Q3 2025 AdaptHealth Corp Earnings Call

November 4, 2025

One and welcome to today's health third quarter 2025 earnings release.

Today's speakers will be Susanne Foster Chief Executive officer of adopt health and Jason <unk>, Chief Financial Officer of adopt health before we begin I'd like to remind everyone that statements included in this conference call and in this press release issued today may constitute forward looking statements within them.

Speaker #1: Thank you for your continued patience. You're meeting will begin shortly. If you need assistance at any time, please press star zero, and a member of our team will be happy to help you.

<unk> of private Securities Litigation Reform Act. These statements include but are not limited to comments regarding financial results for 2025 and beyond actual results could differ materially from those projected in forward looking statements.

A number of risk factors and uncertainties, which are discussed at length in the company's annual and quarterly SEC filings.

<unk> health has no obligation to update the information provided on this call to reflect such subsequent events.

Suzanne Foster: I have heard that at the end of the day, they have to earn the business just like anyone else would. And like I said, in this business, you earn that business by providing the best service. And so we believe with all of the infrastructure and continuous improvement that we made, that we are going to continue to earn business on the basis of our service excellence. And so it does not preclude us from calling on that customer.

Additionally, on this morning's call the company will reference certain financial measures such as.

Evident adjust.

Adjusted EBITDA, adjusted EBITDA margin and free cash flow all of which are non-GAAP financial measures you can find more information about these non-GAAP measures in this presentation materials accompanying today's call, which are posted on the company's website. This mornings call is being recorded and a replay of the call will be.

Jason Clemens: No, Eric, I might add, since the announcement that you're referring to, there's been zero change in our trend lines and our expectations related to that contract. So, we'll see what, I guess, tomorrow brings. But for now, we've got full access and coverage, and we feel just fine about it.

Available later today I am now pleased to introduce the Chief Executive officer of <unk> and Foster.

Thank you and good morning, everyone and welcome to the call.

I am pleased to report that Q3 was a milestone for adapt health. If you recall last year at this time, we realigned our business into four reporting segments. Each under a general managers and dedicated sales leaders. This was intended to focus our efforts on improving patient service and operational efficiency by <unk>.

Eric Coldwell: That's great. Thanks so much, guys. Good job with the quarter.

Suzanne Foster: Thank you. We'll now move on to Brian Tanquilut with Jefferies. Your line is now open.

Doing so it allowed us to better manage our resources and that decision was a key contributor to the mid single digit organic growth each segment produced this quarter.

Brian Tanquilut: Hey, good morning. Congrats on the quarter. Maybe, Suzanne, I'll just hit on that last comment you made. So as we think about the fact that you've already won Humana, the Kaiser contract, and then another one today, I mean, different dynamics there. Humana was not capitated prior. What are you seeing in the market, or what are the conversations like in terms of getting more payers to convert their approaches to DME to capitation? And how far are we from, or is it reasonable to think that eventually this will be mostly capitated, at least for the national providers?

The theme for today's call is that over the past year. The team has worked tirelessly to transform our business and we are now seeing our progress taking hold and flowing through to our financial results.

Speaker #1: Good day, everyone, and welcome to today's AdaptHealth Corp. Q2, 2025 earnings release. Today's speakers will be Suzanne Foster, Chief Executive Officer of AdaptHealth, and Jason Clemens, Chief Financial Officer of AdaptHealth.

In the third quarter, we completed substantial operational improvements across the organization and delivered financial results that exceeded our expectations.

Speaker #1: Before we begin, I'd like to remind everyone that statements included in this conference call and in this press release issued today may constitute forward-looking statements.

We are continuing to demonstrate progress across all three value drivers growth profitability and risk profile.

Suzanne Foster: Thanks, Brian. I mean, I believe that this type of model is what's best for the industry. I was recently on the road meeting with some big hospital systems and their CEOs, and what they're talking about is reducing their length of stay, seamless handoffs, putting our people alongside their people for discharge planning. So they're incented to move patients through the hospital or, if it's a physician practice, to have a seamless handoff. And so having a strong partnership where we can hold each other accountable, they can hold us accountable for service level initiatives, that's a big deal to them. Because if they're managing many, many different players without strong SLAs in place, that makes it difficult.

Speaker #1: Within the meaning of private security and the Litigation Reform Act, these statements include, but are not limited to, comments regarding financial results for 2025 and beyond.

Starting with growth our third third quarter revenue was $823 million up one 8% from prior year quarter.

Speaker #1: Actual results could differ materially from those projected in forward-looking statements. Because of a number of risk factors and uncertainties, which are discussed at length in the company's annual and quarterly SEC filings.

Organic revenue growth, which does not include changes in revenue.

Which does not include changes in revenue from divestitures or acquisitions was five 1% versus the prior year quarter with strength across each of our four reportable segments.

Speaker #1: AdaptHealth Corp. has no obligation to update the information provided on this call to reflect such subsequent events. Additionally, on this morning's call, the company will reference certain financial measures such as EBITDA, adjusted EBITDA, adjusted EBITDA margin, and free cash flow.

Please new starts were up nearly 7% from the prior year quarter, making it our highest quarter in two years.

We also set new patient census records in both sleep and respiratory health.

Suzanne Foster: So us showing up, saying we're a large public company that takes compliance and integrity seriously, that we cover 47 states, that we can do this at scale, that we agree to SLAs in the capitated agreement. They like that model. And so the idea that we can show up and have that seamless handoff for them and quarterly report out how that performance is going between us, that's something that's really getting a lot of interest. And that's where we're putting a lot of resources to go see how many more hospital systems, IDNs, and payers that we can convince that by aligning our incentives, that this is best for patient care.

We experienced robust year over year growth in our wellness at home segment, driven by Orthotics in hospice.

Speaker #1: All of which are non-GAAP financial measures. You can find more information about these non-GAAP measures in this presentation materials accompanying today's call, which are posted on the company's website.

And in diabetes health, we delivered the first quarter of revenue growth since Q1 2024.

Speaker #1: This morning's call is being recorded and replay of the call will be available later today. I am now pleased to introduce the Chief Executive Officer of AdaptHealth, Suzanne Foster.

Moving to profitability, our third quarter, adjusted EBITDA was $171 million up three 5% from the prior year quarter and above the high end of our guidance range.

Speaker #2: Thank you. And good morning, everyone. And welcome to the call. I'm pleased to report that Q3 was a milestone for AdaptHealth. If you recall, last year at this time, we realigned our business into four reporting segments.

Adjusted EBITDA margin was 27% up 30 basis points from the prior year quarter as we exhibited discipline on expenses, even as we made forward investments in talent technology and infrastructure to support our new large appetite partnership we announced in August.

Speaker #2: Each under a general manager's and dedicated sales leaders. This was intended to focus our efforts on improving patient service, and operational efficiency. By doing so, it allowed us to better manage our resources and that decision was a key contributor to the mid-single-digit organic growth each segment produced this quarter.

Brian Tanquilut: That makes sense. Then maybe, Jason, just back to the point of the guidance. I mean, obviously, good quarter here, and then you're maintaining the guidance. First, what exactly are these investments that you've mentioned? And then how should we be thinking about the investments related to the new contract? And where are you tracking versus what you thought you'd be spending for Kaiser? Thanks.

Turning to our risk profile, we reduced debt by another $50 million during the third quarter.

Bringing our year to date total debt reduction to $225 million.

Speaker #2: The theme for today's call is that over the past year, the team has worked tirelessly to transform our business. And we are now seeing our progress taking hold and flowing through to our financial results.

We are delevering quickly and rapidly approaching our 250 times target net leverage ratio.

Jason Clemens: Brian, so I guess firstly, kind of when we say infrastructure, we're talking about an estimated 1,200 people that have to be recruited, onboarded, trained, and ready for day one of patients flowing across multiple states. It's procurement of vehicles, two-hour standards. They've got to be outfitted. They've got to be painted, all this detail that needs to happen in order to have trucks running on day one. So that's all well underway. And finally, it's the procurement of about three dozen locations in geographies that we don't compete in yet. And so as we get those locations identified and secured, they've got to get outfitted. You've got to get them ready. You've got to stock them with inventory and capital equipment, and again, be ready for that patient on day one. So we're moving along according to our plans.

With our net leverage ratio standing at two six times at quarter end.

Speaker #2: In the third quarter, we completed substantial operational improvements across the organization, and delivered financial results that exceeded our expectations. We are continuing to demonstrate progress across all three value drivers.

Debt reduction remains among our highest capital allocation priorities as we believe a strong balance sheet is essential to unlocking and sustaining value for shareholders.

Speaker #2: Growth, profitability, and risk profile. Starting with growth, our third quarter revenue was $820.3 million. Up 1.8% from prior year quarter. Organic revenue growth, which does not include changes in revenue, which does not include changes in revenue from divestitures or acquisitions, was 5.1% versus the prior year quarter, with strength across each of our four reportable segments.

During the quarter, we continued to make significant strides towards improving patient service and field operations.

As planned we completed the implementation of our standard field operating model and organizational structure.

Starting with consolidated from six to four regions.

This was a huge step forward it required empowering our best operators to lead these four regions and realigning nearly 8000 employees to our new field operating structure and staying with workflows.

Speaker #2: Sleep new starts were up nearly 7% from the prior year quarter. Making it our highest quarter in two years. We also set new patient census records in both sleep and respiratory health.

As a reminder, we entered nearly 40000 homes per day, we operated 640 locations across 47 states and without a standard operating model and org structure Rolling out standard workflows at technology can be slow and inefficient.

Jason Clemens: In fact, in some markets, we've actually advanced due to some local dynamics in those markets, which is why we're seeing expenses running hotter, particularly in the labor lines. And then I'd say related, I mean, we went from six regions to four. I mean, we took out two kind of operating regions now as part of that operating model change. Look, there's a lot of talent in the organization, a lot of experience, long time in DME. We think it was prudent to hold on to the folks that want to continue to be part of our business, that potentially want to relocate. We're doing a fair amount of that to these markets to stand up new AdaptHealth operations and to grow from there. So that's a little bit about kind of what we're investing in.

Speaker #2: We experienced robust year-over-year growth in our wellness at home segment, driven by orthotics and hospice. And in diabetes health, we delivered the first quarter of revenue growth since Q1, 2024.

Now with the standard operating model across the country, we can more efficiently deploy operational improvements and technology solutions in a timely manner and at scale.

Speaker #2: Moving to profitability, our third quarter adjusted EBITDA was $170.1 million, up 3.5% from the prior year quarter, and above the high end of our guidance range.

Another initiative, that's taken place over the last many months is the consolidation of our previously fragmented call centers into a new national contact center and utilizing a single patient services technology platform.

Speaker #2: Adjusted EBITDA margin was 20.7%, up 30 basis points from the prior year quarter. As we exhibited discipline on expenses, even as we made forward investments in talent, technology, and infrastructure to support our new large capitated partnership, we announced in August.

This is a significant enhancement that allows us to dramatically improve how we route our incoming call volume and standardized patient interaction, which creates a higher quality more consistent experience for the patients we serve.

Jason Clemens: In terms of what to expect, we do expect to carry additional expense into the first quarter, potentially mid-second quarter. And as this revenue comes online, the nice thing about it is, I mean, you immediately move up to the 20% EBITDA margin, which is our expectation for the contract, because the infrastructure is paid for, the capital equipment's in, trucks are running, and then that day one, you start getting paid per member per month. And so there'll be a little bit of forward investment in the fourth quarter and in the first quarter, and then that'll start swinging out over the course of 2026. And we expect high revenue growth as well as big improvement in EBITDA margin in the second half of 2026.

Looking forward as we deploy technology that allows more patients to self serve this new call Center will supplement the local brand is with increased capacity to manage the most critical patient concerns.

Speaker #2: Turning to our risk profile, we reduced debt by another $50 million during the third quarter. Bringing our year-to-date total debt reduction to $225 million.

We continue to believe that there is significant potential to deploy AI and automation across our business.

Speaker #2: We are de-levering quickly and rapidly approaching our $2.50 times target net leverage ratio. With our net leverage ratio standing at 2.68 times at quarter end.

Therefore, we continue to selectively but aggressively pursue and pilot the use of these tools to dropped to drive service excellence and operational efficiencies and we are already beginning to see the early benefits for.

Speaker #2: Debt reduction remains among our highest capital allocation priorities as we believe a strong balance sheet is essential to unlocking and sustaining value for shareholders.

For example, in the third quarter automation enabled the revenue cycle management team to reduce its reliance on offshore labor by approximately 5%.

Eric Coldwell: Thank you.

Speaker #2: During the quarter, we continue to make significant strides towards improving patient service and field operations. As planned, we completed the implementation of our standard field operating model and organizational structure.

Suzanne Foster: Thank you. We'll now move on to Richard Close with Canaccord Genuity. Your line is now open.

Let me connect these results to where we're headed strategically we.

We are moving quickly to establish the infrastructure required to service, our recently announced exclusive <unk> agreement with a large integrated delivery network.

Eric Coldwell: Yeah, just hitting on the capitated agreements a little bit more. In terms of the announcement or the new contract announced today, are there any more details that you can provide? Just curious if there's any geographic overlap with your other agreements that provide maybe some additional operating leverage there or less infrastructure investments in that. And then is there an opportunity to expand the number of lives with that agreement?

Speaker #2: Starting with consolidating from six to four regions. This was a huge step forward. It required empowering our best operators to lead these four regions and realigning nearly 8,000 employees to our new field operating structure and standard workflows.

This is a significant undertaking that will require approximately 1200 employees.

<unk> 30 locations and 300 vehicles.

Our partnership with this customer is off to a strong start because we share a philosophy about how best to guide our efforts to provide superior care for patients.

Speaker #2: As a reminder, we entered nearly 40,000 homes per day. We operate 640 locations across 47 states and without a standard operating model and/or structure, rolling out standard workflows and technology can be slow and inefficient.

This starts with a mutual recognition that the combination of an integrated delivery network.

And add scale home medical equipment and service provider.

Jason Clemens: Yeah, Richard, I'd say that. We announced this agreement more so for the strategic implications to the company. Where we're heading in terms of taking control of our own destiny on reimbursement. Capping business exclusively where we can contain an entire population and take care of all of those patients. In terms of financial impact. I mean, 170,000 members, the math doesn't work exactly, but compared to over 10 million lives in this other contract that we've spoken about. You'll see it's maybe a couple of percentage points. So it's nowhere near size and scale. There is benefit to the geography of this contract and potential growth. This is a major payer. If we do our jobs and we think we will, it does set up nicely for us to continue to work that payer's pipeline. So more to come.

Speaker #2: Now, with a standard operating model across the country, we can more efficiently deploy operational improvements and technology solutions in a timely manner and at scale.

Working through a per member per month or <unk> fee model produces the strongest alignment of incentives.

This means we share a common commitment to a seamless handoff of care as patients are discharged from the hospital when they are at their most vulnerable and the risk of readmission is the highest.

Speaker #2: Another initiative that's taken place over the last many months is the consolidation of our previously fragmented call centers into a new national contact center and utilizing a single patient services technology platform.

It means being rewarded for clinical appropriateness and efficiency by providing exactly what the patient needs nothing more nothing less.

Speaker #2: This is a significant enhancement that allows us to dramatically improve how we route our incoming call volume and standardize patient interaction. Which creates a higher quality, more consistent experience for the patients we serve.

It also means being motivated to drive patient adherence by investing in setup training education and ongoing support to ensure patients used equipment correctly and.

In short we are strategic partners working to keep patients healthy at the lowest sustainable cost.

Speaker #2: Looking forward, as we deploy technology that allows more patients to self-serve, this new call center will supplement the local branches with increased capacity to manage the most critical patient concerns.

We arrived at this moment because of our success with with our Humana Palpitated arrangement.

Which demonstrated for the first time that an at scale HMA provider could lift and shift significant volumes of activity, while maintaining high service standards.

Speaker #2: We continue to believe that there is significant potential to deploy AI and automation across our business. Therefore, we continue to selectively but aggressively pursue and pilot the use of these tools to drive service excellence and operational efficiencies.

Suzanne Foster: Once again, if you'd like to ask a question, please press star and move on your keypad now. We'll now move on to Peta Chickering with Deutsche Bank. Your line is now open.

Our immediate objective is to replicate that success by delivering delivering on our promises to our new IBM partner as well as to another new competition partner, a major payer for whom we will be the exclusive provider to an additional 170000 lives as announced this morning.

Speaker #2: And we are already beginning to see the early benefits. For example, in the third quarter, automation enabled the revenue cycle management team to reduce its reliance on offshore labor by approximately 5%.

Kieran Ryan: Morning. This is Kieran Ryan on for Peta this morning. Appreciate you taking the questions. Just wanted to check in and see if you could provide any other color on diabetes. Appreciate the detail on CGM's first pumps. Not sure if you can talk about anything you saw on the pharmacy side or with payer mix in the quarter that maybe contributed to the uptake. Thanks.

But as we look out on the horizon, we intend to lead the evolution of our industry by using our results to prove to every IBM and large hospital system in the U S that partnering with us produces better outcomes for patients.

Speaker #2: Let me connect these results to where we are headed strategically. We are moving quickly to establish the infrastructure required to service our recently announced exclusive capitated agreement with a large integrated delivery network.

That means faster time to therapy higher adherence greater patient satisfaction, and ultimately finding ways to lower readmission rates and delivery genuine clinical value in my home.

Suzanne Foster: Okay. Appreciate the questions. Jason and I will tag-team this. I'll start with just what we're seeing in diabetes. Listen, we've talked about this now for the past year that this has been a focus of ours to improve our execution, that a lot of this was certainly an interesting market dynamic, but that was no excuse for our past year's performance. We have finally gotten our arms around the business, and we're seeing the best attrition rates from our resupply team. We've really stopped that bleeding and servicing patients really well there. Pumps have been strong, and our sales force has been trained, put in place. We've made the changes we've needed to. We have a strong leader there, so we're getting out in front of the right customers and leveraging the HME side of our business.

Adapt health is uniquely positioned with our technology infrastructure and operational capacity to offer this value proposition at scale.

Speaker #2: recognition that the combination of an integrated delivery network at an at-scale home medical equipment and service provider, working through a per-member, per-month, or capitated fee model, produces the strongest alignment of incentives.

And our relentless focus on operational discipline and service excellence demonstrated in our Q3 progress is all about enhancing the value proposition.

Our national contact center centralized order intake and adoption of AI and automation are just a few examples of how we are alleviating patient physician and hospital pain points.

Speaker #2: This means we share a common commitment to a seamless handoff of care as patients are discharged from the hospital, when they are at their most vulnerable, and the risk of readmission is the highest.

This focus extends beyond competition to our entire business.

Suzanne Foster: The diabetes team and our HME sales forces are working collectively to identify opportunities. So it's kind of been an all-hands-on-deck that finally has proven to show some success. And then in terms of the numbers, I'll hand that off to Jason to give you a little bit more for that purpose.

Speaker #2: It means being rewarded for clinical appropriateness and efficiency, by providing exactly what the patients need, nothing more, nothing less. It also means being motivated to drive patient adherence by investing in setup, training, education, and ongoing support to ensure patients use equipment correctly.

To be clear about what does that state service excellence is where HMA providers win or lose loyalty.

Hospitals, and physicians remember, which HMA companies respond timely.

Who handles logistics team has seamlessly and who prevents patient readmissions.

Jason Clemens: Yeah, to get maybe into the weeds a little bit. This was the first quarter or last quarter, I'd say, of a comparable against a different management team, a different resupply organization, and processes. Because those changes were made late September of 2024. And so what you're seeing is just strength in retention, as Suzanne said. Now, when we get to Q4, now we're comping that same team that we've got running in Nashville is now comping against themselves. And so we're setting record retention rates, but to grow above that, it does get more challenging. So although we were thrilled to see over 6% growth in diabetes in Q3, given the softer starts, we still have a ways to go until we're demonstrating consistency, stability, and ultimately some growth in this business. And so that's a little bit about Q3 versus Q4.

Service excellence creates referrals stickiness for us operational discipline as the foundation for service Excellence is not just about margin improvement.

Speaker #2: In short, we are strategic partners working to keep patients healthy, at the lowest sustainable cost. We arrived at this moment because of our success with our Humana capitated arrangement.

It's the key to competitive differentiation.

And because of that and greening this discipline into our DNA is becoming one of our highest strategic imperatives.

Speaker #2: Which demonstrated for the first time that an at-scale HME provider could lift and shift significant volumes of activity while maintaining high service standards. Our immediate objective is to replicate that success by delivering on our promises to our new IVN partner.

As we look toward the upcoming round of Cms's competitive bidding program, our operating efficiency is a unique and critical strategic asset.

While the final rule has yet to be released and the ongoing government shutdowns holds the potential to delay it.

Speaker #2: As well, as to another new capitation partner, a major payer for whom we will be the exclusive provider to an additional 170,000 lives as announced this morning.

CMS has not mince words about what it hopes to achieve with the redesign of the program.

As outlined in the proposed rule.

Speaker #2: But as we look out on the horizon, we intend to lead the evolution of our industry by using our results to prove to every IVN and large hospital system in the US that partnering with us produces better outcomes for patients.

Speeds. The successful process is one that will cause HMA participant of small and large to submit competitive bid and it seems to view eliminate the number of contracts awarded at the key mechanism for achieving that aim.

Jason Clemens: As we get to 2026, again, we expect stable retention, modest improvement in sales. We're taking actions to make sure we secure that. And with a little luck, we'll have a consistent, stable business to report in 2026.

Speaker #2: That means faster time to therapy, higher adherence, greater patient satisfaction, and ultimately finding ways to lower readmission rates and deliver genuine clinical value in the home.

Some look at the bidding program and focus only on the reimbursement risk. However rate compression is not a foregone conclusion and Moreover, it is only half the equation. The other half is that if BMS retains its proposal to limit contract awards.

Suzanne Foster: To your point around pharmacy versus med benefit during the past year, we've made the decision to pursue the pharmacy channel. We were slower last year committing to that to wait to see what this business, how it would perform. But now that we're seeing that providers do really want the optionality to send both, we're making investments to make sure that we can efficiently process those types of orders as well.

Speaker #2: AdaptHealth is uniquely positioned with our technology infrastructure and operational capacity to offer this value proposition at scale. And our relentless focus on operational discipline and service excellence demonstrated in our Q3 progress is all about enhancing the value proposition.

Would by definition consolidate traditional Medicare market share with knock on effects that would likely forest industry consolidation more broadly.

As a result competitive bidding has more potential to transform the industry structure than perhaps any other dynamic.

Speaker #2: Our national contact center, centralized order intake, and adoption of AI and automation are just a few examples of how we are alleviating patient, physician, and hospital pain points.

Adapt <unk> been preparing for this moment three years, our cost structure enables us to participate in the bidding program from an advantaged position.

Kieran Ryan: Thanks a lot. And then I guess just briefly on the sleep side, obviously strong new start and census numbers. Just wanted to still understand if you still expect that mixed headwind to be fully comped out as we exit 2025. So that's kind of not a factor as we move into 2026. Thanks.

Speaker #2: This focus extends beyond capitation to our entire business. To be clear about what is at stake, service excellence is where HME providers win or lose loyalty.

Furthermore, as governments policy continues to evolve our improving financial strength affords us the flexibility to take strategic action to consolidate market share.

Speaker #2: Hospitals and physicians remember which HME companies respond timely. Who handles logistics seamlessly, and who prevents patient readmissions. Service excellence creates referral stickiness. For us, operational discipline as the foundation for service excellence is not just about margin improvement.

Where others may see risk, we see opportunity.

Jason Clemens: Yeah, exactly. I mean, there'll be de minimis impact in Q4, but as we get into 2026, we'll be past all that. So it'll be a bit of an easier comp, if you will, as we look towards next year.

Before I close I'd like to express how grateful I am to my adapt health colleagues. The progress we've made over the last year and especially in the third quarter demonstrated our grit determination and focus is paying off.

Kieran Ryan: Thanks a lot.

We have a lot of momentum coming into 2026 and expect to see continuous improvement across our business as our teams execute on these growth opportunities ahead of us.

Suzanne Foster: Thank you. We'll now move on to Whit Mayo with Leerink Partners. Your line is now open.

Speaker #2: It's the key to competitive differentiation. And because of this, ingraining this discipline into our DNA is becoming one of our highest strategic imperatives. As we look toward the upcoming round of CMS's competitive bidding program, our operating efficiency is a unique and critical strategic asset.

Eric Coldwell: Hey, thanks. Good morning. Jason, the 6% to 8% revenue growth that you're guiding to for 2026, any way to unpack that by segment, how you're thinking about it?

With that I'd like to pass the call over to Jason to review our financials. Thank you Suzanne and thanks to everyone for joining our call today.

After covering our third quarter 2025 results ill provide a review of the balance sheet and our plans for capital allocation.

Jason Clemens: Sure. We can probably offer some high-level views. Then we add a lot more to that when we guide in February. But if you look at the base business today, I mean, we've gone through a lot of disposition activity over the course of kind of late 2024 through current. We're starting modest M&A that's been going on around that same timeframe. So you're going to likely have a bit of a canceling effect as we look to 2026. Outside of that, our organic growth, which excludes dispositions, acquisitions, year to date, we're running 1.8%. So as we look to 2026, I mean, we think that we can get a little bit of growth there. Some of that will come through the accounting changes that Kieran mentioned in the last question. I mean, that alone is $30 million or about a point of revenue.

Speaker #2: While the final rule has yet to be released, and the ongoing government shutdown holds the potential to delay it. CMS has not minced words about what it hopes to achieve with the redesign of the program.

Then I'll finish with guidance for the remainder of 2025 and some perspective on our early expectations for 2026.

Our third quarter 2025, net revenue of $828 3 million increased one 8% from the prior year quarter.

Speaker #2: As outlined in the proposed rule, CMS sees the successful process as one that will cause HME participants—small and large—to submit competitive bids, and it seems to view limiting the number of contracts awarded as the key mechanism for achieving that aim.

Organic revenue growth was five 1% in the quarter.

This does not include $34 4 million of prior year revenues related to the divestiture of certain assets from the wellness at home segment and $7 7 million of revenue from acquired businesses.

Speaker #2: Some look at the bidding program and focus only on the reimbursement risk. However, rate compression is not a foregone conclusion, and moreover, it is only half the equation.

As Suzanne noted our third quarter revenues were characterized by strength across all four reportable segments.

Speaker #2: The other half is that if CMS retains its proposal to limit contract awards, this would, by definition, consolidate traditional Medicare market share, with knock-on effects that would likely force industry consolidation more broadly.

Each producing year over year organic growth.

Third quarter sleep Health segment, net revenue increased five 7% versus the prior year quarter to $354 8 million.

Speaker #2: As a result, competitive bidding has more potential to transform HME industry structure than perhaps any other dynamic. AdaptHealth has been preparing for this moment for years.

Jason Clemens: So if you look at sleep, I mean, that alone. We expect to produce a better growth rate in sleep. Not just that single factor, but we're starting to near records of new start activity. So we aim to continue that through 2026. Respiratory in 2025 so far has just had a blowout year. I don't know that we'll be producing at these upper single-digit levels for respiratory. We think it'll normalize back to kind of a lower single-digit, which is what we've seen historically as it relates to respiratory. Then as it relates to diabetes and wellness, we think we'll produce steady and stable revenue, potentially a little bit of growth in one or both of those segments. But all that together, we think organic growth, again, today, a little under 2%, could move to a little under 3% next year.

We've helped starts were approximately 130000 up six 8% versus the prior year quarter, resulting in our highest quarter to two years.

Our sleep health senses reached a new record of 172 million patients up from $170 million in the prior quarter.

Speaker #2: Our cost structure enables us to participate in the bidding program from an advantaged position. Furthermore, as government policy continues to evolve, our improving financial strength affords us the flexibility to take strategic action to consolidate market share.

Third quarter respiratory health segment net revenue increased seven 8% from the prior year quarter to 177 zero million.

Speaker #2: Where others may see risk, we see opportunity. Before I close, I'd like to express how grateful I am to my AdaptHealth colleagues. The progress we've made over the last year—and especially in the third quarter—demonstrated our grit, determination, and focus as paying off.

Despite lower than anticipated oxygen new starts retention remained strong resulting in an oxygen census of 330000 patients, which was a new third quarter record.

Third quarter diabetes Health segment net revenue increased six 4% versus the prior year quarter to $150 $1 million, our first quarter of year over year growth since the first quarter of 2024.

Speaker #2: We have a lot of momentum coming into 2026, and expect to see continuous improvements across our business as our teams execute on these growth opportunities ahead of us.

Jason Clemens: Then you've got the benefit, which is also organic, of this capitated arrangement that gets you up to that 6% to 8%.

Although CGM starts were softer than we expected CGM census grew over the prior year quarter for the third consecutive quarter driven by continued improvement in retention rates.

Eric Coldwell: Okay. That's helpful. I was wondering, is there anything new on rack audits for PAPs, ventilators, rentals, etc., that's on your radar that's concerning or not concerning to you? I think CMS did award a new contract recently, so just wanted to get an update there.

Pump and pump supplies revenue continued to grow over the prior year quarter.

Jason Clemens: That's right, Wade, but the number of audits and the kind of frequency of audits, it's been very, very steady. There's been no change or impact.

For the wellness at home segment third quarter net revenue declined 16.0% from the prior year quarter to $138 4 million, including the previously mentioned impact of the disposition of certain noncore assets.

Eric Coldwell: Okay. Helpful. Thanks.

Turning to profitability third quarter 2025, adjusted EBITDA was $170 1 million up three 5% from the prior year quarter.

Suzanne Foster: Thank you. This now brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Adjusted EBITDA margin was 27% slightly above the midpoint of our Q3 guidance range and up 30 basis points from 24% in Q3 2024.

Year over year margin trend reflected modest improvement in operating expenses as well as the disposable of less profitable non core product lines.

Our labor expenses were well contained even as we invested in advance of revenue for our new capitation agreements.

Moving to cash flow balance sheet and capital allocation Q3, 2025 cash flow from operations was $161 1 million.

Capex of $94 2 million was 11, 5% of revenue up slightly from the prior quarter as we continue to invest in new patient growth.

Free cash flow was $66 8 million in line with our expectations and unrestricted cash $84 million at the end of the quarter.

At quarter end net debt stood at 173 billion down from 180 1 billion at the end of the second quarter.

We reduced our <unk> balance by $50 million in Q3, 2025, bringing the year to date total to $225 million.

Our focus on debt reduction has decreased year to date interest expense by over $15 million as compared with the same period for 2024.

Our net leverage ratio stood at $2 six to eight times down from two one times at the end of the second quarter and rapidly approaching our target of two five times.

Turning to capital allocation, our highest priorities continue to be investing to accelerate organic growth and debt reduction to strengthen our financial position.

Followed by strategic acquisitions of home medical equipment providers to round out our geographic footprint and increased patient access.

So far in 2025, we have allocated $19 million of capital to tuck in deals and we're continuing to advanced modest tuck in deals through our pipeline.

Turning to guidance, we are maintaining our full year 2025 revenue guidance range and expect to come in very modestly above the midpoint of that range.

We are also maintaining our full year 2025, adjusted EBIT guidance, we expect to come in at the bottom end of that range as we prudently.

Alright investments and infrastructure.

Technology and labor to stand up our new catheter unit arrangement.

We are maintaining our free cash flow guidance at a range of $170 million to $190 million.

While the government shutdown has the potential to push some cash collections into Q1 2026.

Given the free cash flow generated year to date, we remain confident that we will still achieve our prior guidance range.

Given the number of moving parts affecting our expectations for 2026, let me provide a preview of how we're thinking about next year.

We anticipate the top line will grow 6% to 8% over full year 2025.

Which assumes accelerated growth in our core products.

Revenue from our new capitation contract and the impact of certain assets disposed in 2025.

We expect revenue growth will start slower in the first half, but will accelerate in the back half due to the timing of the ramp of the capitation contract and the dispositions.

We anticipate full year 2026, adjusted EBIT margin to be approximately 50 basis points better than 2025, even as we invest in new capital infrastructure. In early 2026 ahead of the revenue ramp.

As a reminder, we expect this capitation contract once fully ramped to produce at least $200 million of annual revenue with adjusted EBITDA margin and free cash flow margin in line with the rest of our business.

Turning to guidance, we are maintaining our full year 2025 revenue guidance range and expect to come in very modestly above the midpoint of that range.

As has been our practice, we intend to provide formal full year 2026 guidance. When we report fourth quarter earnings this coming February.

We are also maintaining our full year 2025, adjusted EBIT guidance, we expect to come in at the bottom end of that range as we prudently accelerated investments in infrastructure technology and labor to stand up our new catheter unit arrangement.

That brings me to the end of my remarks, operator would you kindly open up the call for questions.

We are maintaining our free cash flow guidance at a range of $170 million to $190 million.

Thank you if you'd like to ask a question press star one on your keypad to link the queue at any time.

While the government shutdown has the potential to push some cash collections into Q1 2026, given the free cash flow generated year to date, we remain confident that we will still achieve our prior guidance range.

Saar to once again that is star one to ask a question and we'll pause for just a moment to allow everyone a chance to join the queue.

Given the number of moving parts affecting our expectations for 2026, let me provide a preview of how we're thinking about next year.

Our first question comes from Eric Coldwell with Baird. Please go ahead. Your line is now open thanks.

We anticipate the top line will grow 6% to 8% over full year 2025.

Very much.

Nice job on the quarter.

Wanted to hit on the large capital deal your comments on 2006, Jason We're very helpful. You mentioned slower growth in the first half more in the second half Conversely, the incumbent on that arrangement has been signaling that it actually expect the.

Which assumes accelerating growth in our core products revenue.

Revenue from our new capitation contract and the impact of certain assets disposed in 2025.

We expect revenue growth will start slower in the first half, but will accelerate in the back half due to the timing of the ramp of the <unk> contract and the dispositions.

Transition to be begin this quarter and to be completely ramped or completed by the end of the second quarter of next year. So the incumbent sounding like the transition is going to happen a little faster if I'm reading you correctly, it still sounds like you're expecting a little slower I'm, hoping you can just.

We.

<unk> full year 2026, adjusted EBIT margin to be approximately 50 basis points better than 2025, even as we invest in new capital and infrastructure in early 2026 ahead of the revenue ramp.

Help us triangulate those those two data points.

Well sure Eric I mean, I guess I'd say firstly that.

We don't have a lot of perspective on.

What competitors might be saying out there but.

As has been our practice, we intend to provide formal full year 2026 guidance. When we report fourth quarter earnings this coming February.

But we do know is that the contracted days that we've signed up to deliver okay. That's very clear.

Yes.

That brings me to the end of my remarks, operator would you kindly open up the call for questions.

We are in advance of the bulk of that ramp and so we think we're being appropriately conservative with our expectations of the ramp over the course of 2026.

Thank you if you'd like to ask a question press star one on your keypad to lead the queue at any time.

And as markets come online, we will certainly gain confidence on having all of the infrastructure that we need in place before the first patient shows up I mean that in our mind is the priority is making sure that we've got the labor and the people and the vehicle and the infrastructure in place for those patients.

Dr. Zhu once again that is star one to ask a question and we'll pause for just a moment to allow everyone a chance to join the queue.

Our first question comes from Eric Coldwell with Baird. Please go ahead. Your line is now open thanks.

Prior showing up and if we do that we take good care of those patients.

Thanks very much.

Rahm could get better than what we're suggesting.

Nice nice job in the quarter.

Just.

Wanted to hit on the large capital deal your comments on 26th Jason. We're very helpful. You mentioned slower growth in the first half more in the second half Conversely, the incumbent on that arrangement has been signaling that it actually expect the.

Just one quick follow up or additional question.

Obviously been pretty successful here recently with these new wins, particularly on the large capital side.

At the same time again, a competitor has recently announced a.

At least in the near term and exclusive with a large network Optum health.

The transition to be begin this quarter and to be completely ramped or completed by.

And I'm curious based on your 2026 preview it doesn't sound like that's a big impact.

At the end of the second quarter of next year. So the incumbent sounding like the transition is going to happen a little faster if I'm reading you correctly, it still sounds like youre expecting a little slower I'm, hoping you can just help us triangulate those those two data points.

Hoping you can give us some color on.

Perhaps how much exposure you might have had there or if that.

That competitor announcements at all impactful I mean, certainly a larger optima health larger network somewhat visible to the street I'm just.

Well sure Eric I mean, I guess I'd say firstly that.

We don't have a lot of perspective on.

Curious if you have any thoughts on that change.

What competitors might be saying out there.

I'll take that one Eric.

But we do know is that the contracted dates that we've signed up to deliver that.

So taking a step back I think that these capitation agreements or preferred provider agreements as some will call. Other types of agreements are evidence that the market payers and providers are interested in partnering with the single scaled partner to help their members single Ah patients.

Very clear.

Yes.

In advance of the bulk of that ramp and so we think we're being appropriately conservative with our expectations of the ramp over the course of 2026.

But there is a distinction in my understanding between a exclusive <unk> agreement and what we call a preferred provider agreement and so the distinction here is that with what when we say complicated agreement we are exclusive.

And as markets come online, we will certainly gain confidence on having all of the infrastructure that we need in place before the first patient shows up I mean that in our mind is the priority is making sure that we've got the labor and the people and the vehicles and the infrastructure in place for those patients.

We may have to refer to us and we have to service that patient or a preferred.

Provider agreement means.

Give us the give.

Prior showing up and if we do that we take good care of those patients.

Give us the business will service it.

That ramp could get better than what we're suggesting.

But it still means that people can compete for that business.

Just.

Just one quick follow up or additional question.

It's still open network and so if I understand correctly the contract that you're referring to I have not heard that it is exclusive I have heard that at the end of the day. They have to earn the business just like anyone else would and like I said in this business you earn that business by providing the best service and so we believe with all.

Obviously been pretty successful here recently with these new wins, particularly on the large cap side.

At the same time again, a competitor has recently announced a.

At least in the near term and exclusive with a large network Optum health.

The infrastructure and continuous improvement that we made that we are going to continue to earn business on the basis of our service excellence.

And I'm curious based on your 2026 preview it doesn't sound like that's a big impact, but I'm, hoping you can give us some color on.

So it does not preclude us from Colleen on the customer.

Perhaps how much exposure you might have had there or if that.

No Eric I might add since the announcement that youre, referring to there has been zero change in our trend lines in our expectations.

That competitor announcements at all impactful I mean, certainly a larger optum health larger network somewhat visible to the street I'm just.

Related to that contract so.

Curious if you have any thoughts on that change.

We'll see what tomorrow brings but for now.

I'll take that one Eric.

We've got we've got full access and coverage.

So taking a step back I think that these complicated agreements or preferred provider agreements as some call. Other types of agreements are evidence that the market payers and providers are interested in partnering with a single scaled partner to help their membership or patients.

Feel just fine about it.

That's great. Thanks, Thanks, so much guys good job with the quarter.

Thank you, we'll now move on to Brian Tim Quillin with Jefferies. Your line is now open.

Hey, good morning, congrats on the quarter.

But there is a distinction in my understanding between a exclusive cappuccino agreement and what we call a preferred provider agreement and so the distinction here is that with what when we said compensated agreement we are exclusive.

Suzanne I'll just hit on that last comment you made so as we think about the fact that you've already won humana.

These are contracted and then another one today I mean different dynamics there Humana was not without cabinets added Brian what are you seeing in the market or what are the conversations like in terms of getting more payers to convert their approaches to <unk> to capitation.

They have to refer to us and we have to service that patient pool.

First provider agreement means hey give us.

Far away from or is it reasonable to think that eventually this will be most of the cap stated at least for the natural providers.

Give us the business will service it.

But it still means that people can compete for that business.

Thanks, Brian.

I believe that this type of model is what's best for the industry I was recently on the road meeting with some.

Big Hospital systems, and their Ceos, and what they're talking about is reducing their length of stay seamless handoffs, putting our people alongside their people for discharge planning.

So we believe with all of the infrastructure.

So their incentive to to move patients through the hospital or if it's a physician practice to have a seamless handoff and so having a strong partnership where we can hold each other accountable of Vegas hold us accountable for service level.

This improvement that we made that we are going to continue to earn business on the basis of our service excellence and so it does not preclude us from Colleen on the customer.

No Eric I might add since the announcement that you're referring to there has been zero change in our trend lines in our expectations.

Initiatives, that's a big deal to them because if they are managing many many different players without strong SLS in place that makes it difficult so as showing up saying were.

Related to that contract so.

We'll see what tomorrow brings but for now.

A large public company that takes compliance and integrity seriously that we covered 47 states that we can do this at scale that we agreed to SLE in the targeting the cap seeded agreement.

We've got we've got full access and coverage.

We feel just fine about it.

Great. Thanks, Thanks, so much guys good job with the quarter.

Okay.

They like that model.

Thank you, we'll now move on to Brian Tim Quillin with Jefferies. Your line is now open.

And so the idea that we can show up it and have that seamless handoff for them quarterly report out how that performance is going between us that's something that's really getting a lot of interest and thats where were putting a lot of resources to go see how many more hospital systems <unk> and payers that we.

Hey, good morning, congrats on the quarter.

Maybe susanne I'll just hit on that last comment you made so as we think about the fact that you've already won humana. The Kaiser contract and then another one today I mean different dynamics, there humana was not.

Convinced that this by aligning our incentive set this is best for patient care.

Cabot's added Brian what are you seeing in the market or what are the conversations like in terms of getting more payers to convert their approaches to dnb to capitation.

That makes sense and then maybe Jason just back to the point of the guidance I mean, obviously good quarter here.

Turning to guidance.

Far away from or is it reasonable to think that eventually this will be most of the cap stated at least for the national providers.

First what exactly are these investments that you've mentioned and then how should we be thinking about the investments related to the new contract and where do you where are you tracking versus what you thought you'd expect you'd be spending for Kaiser.

Thanks, Brian.

I believe that this type of model is what's best for the industry.

Brian I guess, firstly like kind of when we say infrastructure.

On the road meeting with <unk>.

Big Hospital systems, and their Ceos and what they are talking about is reducing their length of stay seamless handoffs, putting our people alongside their people for discharge planning.

We're talking about an estimated 1200 people that has to be recruited on boarded trained and.

And ready for day, one of patients flowing across multiple states.

Its procurement of vehicles to our standards they've got to be outfitted they've got to be paid in August.

All of this detail that needs to happen in order to have trucks running on day one.

Initiatives, that's a big deal to them because if theyre managing many many different players without strong SLA is in place that makes it difficult so as showing up saying more.

So thats, all well underway and finally some.

Procurement of about three dozen locations.

A large public company that takes compliance and integrity seriously that we covered 47 states that we can do this at scale that we agreed to SLE in the targeting the cap seeded agreement.

In in geographies that we don't we don't compete in yet yes.

And so as we get those locations identified and secured they gotta get outfitted.

Get them ready to go to stocking with inventory and capital equipment and again be ready for that patient on day one so.

They like that model.

So the idea that we can show up it and have that seamless handoff for them.

We're moving along according to our plans in fact in some markets, we've actually advanced due to some local dynamics.

<unk> report out how that performance is going between us that's something that's really getting a lot of interest and that's where we're putting a lot of resources to go see how many more hospital systems and payers that we have convinced that this by aligning our incentive set this is best for patient care.

Those markets.

Which is why we are seeing expenses running hotter, particularly in the labor lines.

I would say related.

We went from six regions. So for I mean, we took out to kind of operating regions now.

That makes sense and then maybe Jason just back to the point of the guidance I mean, obviously good quarter here and then youre maintaining the guidance.

As part of that operating model change.

Look there's a lot of talent the organization a lot of experience long time at <unk>, We think it was prudent to <unk>.

Hold on to the folks that want to continue to be part of our business that potentially want to relocate we're doing a fair amount of that too.

To these markets to stand up new adopt health operations and to grow from there. So that's a little bit about kind of what we're investing in in terms of what to expect.

Right. So I guess, firstly like kind of when we say infrastructure.

We're talking about an estimated 1200 people that has to be recruited on boarded trained.

We do expect to carry additional expense.

Into the first quarter potentially.

Potentially mid second quarter.

And ready for day, one of patients flowing across multiple states.

And as this revenue comes online the nice thing about it is.

You immediately move up too.

Its procurement of vehicles to our standards.

The 20% EBIT margin, which is our expectation for the contract because the infrastructure is paid for the capital equipments in trucks are running and then that day. One you started getting paid per member per month.

Gotta be outfitted they've got to be painted all of this.

All of this detail that needs to happen in order to have trucks running on day one.

And so there'll be a little bit of foreign investment in the fourth quarter and in the first quarter and then that'll start swinging out over the course of 'twenty six and we expect high revenue growth as well as.

So thats all well underway.

Finally, some procurement of about three dozen locations.

In in geographies that we don't we don't compete it yet yes.

No big improvement in EBIT margin in the second half 'twenty six.

And so as we get those locations identified and secured they kind of get outfitted.

Thank you.

Get them ready, you're going to start going with inventory and capital equipment and again be ready for that patient on day one so.

Thank you, we'll now move on to Richard close with Canaccord Genuity. Your line is now open.

We're moving along according to our plans in fact in some markets, we've actually advanced due to some local dynamics in those markets.

Yes, just.

Hitting on the capitation agreements a little bit more in terms of the announcement or the new contract announced today is are there any more details that you can provide just curious if there's any geographic overlap with your other agreements.

This is why we are seeing expenses running hotter, particularly in the labor lines.

And then I'd say related.

We went from six regions. So for I mean, we took out to kind of operating regions now.

As part of that operating model change.

Per ton maybe.

Look there's a lot of talent in the organization a lot of experience long time at <unk>, We think it was prudent to.

Additional operating leverage there or less infrastructure investments on that and then is there an opportunity to expand the number of lives with that agreement.

Hold on to the folks that want to continue to be part of our business that potentially want to relocate we're doing a fair amount of that.

To these markets to stand up new adopt health operations and to grow from there. So that's a little bit about kind of what we're investing in in terms of what to expect.

Yes, Richard I would say that.

We announced this agreement more so for the strategic implications to the company.

We do expect to carry additional expense.

And where we're heading in terms of taking control of our own destiny on reimbursement.

Into the first quarter Patel.

Potentially mid second quarter.

Capping business exclusively where we can contain an entire population and take care of all of those patients.

And as this revenue comes online the nice thing about it is.

You immediately move up too.

In terms of financial impact.

20% EBIT margin, which is our expectation for the contract because the infrastructure is paid for the capital equipments in trucks are running and then that day. One you start getting paid per member per month.

170000 members, the math doesn't work exactly but compared to over 10 million lives. In this this other contract that we've spoken about youll see us maybe a couple of percentage points. So it's nowhere near size and scale.

There is benefit too.

The geography of this contract and potential growth. This is a major payer if we do our jobs and we think we will it does set up nicely for us.

No big improvement in EBIT margin in the second half 'twenty six.

Thank you.

To continue to work that payers pipeline so.

Okay.

Thank you, we'll now move on to Richard close with Canaccord Genuity. Your line is now open.

More to come.

Once again, if you'd like to ask a question. Please press star on your keypad now.

Yes, just.

Hitting on the catheter <unk> agreements a little bit more in terms of the announcement or the new contract announced today's are there any more details that you can provide just curious if there's any geographic overlap with your other agreements.

We will now move on to Peter Chickering with Deutsche Bank. Your line is now open.

Good morning, as Kieran Ryan on for Peter This morning, I appreciate you taking the questions.

Just wanted to check in and see if you could provide any any other color on diabetes I appreciate the detail on cgm's various pumps I'm not sure. If you can talk about anything you saw on the pharmacy side or with payer mix in the quarter that maybe contributed to the to the uptick.

Per ton maybe.

Additional operating leverage there or less infrastructure investments on that and then is there an opportunity to expand the number of lives with that agreement.

Okay. I appreciate the question, Jason I will tag team. This I'll start with just what we're seeing in diabetes. So.

Yes, Richard I say that.

<unk>.

We announced this agreement more so for the strategic implications to the company.

Listen we've talked about this now for the past year that this has been a focus of ours too.

And where we're heading in terms of taking control of our own destiny on reimbursement.

Prove our execution that a lot of this was certainly an interesting market dynamic, but that was no excuse for our past year's performance and we have finally gotten our arms around the business and we're seeing the best attrition rates from our resupply team with really stopped without bleeding and servicing patients really well there.

Capping business exclusively where we can contain an entire population and take care of all of those patients.

In terms of financial impact.

Pumps have been strong and our sales force has been trained and put in place. We've made the changes we made to we have a strong leader there. So we're getting out in front of the right customers and leveraging the HMA side of our business. The diabetes team in our HMA sales forces are working collectively to identify opportunities.

There is benefit too.

The geography of this contract and potential growth. This is a major payer if we do our jobs and we think we will it does set up nicely for.

So it's kind of been all hands on deck that finally has has proven to show. Some success and then in terms of the numbers I'll I'll hand that off to Jason to give you a little bit more for that purpose to get maybe into the resort.

As to continue to work that parents pipeline so.

More to come.

This was the first quarter.

Once again, if you'd like to ask a question. Please press star one on your keypad now.

Our last quarter, I'd say of a comparable against.

We'll now move on to Peter Chickering with Deutsche Bank. Your line is now open.

A different management team, but different resupply organization and processes.

Good morning, as Kieran Ryan on for Peter This morning, I appreciate you taking the questions.

Because those changes were made late September of 2024, and so what Youre seeing is just strength in retention as Suzanne said now when we get to Q4 now we're comping that same team that we've got running in Nashville is now comping against themselves.

Just wanted to check in and see if you could provide any any other color on diabetes I appreciate the detail on CGM as various pumps.

If you can talk about anything you saw on the pharmacy side or with payer mix in the quarter that maybe contributed to the to the uptick.

So.

We are setting record retention rates, but to grow above that it does get more challenging.

Okay. I appreciate the question, Jason and I will tag team. This I'll start with just what we're seeing in diabetes. So.

So, although we were thrilled to see over 6% growth in diabetes in Q3.

Listen we've talked about this now for the past year that this has been a focus of ours too.

Given the softer starts.

We still have a ways to go until we're demonstrating consistency and stability and ultimately some some growth in this business.

Improve our execution that a lot of this was certainly an interesting market dynamic, but that was no excuse for our past year's performance and we have finally gotten our arms around the business and we're seeing that.

So that's a little bit about Q3 versus Q4, as we get to 'twenty six again, we expect stable retention.

Best attrition rates from our resupply team with really stopped about bleeding and servicing patients really well there.

Modest improvement in sales, we're taking actions to make sure we secure that and with a little luck, we'll have a consistent stable business to report in 2006 and to your point around pharmacy versus med benefit.

Pumps have been strong and our sales force has been trained and put in place. We've made the changes we needed to we have a strong leader there. So we're getting out in front of the right customers and leveraging the HMA side of our business you know the diabetes team in our HMA sales forces are working collectively to identify opportunities.

During the past year we.

We didn't we've made the decision to pursue the pharmacy channel we were slower last year committing to that to wait to see what.

This business, how and how it would perform but now that we're seeing that providers do really want the optionality to sell both we're making the investments to make sure that we can efficiently process those types of orders as well.

Thanks, a lot and then and then I guess just briefly on the on the sleep side, obviously strong new start and census numbers.

This was the first quarter.

Our last quarter, I'd say of a comparable against.

So under is still understand if you if you still expect that mix headwind to be to be fully comped out as we exit 'twenty five so thats.

A different management team a different resupply organization and processes.

That's kind of not a factor as we move into 'twenty six.

Yes, exactly I mean, there'll be there'll be de Minimis impact in Q4, but as we get into 'twenty six that will be we'll be past all of that so it'll be.

A bit of an easier comp if you will as we look towards next year.

We are setting record retention rates, but to grow above that it does get more challenging.

Thanks, a lot.

Thank you, we'll now move on to Whit Mayo with Leerink partners. Your line is now open.

So, although we were thrilled to see over 6% growth in diabetes in Q3.

Hey, Thanks, good morning.

Given the softer starts.

Jason the 6% to 8% revenue growth that you're guiding to for 2026 and any way to unpack that by segment, how you're thinking about it.

We still have a ways to go until we're demonstrating consistency and stability and ultimately some some growth in this business.

And so that's a little bit about Q3 versus Q4, as we get to 'twenty six again, we expect stable retention.

Sure.

You can probably offer some high level views.

And then add a lot more to that when we guide in February.

If you look at the base business today.

We've gone through a lot of disposition activity.

Over the course of kind of late 'twenty four through current.

During the past year we.

We didn't we've made the decision to pursue the pharmacy channel.

We are starting modest M&A, that's been going on around that same timeframe and so youre going to likely have a bit of a cancelling effect as we look to 'twenty six.

Were slower last year committing to that to wait to see what we this.

This business how it how it would perform but now that we're seeing that providers do you really want the optionality to send both we're making investments to make sure that we can efficiently process those types of orders as well.

Outside of that our organic growth, which excludes dispositions acquisitions year to date, we're running one 8%.

So as we look to 2006 I mean, we think that we can get a little bit of growth there.

Thanks, a lot and then and then I guess just briefly on the on the sleep side, obviously strong new start and census numbers.

Some of that will come through the accounting changes that Karen mentioned in the last the last question I mean that alone is $30 million or about a point of revenue.

I wanted to still understand if you if you still expect that mix headwind to be to be fully comped out as we exit 'twenty five so that's that.

So if you look at sleep that alone will we expect to produce a better growth rate in sleep not.

It's kind of not a factor as we move into 'twenty six.

Yes, exactly I mean, there'll be there'll be de Minimis impact in Q4, but as we get into 'twenty six that will be we'll be past all of that so it will be.

Not just that single factor, but.

We're starting to near records of new start activity. So we aim to continue that through 2006.

A bit of an easier comp if you will as we as we look towards next year.

Respiratory and 25, so far has just had a blowout year I don't know that we will be producing at these upper single digit levels for respiratory we think it will normalize back to kind of a lower single digit which is what we've seen historically as it relates to respiratory and then as it relates to diabetes and wellness.

Thanks, a lot.

Thank you, we'll now move on to Brett Mayo with Leerink Partners. Your line is now open.

Hey, Thanks, good morning.

Jason the 6% to 8% revenue growth that you're guiding to for 2026 any way to unpack that by segment, how you're thinking about it.

We think will produce steady.

Stable revenue potentially a little bit of growth.

In one or both of those segments, but all of that together, we think organic growth again today, well under 2% could move to a little under 3% next year and then you've got the benefit which is also organic of this compensation arrangement that gives you up to that six to eight.

Sure.

Can probably offer some high level views.

And then add a lot more to that when we guide in February.

But if you look at the base business today.

Okay. That's helpful.

We've gone through a lot of disposition activity.

I was wondering is there anything new on rack audits for perhaps ventilators rentals et cetera. That's on your radar that's concerning or not concerning to you I think CMS did awarded a new contract recently, so just wanted to get an update there.

Over the course of kind of late 'twenty four through current.

We are starting modest M&A, that's been going on around that same timeframe and so youre going to likely have a bit of a cancelling effect as we look to 'twenty six.

That's right, but the number of audits and the kind of frequency of orders. It's been very very steady there has been no change or impact.

Outside of that our organic growth, which excludes dispositions acquisitions year to date.

Okay helpful. Thanks.

Running one 8%.

So as we look to 2006 I mean, we think that we can get a little bit of growth there.

Thank you. This now brings us to the end of today's meeting we appreciate your time and participation you may now disconnect.

Some of that will come through the accounting changes that Karen mentioned in the last the last question I mean that alone is $30 million or about a point of revenue.

So if you look at sleep that alone will we expect to produce a better growth rate in sleep not.

[music].

Not just that single factor, but.

We're starting to near records of new start activity. So we aim to continue that through 2006.

Mhm.

[music].

Hmm.

[music].

We think will produce steady.

Stable revenue potentially a little bit of growth.

In one or both of those segments, but all of that together, we think organic growth again today, well under 2% to move to a little under 3% next year and then you've got the benefit which is also organic of this compensation arrangement that gets you up to that six to eight.

Okay.

[music].

Okay. That's helpful and I was wondering is there anything new on rack audits for paths ventilators rentals et cetera. That's on your radar that's concerning or not concerning to you I think CMS did awarded a new contract recently, so just wanted to get an update there.

That's the right word, but the number of audits and the kind of frequency of orders. It's been very very steady there has been no change or impact.

Okay helpful. Thanks.

Thank you. This now brings us to the end of today's meeting we appreciate your time and participation you may now disconnect.

[music].

Okay.

Uh-huh.

[music].

Okay.

Hum.

[music].

Got it.

[music].

Hum.

[music].

Okay.

[music].

Okay.

[music].

Hum.

Uh huh.

Hum.

[music].

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