Healthcare services provider AdaptHealth Corp. (NASDAQ: AHCO) met Wall Street’s revenue expectations in Q2 CY2025, but sales were flat year on year at $800.4 million. On the other hand, the company’s full-year revenue guidance of $3.22 billion at the midpoint came in 0.6% below analysts’ estimates. Its GAAP profit of $0.10 per share was significantly above analysts’ consensus estimates.
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AdaptHealth (AHCO) Q2 CY2025 Highlights:
- Revenue: $800.4 million vs analyst estimates of $804 million (flat year on year, in line)
- EPS (GAAP): $0.10 vs analyst estimates of $0.04 (significant beat)
- Adjusted EBITDA: $155.5 million vs analyst estimates of $150.8 million (19.4% margin, 3.1% beat)
- The company dropped its revenue guidance for the full year to $3.22 billion at the midpoint from $3.25 billion, a 0.9% decrease
- EBITDA guidance for the full year is $662 million at the midpoint, below analyst estimates of $676.6 million
- Operating Margin: 9.9%, up from 6.5% in the same quarter last year
- Free Cash Flow Margin: 9.2%, down from 14.5% in the same quarter last year
- Market Capitalization: $1.20 billion
“AdaptHealth’s momentum continues to build,” said Suzanne Foster, CEO of AdaptHealth.
Company Overview
With a network of approximately 680 locations serving patients across all 50 states, AdaptHealth (NASDAQ: AHCO) provides home medical equipment, supplies, and related services to patients with chronic conditions like sleep apnea, diabetes, and respiratory disorders.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Luckily, AdaptHealth’s sales grew at an incredible 35.5% compounded annual growth rate over the last five years. Its growth beat the average healthcare company and shows its offerings resonate with customers.
Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. AdaptHealth’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 2.7% over the last two years was well below its five-year trend. 
This quarter, AdaptHealth’s $800.4 million of revenue was flat year on year and in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 1.8% over the next 12 months, similar to its two-year rate. This projection doesn't excite us and suggests its newer products and services will not catalyze better top-line performance yet.
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Operating Margin
Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
AdaptHealth’s operating margin has risen over the last 12 months and averaged 1.6% over the last five years. The company’s higher efficiency is a breath of fresh air, but its suboptimal cost structure means it still sports lousy profitability for a healthcare business.
Looking at the trend in its profitability, AdaptHealth’s operating margin of 8.1% for the trailing 12 months may be around the same as five years ago, but it has increased by 2.9 percentage points over the last two years.
This quarter, AdaptHealth generated an operating margin profit margin of 9.9%, up 3.4 percentage points year on year. This increase was a welcome development and shows it was more efficient.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
AdaptHealth’s full-year EPS flipped from negative to positive over the last five years. This is encouraging and shows it’s at a critical moment in its life.
In Q2, AdaptHealth reported EPS at $0.10, down from $0.13 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street expects AdaptHealth’s full-year EPS of $0.54 to grow 84.5%.
Key Takeaways from AdaptHealth’s Q2 Results
AdaptHealth reported revenue that was in line with its expectations. Looking ahead, guidance was very weak. The company lowered full-year revenue guidance and its full-year EBITDA guidance fell short of Wall Street’s estimates. Zooming out, we think this was a mediocre quarter. The stock traded down 6.9% to $8.50 immediately following the results.
Big picture, is AdaptHealth a buy here and now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
