management and the Audit Committee of the Company's board of directors (the "Audit Committee") concluded that it is appropriate to correct such errors in its previously issued (x) unaudited condensed consolidated statements of operations for the three months ended March 31, 2020 , and the three-month and year-to-date periods ended June 30, 2020 and September 30, 2020 , and (y) unaudited condensed consolidated balance sheets as of March 31, 2020 , June 30, 2020 and September 30, 2020 (the "Relevant Periods") by restating such unaudited condensed consolidated financial information because the errors were material to the unaudited condensed consolidated financial information for each of the Relevant Periods (with the exception of the unaudited condensed consolidated statements of operations for the three months ended June 30, 2020 for which the impact was not material). Considering such restatements, such unaudited condensed consolidated financial statements should no longer be relied upon. The Company's management and the Audit Committee has concluded that the impact of the error on the Company's audited consolidated financial statements as of and for the year ended December 31, 2019 included in the 2019 Annual Report was not material. The impacts of these corrections to the Relevant Periods are as follows (in thousands, except per share data): March 31, 2020 June 30, 2020 September 30, 2020 As Reported As Restated As Reported As Restated As Reported As Restated Consolidated Balance Sheets: Deferred tax assets $ 33,519 $ 36,684 $ 42,304 $ 45,462 $ 51,114 $ 58,557 Total Assets $ 661,839 $ 665,004 $ 739,309 $ 742,467 $ 1,548,826 $ 1,556,269 Contingent consideration common shares liability - current portion $ - $ 10,293 $ - $ 10,604 $ - $ 21,465 Long-term portion of contingent consideration common shares liability $ - $ 15,390 $ - $ 15,037 $ - $ 29,701 Total Liabilities $ 691,285 $ 716,968 $ 746,103 $ 771,744 $ 1,109,111 $ 1,160,277 Additional paid-in capital $ 21,845 $ 12,946 $ 37,614 $ 28,715 $ 476,861 $ 467,962 Accumulated deficit $ (27,368 ) $ (40,987 ) $ (23,335 ) $ (36,919 ) $ (23,130 ) $ (57,954 ) Total stockholders' equity (deficit) attributable to AdaptHealth Corp. $ (10,655 ) $ (33,173 ) $ 8,491 $ (13,992 ) $ 448,630 $ 404,907 Total stockholders' equity (deficit) $ (29,446 ) $ (51,964 ) $ (6,794 ) $ (29,277 ) $ 439,715 $ 395,992 Three Months Ended Six Months Ended Three Months Ended March 31, 2020 June 30, 2020 June 30, 2020 As Reported As Restated As Reported As Revised As Reported As Revised Consolidated Statements of Operations: Change in fair value of contingent consideration common shares liability $ - $ 16,367 - (42 ) - 16,325 Income tax expense (benefit) $ 1,107 $ (1,641 ) 1,819 1,826 2,926 185 Net income (loss) $ 266 $ (13,353 ) 7,169 7,204 7,435 (6,149 ) Net income (loss) attributable to AdaptHealth Corp. $ (158 ) $ (13,777 ) 4,033 4,068 3,875 (9,709 ) Basic earnings (loss) per share attributable to AdaptHealth Corp. $ - $ (0.33 ) 0.09 0.09 0.09 (0.22 ) Diluted earnings (loss) per share attributable to AdaptHealth Corp. $ - $ (0.33 ) 0.08 0.08 0.08 (0.22 ) Three Months Ended Nine Months Ended September 30, 2020 September 30, 2020 As Reported As Restated As Reported As Revised Consolidated Statements of Operations: Change in fair value of contingent consideration common shares liability $ - $ 25,525 $ - $ 41,850 Income tax expense (benefit) $ (636 ) $ (4,921 ) $ 2,290 $ (4,736 ) Net income (loss) $ (3,827 ) $ (25,067 ) $ 3,608 $ (31,216 ) Net income (loss) attributable to AdaptHealth Corp. $ (2,489 ) $ (23,729 ) $ 1,386 $ (33,438 ) Basic earnings (loss) per share attributable to AdaptHealth Corp. $ (0.04 ) $ (0.41 ) $ 0.03 $ (0.70 ) Diluted earnings (loss) per share attributable to AdaptHealth Corp. $ (0.04 ) $ (0.41 ) $ 0.02 $ (0.70 ) The Company intends to include the restated unaudited interim financial information for the Relevant Periods in the Company's Form 10-K for the year ended December 31, 2020 (the "2020 Annual Report"), which it expects to file on or before March 16, 2021 . The Company will revise its unaudited 2020 interim consolidated financial information in connection with the filing of its Quarterly Reports on Form 10-Q for the quarters ending March 31 , June 30 and September 30, 2021 . The Company will revise its December 31, 2019 consolidated balance sheet in conjunction with filing the 2020 Annual Report to reflect a $9.3 million total contingent consideration common shares liability and a related increase in deferred tax assets of $0.4 million , as previously disclosed in the Earnings Release. The Company will also correct the unaudited pro forma financial information filed on its December 14, 2020 Form 8-K with respect to the acquisition of AeroCare Holdings, Inc. (the "Pro Formas 8-K") by filing an amendment to the Pro Formas 8-K. The Company is in the process of finalizing its evaluation of internal controls over financial reporting and expects to report on any material weaknesses in the 2020 Annual Report. The Company's management and the Audit Committee have discussed the matters disclosed in this Item 4.02 with the Company's independent registered public accounting firm, KPMG LLP . - 2 - © Edgar Online, source Glimpses

View stock analysis, news, and events for Adapthealth Corp.