Why AdaptHealth Stock Got Thrashed on Tuesday

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.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.