AdaptHealth Corp.

Greetings and welcome to the ADAPT Health second quarter 2022 financial results conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Chris Joyce. Thank you, Chris. You may begin.

Thank you, operator. I'd like to welcome everyone to today's ADAPT Health Corp conference call for the second quarter ended June 30, 2022. Everyone should have received a copy of our earnings release earlier this morning. If not, I'd like to highlight that the earnings release as well as a supplemental slide presentation regarding Q2 2022 results is posted on the investor relations section of our website. In a moment, we'll have some prepared comments from Steve Griggs, Chief Executive Officer of ADAPT Health, Josh Parnas, President of ADAPT Health, and Jason Clemens, Chief Financial Officer of ADAPT Health. We'll then open the call for questions. Before we begin, I'd like to remind everyone that statements included in this conference call and in our press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These statements include, but are not limited to, comments regarding our financial results for 2022 and beyond. 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 our annual and quarterly SEC filings. ADAPT Health Corp. shall have no obligation to update the information provided on this call to reflect such subsequent events. Additionally, on this morning's call, we'll reference certain financial measures such as EBITDA, adjusted EBITDA, and free cash flow, all of which are non-GAAP financial measures. This morning's call is being recorded and a replay of the call will be available later today. I'm now pleased to introduce our Chief Executive Officer, Steve Griggs.

Thank you, Chris. Good morning, everyone, and thank you for joining us as we review our results for the quarter ended June 30th, 2022. As always, we are indebted to our 11,109 employees for the contributions they make every day to ADAPT Health's success. As we move into our second year together, we are very pleased on how well AdaptHealth and AeroCare have integrated operations and continue to take advantage of our scale as a full-service nationwide HME and supplies provider. Results for the second quarter were consistent with our expectations and were characterized by many of the same themes that we've experienced in recent quarters. Our record revenues of $727.6 million, the sequential growth in our second quarter sleep business, and the improvement in our EBITDA margin gives us confidence that we are entering the second half of 2022 on a strong trajectory to achieve our guidance for the year, despite inflationary pressures and supply chain issues that have affected us. Turning to the sleep business, we are pleased to report at quarter end, our census is up 16% from February 2022, when it hit its lowest level since the Phillips recall began in June of 2021. 13 months into the recall, we have worked with our manufacturers to gain greater capacity and accelerate delivery of machines, thus enabling us to get more patients onto therapy in Q2. While we do not expect Philips to be back in the market any time before early 2023, the increased production we are starting to see from other suppliers has become more reliable, and we have substantially increased our capacity to schedule and set up patients. We are, of course, incurring additional shipping costs and other incremental expenses, but we expect those costs to decline as normal supply returns to the market. We continue to drive double-digit growth in our diabetes business, consistent with the market. For the year to date, non-acquired growth is 17%, and we continue to expect solid growth for the remainder of the year. Even though growth in our non-acquired business was flat for the quarter, we feel comfortable with our guidance for overall non-acquired growth of 4% for the full year, largely driven by increased census in our sleep business and our continued growth in our diabetes business. Like most companies, our company is challenged by inflationary pressures and other supply chain issues. While these issues, especially shipping costs, including the price of fuel for our 2,400 vehicles, have impacted our results, I'm pleased that we've been able to mitigate the impact of these pressures through our purchasing scale and use of technology to drive efficiencies. Further, the labor synergies we achieved with the AeroCare merger have minimized the effect of broad labor inflation, as is demonstrated by our labor holding steady as a percentage of revenue. As a result of these factors, our gross margin has stayed relatively stable over the past few quarters. Finally, we are largely insulated from higher interest rates since more than 75% of our debt is fixed, so our cost of capital has remained favorable. I will now turn the call over to our president, Josh Parnas, for further details and an update on our strategic developments.