AdaptHealth (NASDAQ:AHCO) is treating 2025 as a “transition and investment” year focused on operational streamlining and infrastructure buildout, while positioning 2026 as a year geared toward growth, Chief Financial Officer Jason Clemens said during a company discussion. Clemens pointed to changes spanning sales, standardized operating processes, and technology and automation initiatives, alongside preparations for a new exclusive capitated durable medical equipment (DME) agreement with Kaiser Permanente.
Operational changes and commercial reorganization
Clemens said one of the most significant moves in 2025 was “decoupling the sales force from operations” to create a core commercial organization. As part of that shift, the company implemented a commissions program and has been refining it for 2026. Clemens described the rollout as smooth, calling it an unusually successful commissions implementation based on his prior experience.
Sleep setup times improve; app adoption grows
In the sleep business, Clemens said the company had previously disclosed it slipped in some markets on time-to-setup metrics. He described the industry average as roughly 17 to 18 days from physician scripting to setup, due to steps such as prior authorization, insurance verification, patient contact, and scheduling. AdaptHealth exited 2025 at an average of nine days to setup, which he attributed to both operational execution and increased technology use.
He highlighted the use of AI chatbots that connect into capacity models across the company’s 640 locations to support scheduling and patient contact. Clemens also said AdaptHealth reinstated virtual setups, a capability it used during the pandemic but later deemphasized; he called the return to virtual setups “a welcome change” that has helped reduce setup times.
Virtual setups remain a minority of the mix, however. Clemens said setups are still about 90% in-person and 10% virtual, though virtual is growing as the company markets the capability to patients at the physician’s office, including via QR codes.
He also said more than 300,000 patients are now registered on the company’s myAPP, which he framed as enabling patient communication, reorders, and scheduling within the app with reduced employee involvement.
Resupply performance and volume trends
Clemens characterized resupply as a core strength, saying sleep resupply operations are “as strong and consistent as they’ve ever been.” He noted the company expanded the resupply team’s responsibilities to include diabetes resupply beginning in September 2024, and said the diabetes business set a new record in fourth quarter 2025 for sequential refills and retention.
He contrasted AdaptHealth’s resupply frequency with the broader DME industry, saying an average DME company resupplies a patient about 2.1 to 2.2 times per year, while AdaptHealth is “over 2.9x a year,” attributing the difference to managed care contract integrations, eligibility tracking, and workflow automation.
On overall demand, Clemens said the company has hit record census levels in its core categories—sleep, respiratory, and DME—while noting diabetes was the exception. He attributed the record census to a combination of sales reconfiguration and incentives to drive more referrals, operating model changes that improved setup times and conversion of referrals, and broader industry dynamics that are pressuring consolidation.
Capitated contracting: Humana, Kaiser, and pipeline
Clemens said industry consolidation pressures have benefited AdaptHealth, particularly through its ability to manage capitated arrangements with large payers. He cited prior scale execution with Humana and described Kaiser Permanente as a new agreement under which AdaptHealth will serve as the exclusive DME provider for more than 12 million Kaiser members. He said the company ended 2025 after pulling forward investments in employees, vehicles, locations, and equipment to support the Kaiser implementation.
Discussing Humana, Clemens said he was “pleasantly surprised” by membership growth in 2026 and described AdaptHealth as the exclusive DME partner for Humana’s HMO business in 33 states. He said the company signed a multi-year extension with Humana “a little under a year ago,” indicating the first two years of the arrangement went well, and said AdaptHealth feels good about performance against the metrics it provides Humana.
Clemens also addressed investor concerns about the risk of rapid membership growth, saying DME utilization in Medicare populations is “extraordinarily steady” and that only about 2% to 4% of members are actively using DME at any given time.
On Kaiser execution, he said the company accelerated transition efforts in the fourth quarter because it was able to build the needed infrastructure faster than expected, rather than from a desire to move faster. AdaptHealth previously said it needed 1,200 employees for Kaiser, and Clemens said that hiring has been completed. He also described upfront readiness work, including outfitted sites, stocked equipment to train employees, and temporary training centers.
He said a key lesson learned from Humana was the cost and complexity of transitioning patients one by one, and that the company is handling Kaiser differently. He referenced acquisitions completed to help secure start dates for Kaiser, including a fourth-quarter transaction in Hawaii and an additional deal “for about $47 million” completed shortly before the earnings call to buy out equipment on patients.
Looking ahead, Clemens said the company has an active pipeline for additional capitated contracts, though he cautioned that agreements on the scale of Humana or Kaiser are less certain. He said sales cycles are long, and suggested there are numerous large hospital systems with insurance products that could be candidates for the model.
Diabetes: payer mix pressure and pharmacy buildout
Clemens said the diabetes business has stabilized from a census perspective due to resupply changes made at the end of 2024 and new referral points feeding the pipeline. However, he said diabetes revenue did not return to growth in 2025 due to payer mix pressure. For 2026, he said the company does not anticipate “large or fast moves” in payer mix, but does expect a modest shift toward pharmacy reimbursement that will require additional sales to offset DME channel pressure. He said AdaptHealth is hiring additional diabetes sales representatives for that effort.
He also said the company expects ongoing payer pressure—particularly from payers with large pharmacy benefit managers—to encourage movement to pharmacy benefits. In response, he said AdaptHealth has continued investing in pharmacy operations so its salesforce can offer both DME and pharmacy options and serve as an “easy button” for referring providers.
Clemens said pharmacy has doubled as a percentage of diabetes revenue over the last six quarters and is now “just under 10%” of diabetes revenue. He added that the company is investing in technology, including patient accounting platforms, to improve efficiency and protect margins. He noted the diabetes segment now represents less than 5% of company Adjusted EBITDA, and said the Kaiser agreement excludes diabetes, which may cause diabetes to shrink as a share of the overall enterprise over time even as the company intends to grow it.
He added that diabetes is carved out of the Kaiser and Humana capitated arrangements, though not all capitated agreements. He referenced a newer capitated contract announced in the third quarter of the prior year that includes diabetes pumps and continuous glucose monitors (CGMs), describing early performance as positive but emphasizing the contract has been in place for less than six months and that CGM utilization curves may differ from more stable DME categories.
Portfolio actions, M&A, and regulatory backdrop
Clemens said the company divested several business lines over the past two years—home infusion, ActivStyle (direct-to-consumer incontinence products), and Custom Rehab (custom motorized wheelchairs and accessories)—which he described as subscale and not meaningfully contributing to the core sleep, respiratory, and DME business. He said assets were sold at or above the company’s trading multiples and proceeds were used to reduce debt. While he said the company may continue trimming the portfolio opportunistically, he also noted opportunities to expand offerings within sleep and respiratory as new products become viable and reimbursable.
On acquisitions, he said AdaptHealth deployed “a little over $40 million” toward tuck-in M&A in 2025 and suggested that could be a reasonable magnitude to consider for 2026, while noting the company does not guide to acquisitions unless deals are closed.
Clemens also discussed a CMS six-month moratorium on new licensing tied to fraud, waste, and abuse concerns in DME, referencing a reported scheme involving shipments of urology supplies. He said AdaptHealth’s longstanding licenses and provider numbers limit direct impact, though he noted a nuance affecting M&A targets that have had majority ownership changes within the last three years. Clemens said the company supports efforts to reduce fraud and professionalize the industry.
About AdaptHealth (NASDAQ:AHCO)
AdaptHealth, Inc operates as a leading provider of home medical equipment (HME) and related services in the United States. The company focuses on delivering respiratory care, mobility solutions and bathroom safety products to patients with chronic and acute medical needs. Through its comprehensive service offerings, AdaptHealth aims to enhance quality of life and clinical outcomes for patients who require long-term support outside of a hospital setting.
The company’s respiratory portfolio includes products such as continuous positive airway pressure (CPAP) devices, oxygen concentrators, ventilators, and associated supplies for patients with sleep apnea, COPD and other pulmonary conditions.
