Why AdaptHealth Stock Got Thrashed on Tuesday

The Motley FoolNov 6, 2024 12:23 AM

Home healthcare services specialist AdaptHealth (NASDAQ: AHCO) was hardly looking special on Tuesday. Following news that its latest set of quarterly results didn't meet analyst expectations, the market took a dim view of the company and collectively traded out of it. This left it with a nearly 10% loss in price on the day, compared to the 1.2% increase of the bellwether S&P 500 index.

Bottom-line change not dramatic enough

AdaptHealth published its third-quarter results early that morning, and probably wishes it had taken a sick day for the remainder. Revenue inched up marginally on a year-over-year basis to just under $806 million, while net income per GAAP standards flipped dramatically -- it landed at nearly $23 million ($0.15 per share), against the more than $454 million loss in the same quarter one year ago.

That bottom-line shift was heavy, yet it wasn't sufficient enough to hit the consensus analyst estimate of $0.19 per share. AdaptHealth missed on revenue, too, as those pundits following its stock were collectively modeling slightly over $809 million.

In what feels like an attempt to spin the anemic top-line growth, the company quoted CEO Suzanne Foster as saying that she remains "optimistic about the road ahead. We have identified growth opportunities, we are assembling a high performing team and investing in areas that allow us to serve even more patients in their homes."

Guidance adjustments

Yet management reduced its full-year guidance for both revenue and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). For the former, it's now guiding for $3.22 billion to $3.26 billion; that's down from the former range of nearly $3.26 billion to almost $3.32 billion. It's also only marginally better than the 2023 tally of $3.22 billion, and below the average $3.28 billion analyst estimate.

Adjusted EBITDA is now anticipated to reach $655 million to $675 million. The preceding forecast was $660 million to $700 million.

On a brighter note, AdaptHealth lifted its guidance for free cash flow to $175 million-$195 million for 2024. That's up from the previous range of $160 million to $180 million.

Disclaimer: The content of this article solely represents the author's personal opinions and does not reflect the official stance of Tradingkey. It should not be considered as investment advice. The article is intended for reference purposes only, and readers should not base any investment decisions solely on its content. Tradingkey bears no responsibility for any trading outcomes resulting from reliance on this article. Furthermore, Tradingkey cannot guarantee the accuracy of the article's content. Before making any investment decisions, it is advisable to consult an independent financial advisor to fully understand the associated risks.