Filed Pursuant to Rule 424(b)(3)
Registration No. 333-239967
PROSPECTUS SUPPLEMENT NO. 3
(to Prospectus dated July 29, 2020)
AdaptHealth Corp.
Secondary Offering of
2,545,455 shares of Class A Common Stock
This prospectus supplement supplements the prospectus dated July 29, 2020 (the “Prospectus”), which forms a part of our registration statement on Form S-1 (No. 333-239967). This prospectus supplement is being filed to update and supplement the information in the Prospectus with the information contained in our definitive proxy supplement on Form DEFR14A relating to our 2020 annual meeting of stockholders, filed with the Securities and Exchange Commission (the “Commission”) on August 3, 2020 (the “Proxy Supplement”). Accordingly, we have attached the Proxy Supplement to this prospectus supplement.
The Prospectus and this prospectus supplement relate to the offer and sale from time to time in one or more offerings by the selling securityholder identified in the Prospectus of up to 2,545,455 shares of our Class A Common Stock issuable upon conversion of our Series B-1 Preferred Stock issuable upon conversion of our Series B-2 Preferred Stock issued to Deerfield Partners, L.P. in a private placement on July 1, 2020.
Our Class A Common Stock is listed on the Nasdaq Capital Market and trades under the symbol “AHCO”. On July 31, 2020, the closing price of our Class A Common Stock was $19.48.
This prospectus supplement should be read in conjunction with the Prospectus, which is to be delivered with this prospectus supplement. This prospectus supplement is qualified by reference to the Prospectus, except to the extent that the information in this prospectus supplement updates and supersedes the information contained in the Prospectus.
This prospectus supplement is not complete without, and may not be delivered or utilized except in connection with, the Prospectus.
See the section entitled “Risk Factors” beginning on page 9 of the Prospectus and any similar section contained in any applicable prospectus supplement to read about factors you should consider before buying our securities.
We are an “emerging growth company” as defined in Section 2(a) of the Securities Act and are subject to reduced public company reporting requirements. We are also a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act and are subject to reduced public company reporting requirements. See “Risk Factors.”
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus supplement is August 4, 2020
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Securities Exchange Act of 1934
(Amendment No. 3)
FOR ANNUAL MEETING OF STOCKHOLDERS
Chief Executive Officer and Director
Secretary
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220 WEST GERMANTOWN PIKE SUITE 250
PLYMOUTH MEETING, PA
2020 ANNUAL MEETING OF STOCKHOLDERS
| Why did I receive this Supplement? | | | Following the filing of the Proxy Statement on April 29, 2020, the board determined to postpone the date of the Annual Meeting and to add an additional proposal for approval by stockholders at the Annual Meeting. The additional proposal to be presented at the Annual Meeting is Proposal 3: asking our stockholders to approve, for purposes of complying with Nasdaq Listing Rule 5635, the issuance of shares of the Company’s Class A Common Stock, representing equal to or in excess of 20% of the issued and outstanding common stock or voting power of the Company, (i) issuable upon conversion of the Series A Preferred Stock issued by the Company to the OEP Purchaser on July 1, 2020 pursuant to the OEP Investment Agreement and (ii) issuable upon conversion of the Series B-1 Preferred Stock issuable upon conversion of the Series B-2 Preferred Stock issued to Deerfield Partners on July 1, 2020 pursuant to the Deerfield Investment Agreement, in each case, by removal of the conversion restriction that prohibits such conversion of Series A Preferred Stock and Series B-2 Preferred Stock, as applicable. | |
| How can I attend and participate in the Annual Meeting? | | | The Annual Meeting will be a completely virtual meeting of stockholders conducted exclusively via live audio webcast. You will be able to attend the Annual Meeting by visiting www.virtualshareholdermeeting.com/AHCO2020. To participate in the Annual Meeting, you will need the 16-digit control number included on your proxy card or voting instruction card. The Annual Meeting will begin promptly at 10:30 a.m. Eastern Time on August 27, 2020. We encourage you to access the virtual meeting website prior to the start time. | |
| What if I have technical difficulties or trouble accessing the virtual meeting website? | | | Technicians will be available to assist you if you experience technical difficulties accessing the virtual meeting website. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the virtual meeting website login page. | |
| Who is entitled to vote? | | | The record date for the Annual Meeting is June 30, 2020. This means that holders of our Class A Common Stock or our Class B Common Stock on such date are entitled to vote at the Annual Meeting. On June 30, 2020, there were 59,171,876 shares of our Common Stock outstanding and entitled to vote at the Annual Meeting, consisting of 30,663,126 shares of Class A Common Stock and 28,508,750 shares of Class B Common Stock. | |
| How many votes do I have? | | | Each share of our Class A Common Stock and Class B Common Stock is entitled to one vote on each matter properly submitted for stockholder action at the Annual Meeting, except as noted above. | |
| What am I voting on? | | | You will be voting on the following: | |
| | | | • To elect to the board the three nominees named in the Proxy Statement who have been nominated by the board to | |
| | | | continue to serve as Class I directors and whose current terms will expire at the Annual Meeting; | |
| | | | • To ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2020; and | |
| | | | • To approve, for purposes of complying with Nasdaq Listing Rule 5635, the issuance of shares of Class A Common Stock, representing equal to or in excess of 20% of the outstanding common stock or voting power of the Company, (i) issuable upon conversion of Series A Preferred Stock issued by the Company to the OEP Purchaser on July 1, 2020 pursuant to the OEP Investment Agreement and (ii) issuable upon conversion of the Series B-1 Preferred Stock issuable upon conversion of the Series B-2 Preferred Stock issued to Deerfield Partners on July 1, 2020 pursuant to the Deerfield Investment Agreement, in each case, by removal of the conversion restriction that prohibits such conversion of Series A Preferred Stock and Series B-2 Preferred Stock, as applicable. | |
| How do I vote? | | | You may vote in the following ways: | |
| | | | • At the Annual Meeting: You may vote your shares electronically at the Annual Meeting by using the control number on your proxy card or voting instruction form and following the instructions at www.virtualshareholdermeeting.com/AHCO2020. If you have already voted previously by telephone or Internet, there is no need to vote again at the Annual Meeting unless you wish to revoke and change your vote. | |
| | | | • By Telephone or Internet: If you hold your shares in street name or in an account at a brokerage firm or bank, you may be able to vote your shares by telephone or over the Internet. Please follow the instructions on your proxy or voting instruction card. | |
| | | | • By Mail: If you requested to receive printed proxy materials, you may vote by marking, dating and signing your proxy card and promptly returning it by mail in the enclosed envelope. | |
| What if I return my proxy or voting instruction card but do not mark it to show how I am voting? | | | Your shares will be voted according to the instructions you have indicated on your proxy or voting instruction card. If no direction is indicated, your shares will be voted “FOR” the election of the Class I nominees and “FOR” Proposals 2 and 3. | |
| How do I change or revoke my proxy? | | | Any person signing a proxy in the form accompanying the Proxy Statement has the power to revoke it prior to the Annual Meeting or at the Annual Meeting prior to the vote pursuant to the proxy. A proxy may be revoked by a writing delivered to us stating that the proxy is revoked, by a subsequent proxy that is signed by the person who signed the earlier proxy and is delivered before or at the Annual Meeting, by voting again on a later date on the Internet or by telephone (only your latest Internet or telephone proxy submitted prior to the Annual | |
| | | | Meeting will be counted), or by attendance at the Annual Meeting and voting electronically. | |
| What does it mean if I receive more than one proxy or voting instruction card? | | | It means you have multiple accounts at the transfer agent and/or with banks and stockbrokers. Please vote all of your shares. | |
| What constitutes a quorum? | | | Any number of stockholders, together holding at least a majority in voting power of the capital stock of the Company issued and outstanding and generally entitled to vote in the election of directors, present or represented by proxy at any meeting duly called, shall constitute a quorum for the transaction of all business. Abstentions and “broker non-votes” are counted as shares “present” at the meeting for purposes of determining whether a quorum exists. A “broker non-vote” occurs when shares held of record by a bank, broker or other holder of record for a beneficial owner are deemed present at the meeting for purposes of a quorum but are not voted on a particular proposal because that record holder does not have discretionary voting power for that particular matter under the applicable rules of the Nasdaq Stock Market (“Nasdaq”) and has not received voting instructions from the beneficial owner. | |
| What vote is required in order to approve Proposals 1, 2 and 3? | | | Proposal 1 (Election of Directors): The three nominees named in the Proxy Statement who have been nominated by the board to continue to serve as Class I directors will be elected to the Class I directorships by plurality vote. This means that the three nominees with the most votes cast in their favor will be elected to the Class I directorships. Votes withheld from one or more director nominees will have no effect on the election of any director from whom votes are withheld. If you do not want to vote your shares for a nominee, you may indicate that in the space provided on the proxy card or the voting instruction card or withhold authority as prompted during telephone or Internet voting. In the unanticipated event that a director nominee is unable or declines to serve, the proxy will be voted for such other person as shall be designated by the board to replace the nominee, or in lieu thereof, the board may reduce the number of directors. | |
| | | | Proposal 2 (Ratification of Appointment of KPMG LLP): This proposal requires the affirmative vote of the holders of a majority of the voting power of our outstanding Common Stock present or represented by proxy at the Annual Meeting and entitled to vote on Proposal 2. Abstentions will have the effect of votes against the proposal. “Broker non-votes,” if any, will not have any effect on the adoption of the proposal. | |
| | | | Proposal 3 (Approval, for Purposes of Complying With Nasdaq Listing Rule 5635, of (1) the Issuance of Class A Common Stock Issuable Upon Conversion of Series A Preferred Stock and (2) the Issuance of Class A Common Stock Issuable Upon Conversion of Series B-1 Preferred Stock Issuable Upon Conversion of Series B-2 Preferred Stock), in each case, by Removal of the Conversion Restriction that Prohibits such Conversion of Series A Preferred Stock and Series B-2 Preferred Stock, as Applicable: This proposal requires the affirmative vote (in person or by | |
| | | | proxy) of the holders of a majority of the outstanding shares of Common Stock entitled to vote and actually cast thereon. Abstentions and “broker non-votes,” if any, will not have any effect on the adoption of the proposal. | |
| May my broker vote my shares? | | | Brokers may no longer use discretionary authority to vote shares on the election of directors or non-routine matters if they have not received instructions from their clients. It is important, therefore, that you cast your vote if you want it to count in the election of directors (Proposal 1) or the approval for purposes of complying with Nasdaq Listing Rule 5635 (Proposal 3). Your broker has the authority to exercise discretion with respect to ratification of appointment of KPMG LLP (Proposal 2) if it has not received your instructions for that proposal because that matter is treated as routine under applicable rules. | |
| How will voting on any other business be conducted? | | | We do not know of any business or proposals to be considered at the Annual Meeting other than those set forth in the Proxy Statement. If any other business is properly presented at the Annual Meeting, the proxies received from our stockholders give the proxy holders the authority to vote on the matter in their sole discretion. | |
| Who will count the votes? | | | Broadridge Financial Solutions, Inc. will act as the inspector of elections and will tabulate the votes. | |
| What will happen if Proposal 3 is not approved by the stockholders? | | | If our stockholders do not approve Proposal 3 at the Annual Meeting, the conversion restrictions applicable to the Series A Preferred Stock and Series B-2 Preferred Stock will remain in effect and neither the Company nor the holder thereof shall be entitled to convert the Series A Preferred Stock into shares of Class A Common Stock or Series B-2 Preferred Stock into shares of Series B-1 Preferred Stock. Your approval of Proposal 3 will assist us meeting our obligations under the OEP Investment Agreement and the Deerfield Investment Agreement. | |
For the Stockholder Meeting to be Held on August 27, 2020
PROPOSAL 3.
| | | Three Months Ended March 31, | | | Increase / (Decrease) | | ||||||||||||||||||
(in thousands, except percentages) | | | 2020 | | | 2019 | | | Dollars | | | Percentage | | ||||||||||||
Revenue, net | | | | $ | 39,681 | | | | | $ | 37,676 | | | | | $ | 2,005 | | | | | | 5% | | |
Cost of Goods Sold | | | | | 24,387 | | | | | | 23,666 | | | | | | 721 | | | | | | 3% | | |
Gross Profit | | | | | 15,294 | | | | | | 14,010 | | | | | | 1,284 | | | | | | 9% | | |
Operating Expenses | | | | | | | | | | | | | | | | | | | | | | | | | |
Selling, General and Administrative Expenses | | | | | 12,398 | | | | | | 11,531 | | | | | | 867 | | | | | | 8% | | |
Operating Income | | | | | 2,896 | | | | | | 2,479 | | | | | | 417 | | | | | | 17% | | |
Interest Expense | | | | | (3,565) | | | | | | (2,395) | | | | | | (1,170) | | | | | | 49% | | |
Other Income | | | | | 31 | | | | | | 26 | | | | | | 5 | | | | | | 19% | | |
(Loss) Income Before Income Taxes | | | | | (638) | | | | | | 110 | | | | | | (748) | | | | | | -680% | | |
Income Tax Expense | | | | | — | | | | | | (73) | | | | | | 73 | | | | | | -100% | | |
Net (Loss) Income | | | | $ | (638) | | | | | $ | 37 | | | | | $ | (675) | | | | | | -1824% | | |
| | | Year Ended December 31, | | | Increase / (Decrease) | | ||||||||||||||||||
(in thousands, except percentages) | | | 2019 | | | 2018 | | | Dollars | | | Percentage | | ||||||||||||
Revenue, net | | | | $ | 183,352 | | | | | $ | 144,114 | | | | | $ | 39,238 | | | | | | 27% | | |
Cost of Goods Sold | | | | | 113,335 | | | | | | 92,844 | | | | | | 20,491 | | | | | | 22% | | |
Gross Profit | | | | | 70,017 | | | | | | 51,270 | | | | | | 18,747 | | | | | | 37% | | |
Operating Expenses | | | | | | | | | | | | | | | | | | | | | | | | | |
Selling, General and Administrative Expenses | | | | | 44,360 | | | | | | 28,439 | | | | | | 15,921 | | | | | | 56% | | |
Operating Income | | | | | 25,657 | | | | | | 22,831 | | | | | | 2,826 | | | | | | 12% | | |
Interest Expense | | | | | (13,261) | | | | | | (5,201) | | | | | | (8,060) | | | | | | 155% | | |
Other Income | | | | | 135 | | | | | | 187 | | | | | | (52) | | | | | | -28% | | |
Income Before Income Taxes | | | | | 12,531 | | | | | | 17,817 | | | | | | (5,286) | | | | | | -30% | | |
Income Tax Expense | | | | | (294) | | | | | | (127) | | | | | | (167) | | | | | | 131% | | |
Net Income | | | | $ | 12,237 | | | | | $ | 17,690 | | | | | $ | (5,453) | | | | | | -31% | | |
| | | Three months ended | | |||||||||||||||||||||
| | | March 31, 2020 | | | March 31, 2019 | | ||||||||||||||||||
Net Revenue (in thousands, except percentages) | | | Dollars | | | Revenue Percentage | | | Dollars | | | Revenue Percentage | | ||||||||||||
| | | (Unaudited) | | |||||||||||||||||||||
Net sales revenue: | | | | | | | | | | | | | | | | | | | | | | | | | |
Sleep | | | | $ | 68,894 | | | | | | 36.0% | | | | | $ | 47,127 | | | | | | 39.4% | | |
Supplies to the home | | | | | 33,339 | | | | | | 17.4% | | | | | | 2,029 | | | | | | 1.7% | | |
HME | | | | | 11,579 | | | | | | 6.0% | | | | | | 10,489 | | | | | | 8.8% | | |
Respiratory | | | | | 2,768 | | | | | | 1.4% | | | | | | 1,279 | | | | | | 1.1% | | |
Other | | | | | 12,393 | | | | | | 6.5% | | | | | | 8,032 | | | | | | 6.7% | | |
Total net sales revenue | | | | $ | 128,973 | | | | | | 67.3% | | | | | $ | 68,956 | | | | | | 57.7% | | |
Net revenue from fixed monthly equipment reimbursements: | | | | | | | | | | | | | | | | | | | | | | | | | |
Sleep | | | | $ | 22,669 | | | | | | 11.8% | | | | | $ | 18,057 | | | | | | 15.1% | | |
HME | | | | | 12,177 | | | | | | 6.4% | | | | | | 10,243 | | | | | | 8.6% | | |
Respiratory | | | | | 25,007 | | | | | | 13.1% | | | | | | 20,429 | | | | | | 17.1% | | |
Other | | | | | 2,613 | | | | | | 1.4% | | | | | | 1,813 | | | | | | 1.5% | | |
Total net revenue from fixed monthly equipment reimbursements | | | | $ | 62,466 | | | | | | 32.7% | | | | | $ | 50,542 | | | | | | 42.3% | | |
Total net revenue: | | | | | | | | | | | | | | | | | | | | | | | | | |
Sleep | | | | $ | 91,563 | | | | | | 47.8% | | | | | $ | 65,184 | | | | | | 54.5% | | |
Supplies to the home | | | | | 33,339 | | | | | | 17.4% | | | | | | 2,029 | | | | | | 1.7% | | |
HME | | | | | 23,756 | | | | | | 12.4% | | | | | | 20,732 | | | | | | 17.4% | | |
Respiratory | | | | | 27,775 | | | | | | 14.5% | | | | | | 21,708 | | | | | | 18.2% | | |
Other | | | | | 15,006 | | | | | | 7.9% | | | | | | 9,845 | | | | | | 8.2% | | |
Total net revenue | | | | $ | 191,439 | | | | | | 100.0% | | | | | $ | 119,498 | | | | | | 100.0% | | |
| | | Three months ended | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||
| | | March 31, 2019 | | | June 30, 2019 | | | September 30, 2019 | | | December 31, 2019 | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||
Net Revenue (in thousands, except percentages) | | | Dollars | | | Revenue Percentage | | | Dollars | | | Revenue Percentage | | | Dollars | | | Revenue Percentage | | | Dollars | | | Revenue Percentage | | | Total | | | Revenue Percentage | | ||||||||||||||||||||||||||||||
| | | (Unaudited) | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net sales revenue – Point in time | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Sleep | | | | $ | 47,127 | | | | | | 39.4% | | | | | $ | 50,433 | | | | | | 40.6% | | | | | $ | 59,117 | | | | | | 43.3% | | | | | $ | 67,865 | | | | | | 45.4% | | | | | $ | 224,542 | | | | | | 42.4% | | |
Respiratory | | | | | 1,279 | | | | | | 1.1% | | | | | | 1,445 | | | | | | 1.2% | | | | | | 1,397 | | | | | | 1.0% | | | | | | 1,659 | | | | | | 1.1% | | | | | | 5,780 | | | | | | 1.1% | | |
HME | | | | | 11,042 | | | | | | 9.2% | | | | | | 10,966 | | | | | | 8.8% | | | | | | 11,963 | | | | | | 8.8% | | | | | | 11,977 | | | | | | 8.0% | | | | | | 45,948 | | | | | | 8.7% | | |
Other | | | | | 9,509 | | | | | | 8.0% | | | | | | 10,151 | | | | | | 8.2% | | | | | | 10,587 | | | | | | 7.8% | | | | | | 9,934 | | | | | | 6.6% | | | | | | 40,181 | | | | | | 7.5% | | |
Total Net sales revenue | | | | $ | 68,957 | | | | | | 57.7% | | | | | $ | 72,995 | | | | | | 58.8% | | | | | $ | 83,064 | | | | | | 60.9% | | | | | $ | 91,435 | | | | | | 61.1% | | | | | $ | 316,451 | | | | | | 59.7% | | |
Net revenue from fixed monthly equipment reimbursements | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Sleep | | | | $ | 18,057 | | | | | | 15.1% | | | | | $ | 18,944 | | | | | | 15.3% | | | | | $ | 20,761 | | | | | | 15.2% | | | | | $ | 23,084 | | | | | | 15.4% | | | | | $ | 80,846 | | | | | | 15.3% | | |
Respiratory | | | | | 20,429 | | | | | | 17.1% | | | | | | 20,010 | | | | | | 16.1% | | | | | | 19,646 | | | | | | 14.4% | | | | | | 21,333 | | | | | | 14.3% | | | | | | 81,418 | | | | | | 15.4% | | |
HME | | | | | 10,370 | | | | | | 8.7% | | | | | | 10,294 | | | | | | 8.3% | | | | | | 11,103 | | | | | | 8.1% | | | | | | 11,445 | | | | | | 7.7% | | | | | | 43,212 | | | | | | 8.2% | | |
Other | | | | | 1,686 | | | | | | 1.4% | | | | | | 1,910 | | | | | | 1.5% | | | | | | 1,877 | | | | | | 1.4% | | | | | | 2,244 | | | | | | 1.5% | | | | | | 7,717 | | | | | | 1.4% | | |
Total Net revenue from fixed monthly equipment reimbursements | | | | $ | 50,542 | | | | | | 42.3% | | | | | $ | 51,158 | | | | | | 41.2% | | | | | $ | 53,387 | | | | | | 39.1% | | | | | $ | 58,106 | | | | | | 38.9% | | | | | $ | 213,193 | | | | | | 40.3% | | |
Total net revenue | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Sleep | | | | $ | 65,184 | | | | | | 54.5% | | | | | $ | 69,377 | | | | | | 55.9% | | | | | $ | 79,878 | | | | | | 58.5% | | | | | $ | 90,949 | | | | | | 60.8% | | | | | $ | 305,388 | | | | | | 57.7% | | |
Respiratory | | | | | 21,708 | | | | | | 18.2% | | | | | | 21,455 | | | | | | 17.3% | | | | | | 21,043 | | | | | | 15.4% | | | | | | 22,992 | | | | | | 15.4% | | | | | | 87,198 | | | | | | 16.5% | | |
HME | | | | | 21,412 | | | | | | 17.9% | | | | | | 21,260 | | | | | | 17.1% | | | | | | 23,066 | | | | | | 16.9% | | | | | | 23,422 | | | | | | 15.7% | | | | | | 89,160 | | | | | | 16.9% | | |
Other | | | | | 11,195 | | | | | | 9.4% | | | | | | 12,061 | | | | | | 9.7% | | | | | | 12,464 | | | | | | 9.2% | | | | | | 12,178 | | | | | | 8.1% | | | | | | 47,898 | | | | | | 8.9% | | |
Total net revenue | | | | $ | 119,499 | | | | | | 100.0% | | | | | $ | 124,153 | | | | | | 100.0% | | | | | $ | 136,451 | | | | | | 100.0% | | | | | $ | 149,541 | | | | | | 100.0% | | | | | $ | 529,644 | | | | | | 100.0% | | |
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| | | Three months ended | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||
| | | March 31, 2018 | | | June 30, 2018 | | | September 30, 2018 | | | December 31, 2018 | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||
Net Revenue (in thousands, except percentages) | | | Dollars | | | Revenue Percentage | | | Dollars | | | Revenue Percentage | | | Dollars | | | Revenue Percentage | | | Dollars | | | Revenue Percentage | | | Total | | | Revenue Percentage | | ||||||||||||||||||||||||||||||
| | | (Unaudited) | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net sales revenue – Point in time | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Sleep | | | | $ | 12,205 | | | | | | 21.8% | | | | | $ | 25,760 | | | | | | 32.8% | | | | | $ | 41,226 | | | | | | 40.4% | | | | | $ | 44,394 | | | | | | 40.9% | | | | | $ | 123,585 | | | | | | 35.8% | | |
Respiratory | | | | | 1,069 | | | | | | 1.9% | | | | | | 1,193 | | | | | | 1.5% | | | | | | 1,267 | | | | | | 1.2% | | | | | | 1,382 | | | | | | 1.3% | | | | | | 4,911 | | | | | | 1.4% | | |
HME | | | | | 9,069 | | | | | | 16.2% | | | | | | 9,289 | | | | | | 11.8% | | | | | | 8,938 | | | | | | 8.7% | | | | | | 9,428 | | | | | | 8.7% | | | | | | 36,724 | | | | | | 10.6% | | |
Other | | | | | 5,472 | | | | | | 9.8% | | | | | | 6,043 | | | | | | 7.8% | | | | | | 6,062 | | | | | | 6.0% | | | | | | 7,074 | | | | | | 6.4% | | | | | | 24,651 | | | | | | 7.2% | | |
Total Net sales revenue | | | | $ | 27,815 | | | | | | 49.7% | | | | | $ | 42,285 | | | | | | 53.9% | | | | | $ | 57,493 | | | | | | 56.3% | | | | | $ | 62,278 | | | | | | 57.3% | | | | | $ | 189,871 | | | | | | 55.0% | | |
Net revenue from fixed monthly equipment reimbursements | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Sleep | | | | $ | 7,534 | | | | | | 13.5% | | | | | $ | 11,709 | | | | | | 14.9% | | | | | $ | 16,102 | | | | | | 15.8% | | | | | $ | 17,359 | | | | | | 16.0% | | | | | $ | 52,704 | | | | | | 15.3% | | |
Respiratory | | | | | 12,167 | | | | | | 21.7% | | | | | | 15,627 | | | | | | 19.9% | | | | | | 19,246 | | | | | | 18.8% | | | | | | 19,301 | | | | | | 17.8% | | | | | | 66,341 | | | | | | 19.2% | | |
HME | | | | | 8,354 | | | | | | 14.9% | | | | | | 8,770 | | | | | | 11.2% | | | | | | 9,180 | | | | | | 9.0% | | | | | | 9,638 | | | | | | 8.8% | | | | | | 35,942 | | | | | | 10.4% | | |
Other | | | | | 114 | | | | | | 0.2% | | | | | | 94 | | | | | | 0.1% | | | | | | 135 | | | | | | 0.1% | | | | | | 77 | | | | | | 0.1% | | | | | | 420 | | | | | | 0.1% | | |
Total Net revenue from fixed monthly equipment reimbursements | | | | $ | 28,169 | | | | | | 50.3% | | | | | $ | 36,200 | | | | | | 46.1% | | | | | $ | 44,663 | | | | | | 43.7% | | | | | $ | 46,375 | | | | | | 42.7% | | | | | $ | 155,407 | | | | | | 45.0% | | |
Total net revenue | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Sleep | | | | $ | 19,739 | | | | | | 35.3% | | | | | $ | 37,469 | | | | | | 47.7% | | | | | $ | 57,328 | | | | | | 56.2% | | | | | $ | 61,753 | | | | | | 56.9% | | | | | $ | 176,289 | | | | | | 51.1% | | |
Respiratory | | | | | 13,236 | | | | | | 23.6% | | | | | | 16,820 | | | | | | 21.4% | | | | | | 20,513 | | | | | | 20.0% | | | | | | 20,683 | | | | | | 19.1% | | | | | | 71,252 | | | | | | 20.6% | | |
HME | | | | | 17,423 | | | | | | 31.1% | | | | | | 18,059 | | | | | | 23.0% | | | | | | 18,118 | | | | | | 17.7% | | | | | | 19,066 | | | | | | 17.5% | | | | | | 72,666 | | | | | | 21.0% | | |
Other | | | | | 5,586 | | | | | | 10.0% | | | | | | 6,137 | | | | | | 7.9% | | | | | | 6,197 | | | | | | 6.1% | | | | | | 7,151 | | | | | | 6.5% | | | | | | 25,071 | | | | | | 7.3% | | |
Total net revenue | | | | $ | 55,984 | | | | | | 100.0% | | | | | $ | 78,485 | | | | | | 100.0% | | | | | $ | 102,156 | | | | | | 100.0% | | | | | $ | 108,653 | | | | | | 100.0% | | | | | $ | 345,278 | | | | | | 100.0% | | |
|
| | | Three Months Ended March 31, | | | | | | | | | | | | | | |||||||||||||||||||||
| | | 2020 | | | 2019 | | | Increase/(Decrease) | | |||||||||||||||||||||||||||
(in thousands, except percentages) | | | Dollars | | | Revenue Percentage | | | Dollars | | | Revenue Percentage | | | Dollars | | | Percentage | | ||||||||||||||||||
| | | (unaudited) | | |||||||||||||||||||||||||||||||||
Net revenue | | | | $ | 191,439 | | | | | | 100.0% | | | | | $ | 119,498 | | | | | | 100.0% | | | | | $ | 71,941 | | | | | | 60.2% | | |
Costs and expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of net revenue | | | | | 166,540 | | | | | | 87.0% | | | | | | 100,227 | | | | | | 83.9% | | | | | | 66,313 | | | | | | 66.2% | | |
General and administrative expenses | | | | | 14,347 | | | | | | 7.5% | | | | | | 13,083 | | | | | | 10.9% | | | | | | 1,264 | | | | | | 9.7% | | |
Depreciation, excluding patient equipment depreciation | | | | | 1,241 | | | | | | 0.6% | | | | | | 841 | | | | | | 0.7% | | | | | | 400 | | | | | | 47.6% | | |
Total costs and expenses | | | | | 182,128 | | | | | | 95.1% | | | | | | 114,151 | | | | | | 95.5% | | | | | | 67,977 | | | | | | 59.6% | | |
Operating income | | | | | 9,311 | | | | | | 4.9% | | | | | | 5,347 | | | | | | 4.5% | | | | | | 3,964 | | | | | | 74.1% | | |
Interest expense, net | | | | | 7,938 | | | | | | 4.1% | | | | | | 6,260 | | | | | | 5.2% | | | | | | 1,678 | | | | | | 26.8% | | |
Loss on extinguishment of debt | | | | | — | | | | | | — | | | | | | 2,121 | | | | | | 1.8% | | | | | | (2,121) | | | | | | NM | | |
Income (loss) before income taxes | | | | | 1,373 | | | | | | 0.8% | | | | | | (3,034) | | | | | | (2.5)% | | | | | | 4,407 | | | | | | (145.3)% | | |
Income tax expense (benefit) | | | | | 1,107 | | | | | | 0.6% | | | | | | 2,418 | | | | | | 2.0% | | | | | | (1,311) | | | | | | NM | | |
Net income (loss) | | | | | 266 | | | | | | 0.2% | | | | | | (5,452) | | | | | | (4.5)% | | | | | | 5,718 | | | | | | (104.9)% | | |
Income attributable to noncontrolling interests | | | | | 424 | | | | | | 0.2% | | | | | | 348 | | | | | | 0.3% | | | | | | 76 | | | | | | 21.8% | | |
Net loss attributable to AdaptHealth Corp. | | | | $ | (158) | | | | | | 0.0% | | | | | $ | (5,800) | | | | | | (4.8)% | | | | | $ | 5,642 | | | | | | (97.3)% | | |
| | | Three Months Ended March 31, | | |||||||||||||||||||||||||||||||||
| | | 2020 | | | 2019 | | | Increase/(Decrease) | | |||||||||||||||||||||||||||
(in thousands, except percentages) | | | Dollars | | | Revenue Percentage | | | Dollars | | | Revenue Percentage | | | Dollars | | | Percentage | | ||||||||||||||||||
| | | (unaudited) | | |||||||||||||||||||||||||||||||||
Costs of net revenue: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of products and supplies | | | | $ | 72,003 | | | | | | 37.6% | | | | | $ | 34,600 | | | | | | 29.0% | | | | | $ | 37,403 | | | | | | 108.1% | | |
Salaries, labor and benefits | | | | | 54,651 | | | | | | 28.5% | | | | | | 35,618 | | | | | | 29.8% | | | | | | 19,033 | | | | | | 53.4% | | |
Patient equipment depreciation | | | | | 15,498 | | | | | | 8.1% | | | | | | 14,131 | | | | | | 11.8% | | | | | | 1,367 | | | | | | 9.7% | | |
Rent and occupancy | | | | | 4,600 | | | | | | 2.4% | | | | | | 3,226 | | | | | | 2.7% | | | | | | 1,374 | | | | | | 42.6% | | |
Other operating expenses | | | | | 19,336 | | | | | | 10.2% | | | | | | 12,494 | | | | | | 10.5% | | | | | | 6,842 | | | | | | 54.8% | | |
Transaction costs | | | | | 627 | | | | | | 0.3% | | | | | | — | | | | | | —% | | | | | | 627 | | | | | | NM% | | |
Equity-based compensation | | | | | 551 | | | | | | 0.3% | | | | | | — | | | | | | —% | | | | | | 551 | | | | | | NM% | | |
Severance | | | | | 365 | | | | | | 0.2% | | | | | | 141 | | | | | | 0.1% | | | | | | 224 | | | | | | 158.9% | | |
Other non-recurring (income) expenses | | | | | (1,091) | | | | | | (0.6)% | | | | | | 17 | | | | | | —% | | | | | | (1,108) | | | | | | NM% | | |
Total cost of net revenue | | | | $ | 166,540 | | | | | | 87.0% | | | | | $ | 100,227 | | | | | | 83.9% | | | | | $ | 66,313 | | | | | | 66.2% | | |
| | | Year Ended December 31, | | | | | | | | | | | | | | |||||||||||||||||||||
| | | 2019 | | | 2018 | | | Increase/(Decrease) | | |||||||||||||||||||||||||||
(in thousands, except percentages) | | | Dollars | | | Revenue Percentage | | | Dollars | | | Revenue Percentage | | | Dollars | | | Percentage | | ||||||||||||||||||
| | | (unaudited) | | |||||||||||||||||||||||||||||||||
Revenue: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenue, net of contractual allowances and discounts | | | | | | | | | | | | | | | | $ | 361,054 | | | | | | | | | | | | | | | | | | | | |
Provision for doubtful accounts(1) | | | | | | | | | | | | | | | | | (15,776) | | | | | | | | | | | | | | | | | | | | |
Net revenue | | | | $ | 529,644 | | | | | | 100.0% | | | | | | 345,278 | | | | | | 100.0% | | | | | $ | 184,366 | | | | | | 53.4% | | |
Costs and expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of net revenue | | | | | 440,386 | | | | | | 83.1% | | | | | | 293,384 | | | | | | 85.0% | | | | | | 147,002 | | | | | | 50.1% | | |
General and administrative expenses | | | | | 56,493 | | | | | | 10.7% | | | | | | 18,069 | | | | | | 5.2% | | | | | | 38,424 | | | | | | 212.7% | | |
Depreciation, excluding patient equipment depreciation | | | | | 3,069 | | | | | | 0.6% | | | | | | 2,734 | | | | | | 0.8% | | | | | | 335 | | | | | | 12.3% | | |
Total costs and expenses | | | | | 499,948 | | | | | | 94.4% | | | | | | 314,187 | | | | | | 91.0% | | | | | | 185,761 | | | | | | 59.1% | | |
Operating income | | | | | 29,696 | | | | | | 5.6% | | | | | | 31,091 | | | | | | 9.0% | | | | | | (1,395) | | | | | | (4.5)% | | |
Interest expense, net | | | | | 39,304 | | | | | | 7.4% | | | | | | 7,453 | | | | | | 2.2% | | | | | | 31,851 | | | | | | 427.4% | | |
Loss on extinguishment of debt, net | | | | | 2,121 | | | | | | 0.4% | | | | | | 1,399 | | | | | | 0.4% | | | | | | 722 | | | | | | NM% | | |
(Loss) income before income taxes | | | | | (11,729) | | | | | | (2.2)% | | | | | | 22,239 | | | | | | 6.4% | | | | | | (33,968) | | | | | | (152.7)% | | |
Income tax expense (benefit) | | | | | 1,156 | | | | | | 0.2% | | | | | | (2,098) | | | | | | (0.6)% | | | | | | 3,254 | | | | | | NM | | |
Net (loss) income | | | | | (12,885) | | | | | | (2.4)% | | | | | | 24,337 | | | | | | 7.0% | | | | | | (37,222) | | | | | | (152.9)% | | |
Income attributable to noncontrolling interests | | | | | 2,111 | | | | | | 0.4% | | | | | | 1,077 | | | | | | 0.3% | | | | | | 1,034 | | | | | | 96.0% | | |
Net (loss) income attributable to AdaptHealth Corp. | | | | $ | (14,996) | | | | | | (2.8)% | | | | | $ | 23,260 | | | | | | 6.7% | | | | | $ | (38,256) | | | | | | (164.5)% | | |
|
| | | Three Months Ended March 31, | | |||||||||
(in thousands) | | | 2020 | | | 2019 | | ||||||
| | | (Unaudited) | | |||||||||
Net loss attributable to AdaptHealth Corp | | | | $ | (158) | | | | | $ | (5,800) | | |
Income attributable to noncontrolling interests | | | | | 424 | | | | | | 348 | | |
Interest expense excluding change in fair value of interest rate swaps | | | | | 7,938 | | | | | | 3,558 | | |
Interest expense – change in fair value of interest rate swaps | | | | | — | | | | | | 2,702 | | |
Income tax expense | | | | | 1,107 | | | | | | 2,418 | | |
Depreciation, including patient equipment depreciation | | | | | 16,740 | | | | | | 14,972 | | |
EBITDA | | | | | 26,051 | | | | | | 18,198 | | |
Loss on extinguishment of debt(a) | | | | | — | | | | | | 2,121 | | |
Equity-based compensation expense(b) | | | | | 2,223 | | | | | | 5,223 | | |
Transaction costs(c) | | | | | 2,858 | | | | | | 2,516 | | |
Severance(d) | | | | | 419 | | | | | | 141 | | |
Other non-recurring (income) expense(e) | | | | | (1,091) | | | | | | 17 | | |
Adjusted EBITDA | | | | | 30,460 | | | | | | 28,216 | | |
Less: Patient equipment capex(f) | | | | | (12,967) | | | | | | (11,243) | | |
Adjusted EBITDA less Patient Equipment Capex | | | | $ | 17,493 | | | | | $ | 16,973 | | |
| | | Year Ended December 31, | | |||||||||
(in thousands) | | | 2019 | | | 2018 | | ||||||
| | | (Unaudited) | | |||||||||
Net (loss) income attributable to AdaptHealth Corp. | | | | $ | (14,996) | | | | | $ | 23,260 | | |
Income attributable to noncontrolling interests | | | | | 2,111 | | | | | | 1,077 | | |
Interest expense excluding change in fair value of interest rate swaps | | | | | 27,878 | | | | | | 8,000 | | |
Interest expense (income) – change in fair value of interest rate swaps | | | | | 11,426 | | | | | | (547) | | |
Income tax expense (benefit) | | | | | 1,156 | | | | | | (2,098) | | |
Depreciation | | | | | 62,567 | | | | | | 47,877 | | |
EBITDA | | | | | 90,142 | | | | | | 77,569 | | |
Loss on extinguishment of debt, net(a) | | | | | 2,121 | | | | | | 1,399 | | |
Equity-based compensation expense(b) | | | | | 11,070 | | | | | | 884 | | |
Transaction costs(c) | | | | | 15,984 | | | | | | 2,514 | | |
Severance(d) | | | | | 2,301 | | | | | | 1,920 | | |
Non-recurring expenses | | | | | 534 | | | | | | 161 | | |
Earnout liability activity(e) | | | | | 869 | | | | | | — | | |
Adjusted EBITDA | | | | | 123,021 | | | | | | 84,447 | | |
Less: Patient equipment capex(f) | | | | | (47,421) | | | | | | (39,364) | | |
Adjusted EBITDA less Patient Equipment Capex | | | | $ | 75,600 | | | | | $ | 45,083 | | |
| | | Three Months Ended March 31, | | | Year Ended December 31, | | ||||||||||||||||||
| | ||||||||||||||||||||||||
(in thousands) | | | 2020 | | | 2019 | | | 2019 | | | 2018 | | ||||||||||||
| | | (unaudited) | | |||||||||||||||||||||
Net cash provided by operating activities | | | | $ | 24,380 | | | | | $ | 16,232 | | | | | $ | 60,418 | | | | | $ | 68,427 | | |
Net cash used in investing activities | | | | | (111,329) | | | | | | (26,179) | | | | | | (84,870) | | | | | | (96,284) | | |
Net cash provided by (used in) financing activities | | | | | 58,235 | | | | | | (369) | | | | | | 76,144 | | | | | | 48,769 | | |
Net increase (decrease) in cash and cash equivalents | | | | | (28,714) | | | | | | (10,316) | | | | | | 51,692 | | | | | | 20,912 | | |
Cash at beginning of period | | | | | 76,878 | | | | | | 25,186 | | | | | | 25,186 | | | | | | 4,274 | | |
Cash at end of period | | | | $ | 48,164 | | | | | $ | 14,870 | | | | | $ | 76,878 | | | | | $ | 25,186 | | |
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| | | | A-70 | | | |
| | | | A-71 | | | |
| | | | A-72 | | | |
| | | | A-72 | | | |
| | | | A-72 | | | |
| | | | A-72 | | |
| Exhibit A | | | Unitholder Consent | |
| Exhibit B | | | Form of Certificate of Merger | |
| Exhibit C | | | Form of Paying Agent Agreement | |
| Exhibit D | | | Form of Letter of Transmittal | |
| Exhibit E | | | Allocation Schedule | |
| Exhibit F | | | Form of Escrow Agreement | |
| Exhibit G | | | Working Capital | |
| Exhibit H | | | Pre-Closing Reorganization | |
| Exhibit I | | | Accounting Principles | |
| Exhibit J | | | Investment Agreement | |
| Exhibit K | | | Debt Commitment Letter | |
| Exhibit L | | | Indemnity Matters | |
| Exhibit M | | | Specific Matters | |
THE BLOCKER PURCHASE
THE MERGER
CLOSING, TRANSACTION CONSIDERATION ADJUSTMENT
REPRESENTATIONS AND WARRANTIES OF BUYER, PARENT AND MERGER SUB
REPRESENTATIONS AND WARRANTIES OF BLOCKER SELLER
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
PRE-CLOSING COVENANTS
POST-CLOSING COVENANTS
TAX COVENANTS
CONDITIONS TO THE OBLIGATIONS OF BUYER, PARENT AND MERGER SUB
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND BLOCKER SELLER
DEFINITIONS
TERMINATION
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNITY
GENERAL PROVISIONS
220 West Germantown Pike, Suite 250
Plymouth Meeting, PA 19462
Attention: Luke McGee and Chris Joyce
Email: lmcgree@adapthealth.com and cjoyce@adapthealth.com
555 Fayetteville Street, Suite 720
Raleigh, NC 27601
Attention: Barry Alexander
Email: barry.alexander@polsinelli.com
c/o Linden Capital Partners
150 North Riverside Plaza, Suite 5100
Chicago, IL 60606
Attention: Brian Miller and Michael Bernard
Email: bmiller@lindenllc.com and mbernard@lindenllc.com
300 North LaSalle Street
Chicago, IL 60654
Attention: Robert A. Wilson, P.C. and Daniel A. Guerin, P.C.
Email: robert.wilson@kirkland.com and daniel.guerin@kirkland.com
c/o Linden Capital Partners
150 North Riverside Plaza, Suite 5100
Chicago, IL 60606
Attention: Brian Miller and Michael Bernard
Email: bmiller@lindenllc.com and mbernard@lindenllc.com
300 North LaSalle Street
Chicago, IL 60654
Attention: Robert A. Wilson, P.C. and Daniel A. Guerin, P.C.
Email: robert.wilson@kirkland.com and daniel.guerin@kirkland.com
| | | | BUYER: | |
| | | | ADAPTHEALTH LLC | |
| | | | By: /s/ Luke McGee Name: Luke McGee Title: Chief Executive Officer | |
| | | | PARENT: | |
| | | | ADAPTHEALTH CORP. | |
| | | | By: /s/ Luke McGee Name: Luke McGee Title: Chief Executive Officer | |
| | | | MERGER SUB: | |
| | | | ELEANOR MERGER SUB, LLC | |
| | | | By: /s/ Luke McGee Name: Luke McGee Title: Chief Executive Officer | |
| | | | COMPANY: | |
| | | | SOLARA HOLDINGS, LLC | |
| | | | By: /s/ Stephen Foreman Name: Stephen Foreman Title: Chief Executive Officer | |
| | | | BLOCKER SELLER AND REPRESENTATIVE: | |
| | | | LCP SOLARA BLOCKER SELLER, LLC | |
| | | | By: /s/ Michael Bernard Name: Michael Bernard Title: President, Secretary and Treasurer | |
March 31, 2020
(in thousands) | | | AdaptHealth Historical | | | Solara Reclassified(1) | | | Pro Forma Adjustments | | | Note 3 | | | AdaptHealth Pro-Forma | | ||||||||||||
Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents | | | | $ | 48,164 | | | | | $ | 21,579 | | | | | $ | (22,018) | | | | (a) | | | | $ | 47,725 | | |
Accounts receivable, net | | | | | 118,651 | | | | | | 24,203 | | | | | | — | | | | | | | | | 142,854 | | |
Inventory | | | | | 17,968 | | | | | | 9,373 | | | | | | — | | | | | | | | | 27,341 | | |
Prepaid and other current assets | | | | | 9,759 | | | | | | 3,974 | | | | | | (867) | | | | (b) | | | | | 12,866 | | |
Total current assets | | | | | 194,542 | | | | | | 59,129 | | | | | | (22,885) | | | | | | | | | 230,786 | | |
Equipment and other fixed assets, net | | | | | 87,301 | | | | | | 4,511 | | | | | | — | | | | | | | | | 91,812 | | |
Goodwill | | | | | 340,807 | | | | | | 110,355 | | | | | | 279,005 | | | | (c) | | | | | 730,167 | | |
Intangible asset, net | | | | | — | | | | | | 53,170 | | | | | | (39,170) | | | | (d) | | | | | 14,000 | | |
Other assets | | | | | 5,670 | | | | | | 70 | | | | | | — | | | | | | | | | 5,740 | | |
Deferred tax asset | | | | | 33,519 | | | | | | — | | | | | | — | | | | | | | | | 33,519 | | |
Total assets | | | | $ | 661,839 | | | | | $ | 227,235 | | | | | $ | 216,950 | | | | | | | | $ | 1,106,024 | | |
Liabilities and Stockholders’ Equity (Deficit) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accounts payable and accrued expenses | | | | $ | 136,072 | | | | | $ | 28,158 | | | | | $ | (8,863) | | | | (e) | | | | $ | 155,367 | | |
Current portion of capital lease obligations | | | | | 20,421 | | | | | | — | | | | | | — | | | | | | | | | 20,421 | | |
Current portion of long-term debt | | | | | 2,616 | | | | | | 1,660 | | | | | | 8,402 | | | | (f) | | | | | 12,678 | | |
Contract Liabilities | | | | | 15,584 | | | | | | — | | | | | | — | | | | | | | | | 15,584 | | |
Other liabilities | | | | | 16,460 | | | | | | 5,397 | | | | | | (5,212) | | | | (g) | | | | | 16,645 | | |
Total current liabilities | | | | | 191,153 | | | | | | 35,215 | | | | | | (5,673) | | | | | | | | | 220,695 | | |
Long-term debt, less current portion | | | | | 463,553 | | | | | | 179,467 | | | | | | (52,468) | | | | (h) | | | | | 590,552 | | |
Other long-term liabilities | | | | | 36,580 | | | | | | 144 | | | | | | — | | | | | | | | | 36,724 | | |
Total liabilities | | | | $ | 691,286 | | | | | $ | 214,826 | | | | | $ | (58,141) | | | | | | | | $ | 847,971 | | |
Total stockholders’ equity (deficit): | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total stockholders’ equity (deficit) attributable to AdaptHealth Corp. | | | | | (10,656) | | | | | | 12,409 | | | | | | 275,091 | | | | (i) | | | | $ | 276,844 | | |
Non controlling interest in subsidiaries | | | | | (18,791) | | | | | | — | | | | | | — | | | | | | | | | (18,791) | | |
Total stockholders’ equity (deficit) | | | | | (29,447) | | | | | | 12,409 | | | | | | 275,091 | | | | | | | | | 258,053 | | |
Total Liabilities and Stockholders’ Equity (Deficit) | | | | $ | 661,839 | | | | | $ | 227,235 | | | | | $ | 216,950 | | | | | | | | $ | 1,106,024 | | |
FOR THE THREE MONTHS ENDED MARCH 31, 2020
(in thousands, except per share data) | | | AdaptHealth Historical | | | Solara Reclassified(1) | | | Pro Forma Adjustments | | | Note 3 | | | AdaptHealth Pro-Forma | | ||||||||||||
Net revenue | | | | $ | 191,439 | | | | | $ | 38,876 | | | | | $ | — | | | | | | | | $ | 230,315 | | |
Costs and expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of net revenue | | | | | 166,540 | | | | | | 34,158 | | | | | | — | | | | | | | | | 200,698 | | |
General and administrative expenses | | | | | 14,347 | | | | | | 1,631 | | | | | | (931) | | | | (j) | | | | | 15,047 | | |
Depreciation, excluding patient equipment depreciation | | | | | 1,241 | | | | | | 160 | | | | | | — | | | | | | | | | 1,401 | | |
Total costs and expenses | | | | | 182,128 | | | | | | 35,949 | | | | | | (931) | | | | | | | | | 217,146 | | |
Operating income (loss) | | | | | 9,311 | | | | | | 2,927 | | | | | | 931 | | | | | | | | | 13,169 | | |
Interest expense, net | | | | | 7,938 | | | | | | 3,565 | | | | | | (2,733) | | | | (k) | | | | | 8,770 | | |
Income (loss) before income taxes | | | | | 1,373 | | | | | | (638) | | | | | | 3,664 | | | | | | | | | 4,399 | | |
Income tax expense | | | | | 1,107 | | | | | | — | | | | | | (51) | | | | (l) | | | | | 1,056 | | |
Net income (loss) | | | | | 266 | | | | | | (638) | | | | | | 3,715 | | | | | | | | | 3,343 | | |
Income attributable to non controlling interests | | | | | 424 | | | | | | — | | | | | | (270) | | | | (m) | | | | | 154 | | |
Net income (loss) attributable to AdaptHealth Corp. | | | | $ | (158) | | | | | $ | (638) | | | | | $ | 3,985 | | | | | | | | $ | 3,189 | | |
Net income (loss) per common share: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | | | $ | — | | | | | | | | | | | | | | | | | | | | $ | 0.05 | | |
Diluted | | | | $ | — | | | | | | | | | | | | | | | | | | | | $ | 0.05 | | |
Weighted average shares outstanding for net income (loss) attributable to AdaptHealth Corp.: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | | | | 41,977 | | | | | | | | | | | | 17,724 | | | | (n) | | | | | 59,701 | | |
Diluted | | | | | 41,977 | | | | | | | | | | | | 19,487 | | | | (n) | | | | | 61,464 | | |
FOR THE YEAR ENDED DECEMBER 31, 2019
(in thousands, except per share data) | | | AdaptHealth Historical | | | PCS Reclassified(1) | | | Solara Reclassified(1) | | | Pro Forma Adjustments | | | Note 3 | | | AdaptHealth Pro-Forma | | |||||||||||||||
Net revenue | | | | $ | 529,644 | | | | | $ | 132,885 | | | | | $ | 179,572 | | | | | $ | — | | | | | | | | $ | 842,101 | | |
Costs and expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of net revenue | | | | | 440,386 | | | | | | 163,772 | | | | | | 146,669 | | | | | | — | | | | | | | | | 750,827 | | |
General and administrative expenses | | | | | 56,493 | | | | | | 5,563 | | | | | | 6,521 | | | | | | (3,721) | | | | (o) | | | | | 64,856 | | |
Depreciation, excluding patient equipment depreciation | | | | | 3,068 | | | | | | 235 | | | | | | 590 | | | | | | — | | | | | | | | | 3,893 | | |
Total costs and expenses | | | | | 499,947 | | | | | | 169,570 | | | | | | 153,780 | | | | | | (3,721) | | | | | | | | | 819,576 | | |
Operating income (loss) | | | | | 29,697 | | | | | | (36,685) | | | | | | 25,792 | | | | | | 3,721 | | | | | | | | | 22,525 | | |
Interest expense, net | | | | | 39,305 | | | | | | (90) | | | | | | 13,261 | | | | | | (11,365) | | | | (p) | | | | | 41,111 | | |
Loss on extinguishment of debt, net | | | | | 2,121 | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2,121 | | |
Income (loss) before income taxes | | | | | (11,729) | | | | | | (36,595) | | | | | | 12,531 | | | | | | 15,086 | | | | | | | | | (20,707) | | |
Income tax expense | | | | | 1,156 | | | | | | — | | | | | | 294 | | | | | | 591 | | | | (l) | | | | | 2,041 | | |
Net income (loss) | | | | | (12,885) | | | | | | (36,595) | | | | | | 12,237 | | | | | | 14,495 | | | | | | | | | (22,748) | | |
Income attributable to non controlling interests | | | | | 2,111 | | | | | | — | | | | | | — | | | | | | (1,094) | | | | (m) | | | | | 1,017 | | |
Net income (loss) attributable to AdaptHealth Corp. | | | | $ | (14,996) | | | | | $ | (36,595) | | | | | $ | 12,237 | | | | | $ | 15,589 | | | | | | | | $ | (23,765) | | |
Net income (loss) per common share: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted | | | | $ | (0.66) | | | | | | | | | | | | | | | | | | | | | | | | | | $ | (0.59) | | |
Weighted average shares outstanding for net income (loss) attributable to AdaptHealth Corp.: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted | | | | | 22,557 | | | | | | | | | | | | | | | | | | 17,724 | | | | (n) | | | | | 40,281 | | |
(in thousands) | | | As per Financial Statements | | | Reclassifications | | | As Reclassified | | |||||||||
Assets: | | | | | | | | | | | | | | | | | | | |
Accounts receivable, net | | | | $ | 25,991 | | | | | $ | (1,788) | | | | | $ | 24,203 | | |
Equipment and other fixed assets, net | | | | $ | 2,517 | | | | | $ | 1,994 | | | | | $ | 4,511 | | |
Rental pumps, net | | | | $ | 1,994 | | | | | $ | (1,994) | | | | | $ | — | | |
Liabilities: | | | | | | | | | | | | | | | | | | | |
Accounts payable and accrued expenses | | | | $ | — | | | | | $ | 28,158 | | | | | $ | 28,158 | | |
Accounts payable | | | | $ | 13,555 | | | | | $ | (13,555) | | | | | $ | — | | |
Accrued expenses | | | | $ | 16,576 | | | | | $ | (16,576) | | | | | $ | — | | |
Other liabilities | | | | $ | — | | | | | $ | 5,397 | | | | | $ | 5,397 | | |
Contingent consideration, current portion | | | | $ | 5,212 | | | | | $ | (5,212) | | | | | $ | — | | |
Total stockholders’ equity: | | | | | | | | | | | | | | | | | | | |
Total stockholders’ equity (deficit) attributable to AdaptHealth Corp. | | | | $ | — | | | | | $ | 12,409 | | | | | $ | 12,409 | | |
Total members’ equity | | | | $ | 12,409 | | | | | $ | (12,409) | | | | | $ | — | | |
(in thousands) | | | As per Financial Statements | | | Reclassifications | | | As Reclassified | | |||||||||
Net revenue | | | | $ | 39,681 | | | | | $ | (805) | | | | | $ | 38,876 | | |
Costs and expenses: | | | | | | | | | | | | | | | | | | | |
Cost of Sales | | | | $ | 24,387 | | | | | $ | 9,771 | | | | | $ | 34,158 | | |
General and administrative expenses | | | | $ | — | | | | | $ | 1,631 | | | | | $ | 1,631 | | |
Depreciation, excluding patient equipment depreciation | | | | $ | — | | | | | $ | 160 | | | | | $ | 160 | | |
Selling, general and administrative expenses | | | | $ | 12,398 | | | | | $ | (12,398) | | | | | $ | — | | |
Other income | | | | $ | (31) | | | | | $ | 31 | | | | | $ | — | | |
(in thousands) | | | As per Financial Statements | | | Reclassifications | | | As Reclassified | | |||||||||
Net revenue | | | | $ | 183,352 | | | | | $ | (3,780) | | | | | $ | 179,572 | | |
Costs and expenses: | | | | | | | | | | | | | | | | | | | |
Cost of Sales | | | | $ | 113,335 | | | | | $ | 33,334 | | | | | $ | 146,669 | | |
General and administrative expenses | | | | $ | — | | | | | $ | 6,521 | | | | | $ | 6,521 | | |
Depreciation, excluding patient equipment depreciation | | | | $ | — | | | | | $ | 590 | | | | | $ | 590 | | |
Selling, general and administrative expenses | | | | $ | 44,360 | | | | | $ | (44,360) | | | | | $ | — | | |
Other income | | | | $ | (135) | | | | | $ | 135 | | | | | $ | — | | |
(in thousands) | | | As per Financial Statements | | | Reclassifications | | | As Reclassified | | |||||||||
Costs and expenses: | | | | | | | | | | | | | | | | | | | |
Cost of Sales | | | | $ | 82,263 | | | | | $ | 81,509 | | | | | $ | 163,772 | | |
General and administrative expenses | | | | $ | — | | | | | $ | 5,563 | | | | | $ | 5,563 | | |
Depreciation, excluding patient equipment depreciation | | | | $ | — | | | | | $ | 235 | | | | | $ | 235 | | |
Selling, distribution, and administrative expenses | | | | $ | 82,483 | | | | | $ | (82,483) | | | | | $ | — | | |
Restructuring Charges | | | | $ | 4,838 | | | | | $ | (4,838) | | | | | $ | — | | |
Interest expense (income) | | | | $ | — | | | | | $ | (90) | | | | | $ | (90) | | |
Other expense, net | | | | $ | (104) | | | | | $ | 104 | | | | | $ | — | | |
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AdaptHealth Corp. | | | | |
Consolidated Interim Financial Statements (Unaudited) | | | | |
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Consolidated Financial Statements (Audited) | | | | |
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Patient Care Solutions Business | | | | |
Audited Combined Financial Statements | | | | |
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Unaudited Combined Financial Statements | | | | |
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Solara Medical Supplies, LLC | | | | |
Unaudited Consolidated Interim Financial Statements | | | | |
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Audited Consolidated Financial Statements | | | | |
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| | | March 31, 2020 | | | December 31, 2019 | | ||||||
Assets | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents | | | | $ | 48,163,701 | | | | | $ | 76,878,134 | | |
Accounts receivable | | | | | 118,650,575 | | | | | | 78,619,230 | | |
Inventory | | | | | 17,967,948 | | | | | | 13,239,037 | | |
Prepaid and other current assets | | | | | 9,759,439 | | | | | | 12,678,423 | | |
Total current assets | | | | | 194,541,663 | | | | | | 181,414,824 | | |
Equipment and other fixed assets, net | | | | | 87,300,924 | | | | | | 63,559,080 | | |
Goodwill | | | | | 340,806,853 | | | | | | 266,790,518 | | |
Other assets | | | | | 5,670,301 | | | | | | 6,851,892 | | |
Deferred tax assets | | | | | 33,518,857 | | | | | | 27,505,379 | | |
Total Assets | | | | $ | 661,838,598 | | | | | $ | 546,121,693 | | |
Liabilities and Stockholders’ Deficit | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable and accrued expenses | | | | $ | 136,071,887 | | | | | $ | 102,728,093 | | |
Current portion of capital lease obligations | | | | | 20,421,195 | | | | | | 19,749,854 | | |
Current portion of long-term debt | | | | | 2,615,705 | | | | | | 1,721,132 | | |
Contract liabilities | | | | | 15,584,066 | | | | | | 9,556,423 | | |
Other liabilities | | | | | 16,459,388 | | | | | | 17,138,684 | | |
Total current liabilities | | | | | 191,152,241 | | | | | | 150,894,186 | | |
Long-term debt, less current portion | | | | | 463,552,896 | | | | | | 395,111,563 | | |
Other long-term liabilities | | | | | 36,580,187 | | | | | | 29,364,151 | | |
Total Liabilities | | | | | 691,285,324 | | | | | | 575,369,900 | | |
Commitments and contingencies (note 14) | | | | | | | | | | | | | |
Stockholders’ Deficit | | | | | | | | | | | | | |
Class A Common Stock, par value of $0.0001 per share, 210,000,000 shares authorized; 43,354,251 and 40,816,292 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively | | | | | 4,336 | | | | | | 4,082 | | |
Class B Common Stock, par value of $0.0001 per share, 35,000,000 shares authorized; 30,563,799 and 31,563,799 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively | | | | | 3,056 | | | | | | 3,156 | | |
Preferred Stock, par value of $0.0001 per share, 5,000,000 shares authorized; 0 shares issued and outstanding as of March 31, 2020 and December 31, 2019 | | | | | — | | | | | | — | | |
Additional paid-in capital | | | | | 21,843,967 | | | | | | 11,252,052 | | |
Accumulated deficit | | | | | (27,367,676) | | | | | | (27,209,514) | | |
Accumulated other comprehensive (loss) income | | | | | (5,139,138) | | | | | | 1,431,029 | | |
Total stockholders’ deficit attributable to AdaptHealth Corp. | | | | | (10,655,455) | | | | | | (14,519,195) | | |
Noncontrolling interests in subsidiaries | | | | | (18,791,271) | | | | | | (14,729,012) | | |
Total Stockholders’ Deficit | | | | | (29,446,726) | | | | | | (29,248,207) | | |
Total Liabilities and Stockholders’ Deficit | | | | $ | 661,838,598 | | | | | $ | 546,121,693 | | |
|
| | | Three Months Ended March 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Net revenue | | | | $ | 191,439,034 | | | | | $ | 119,498,274 | | |
Costs and expenses: | | | | | | | | | | | | | |
Cost of net revenue | | | | | 166,539,690 | | | | | | 100,226,876 | | |
General and administrative expenses | | | | | 14,346,919 | | | | | | 13,082,631 | | |
Depreciation, excluding patient equipment depreciation | | | | | 1,241,837 | | | | | | 840,722 | | |
Total costs and expenses | | | | | 182,128,446 | | | | | | 114,150,229 | | |
Operating income | | | | | 9,310,588 | | | | | | 5,348,045 | | |
Interest expense, net | | | | | 7,938,243 | | | | | | 6,260,331 | | |
Loss on extinguishment of debt | | | | | — | | | | | | 2,121,451 | | |
Income (loss) before income taxes | | | | | 1,372,345 | | | | | | (3,033,737) | | |
Income tax expense | | | | | 1,106,722 | | | | | | 2,418,441 | | |
Net income (loss) | | | | | 265,623 | | | | | | (5,452,178) | | |
Income attributable to noncontrolling interests | | | | | 423,785 | | | | | | 348,139 | | |
Net loss attributable to AdaptHealth Corp. | | | | $ | (158,162) | | | | | $ | (5,800,317) | | |
Net loss per common share attributable to AdaptHealth Corp.: | | | | | | | | | | | | | |
Basic and diluted | | | | $ | — | | | | | $ | (0.42) | | |
Weighted average shares outstanding for net loss attributable to AdaptHealth Corp.: | | | | | | | | | | | | | |
Basic and diluted | | | | | 41,976,560 | | | | | | 13,863,570 | | |
| | | Three Months Ended March 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Net income (loss) | | | | $ | 265,623 | | | | | $ | (5,452,178) | | |
Other comprehensive loss: | | | | | | | | | | | | | |
Interest rate swap agreements, inclusive of reclassification adjustment | | | | | (11,417,216) | | | | | | — | | |
Comprehensive loss | | | | | (11,151,593) | | | | | | (5,452,178) | | |
Income attributable to noncontrolling interests | | | | | 423,785 | | | | | | 348,139 | | |
Comprehensive loss attributable to AdaptHealth Corp. | | | | $ | (11,575,378) | | | | | $ | (5,800,317) | | |
| | | Class A Common Stock | | | Class B Common Stock | | | Additional paid-in capital | | | Members’ interest | | | Controlling interest members’ deficit | | | Accumulated deficit | | | Accumulated other comprehensive income (loss) | | | Noncontrolling interests in subsidiaries | | | Total | | |||||||||||||||||||||||||||||||||||||||
| | | Shares | | | Amount | | | Shares | | | Amount | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2019 | | | | | 40,816,292 | | | | | $ | 4,082 | | | | | | 31,563,799 | | | | | $ | 3,156 | | | | | $ | 11,252,052 | | | | | $ | — | | | | | $ | — | | | | | $ | (27,209,514) | | | | | $ | 1,431,029 | | | | | $ | (14,729,012) | | | | | $ | (29,248,207) | | |
Issuance of Class A Common Stock for an acquisition | | | | | 386,874 | | | | | | 39 | | | | | | — | | | | | | — | | | | | | 6,247,976 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,248,015 | | |
Exchange of Class B Common Stock for Class A Common Stock | | | | | 1,000,000 | | | | | | 100 | | | | | | (1,000,000) | | | | | | (100) | | | | | | (361,005) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 361,005 | | | | | | — | | |
Cashless exercise of warrants | | | | | 1,092,468 | | | | | | 109 | | | | | | — | | | | | | — | | | | | | (109) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Equity-based compensation | | | | | 58,617 | | | | | | 6 | | | | | | — | | | | | | — | | | | | | 2,222,603 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,222,609 | | |
Net income (loss) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (158,162) | | | | | | — | | | | | | 423,785 | | | | | | 265,623 | | |
Equity activity resulting from Tax Receivable Agreement | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,482,450 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,482,450 | | |
Change in fair value of interest rate swaps, inclusive of reclassification adjustment | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (6,570,167) | | | | | | (4,847,049) | | | | | | (11,417,216) | | |
Balance, March 31, 2020 | | | | | 43,354,251 | | | | | $ | 4,336 | | | | | | 30,563,799 | | | | | $ | 3,056 | | | | | $ | 21,843,967 | | | | | $ | — | | | | | $ | — | | | | | $ | (27,367,676) | | | | | $ | (5,139,138) | | | | | $ | (18,791,271) | | | | | $ | (29,446,726) | | |
|
| | | Class A Common Stock | | | Class B Common Stock | | | Additional paid-in capital | | | Members’ interest | | | Controlling interest members’ deficit | | | Accumulated deficit | | | Accumulated other comprehensive income | | | Noncontrolling interests in subsidiaries | | | Total | | |||||||||||||||||||||||||||||||||||||||
| | | Shares | | | Amount | | | Shares | | | Amount | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2018 | | | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | | | | $ | — | | | | | $ | 113,274,181 | | | | | $ | (13,370,648) | | | | | $ | — | | | | | $ | — | | | | | $ | 2,865,125 | | | | | $ | 102,768,658 | | |
Issuance of members’ interest, net of offering costs of $837,156 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 19,162,844 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 19,162,844 | | |
Redemption of members’ interest | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (2,112,500) | | | | | | (1,600,955) | | | | | | — | | | | | | — | | | | | | — | | | | | | (3,713,455) | | |
Distributions to members | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (250,000,000) | | | | | | — | | | | | | — | | | | | | — | | | | | | (250,000,000 | | |
Equity-based compensation | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 5,223,108 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 5,223,108) | | |
Net income (loss) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (5,800,317) | | | | | | — | | | | | | — | | | | | | 348,139 | | | | | | (5,452,178) | | |
Balance, March 31, 2019 | | | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | | | | $ | — | | | | | $ | 135,547,633 | | | | | $ | (270,771,920) | | | | | $ | — | | | | | $ | — | | | | | $ | 3,213,264 | | | | | $ | (132,011,023) | | |
|
| | | Three Months Ended March 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Cash flows from operating activities: | | | | | | | | | | | | | |
Net income (loss) | | | | $ | 265,623 | | | | | $ | (5,452,178) | | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | | | | | | | | | | |
Depreciation, including patient equipment depreciation | | | | | 16,740,154 | | | | | | 14,971,628 | | |
Equity-based compensation | | | | | 2,222,609 | | | | | | 5,223,108 | | |
Deferred income tax | | | | | 479,092 | | | | | | 1,483,430 | | |
Change in fair value of interest rate swaps, net of reclassification adjustment | | | | | (707,381) | | | | | | 2,702,400 | | |
Change in fair value of contingent consideration | | | | | (2,000,000) | | | | | | — | | |
Amortization of deferred financing costs | | | | | 391,591 | | | | | | 136,801 | | |
Write-off of deferred financing costs | | | | | — | | | | | | 2,121,451 | | |
Gain on sale of investment | | | | | (590,701) | | | | | | — | | |
Changes in operating assets and liabilities, net of effects from acquisitions: | | | | | | | | | | | | | |
Accounts receivable | | | | | (20,457,579) | | | | | | (8,636,030) | | |
Inventory | | | | | 51,528 | | | | | | (161,065) | | |
Prepaid and other assets | | | | | 3,908,676 | | | | | | (172,468) | | |
Accounts payable and accrued expenses | | | | | 24,076,642 | | | | | | 4,015,039 | | |
Net cash provided by operating activities | | | | | 24,380,254 | | | | | | 16,232,116 | | |
Cash flows from investing activities: | | | | | | | | | | | | | |
Purchases of equipment and other fixed assets | | | | | (7,534,433) | | | | | | (5,297,940) | | |
Proceeds from sale of investment | | | | | 2,045,701 | | | | | | — | | |
Payments for business acquisitions, net of cash acquired | | | | | (105,840,930) | | | | | | (20,881,343) | | |
Net cash used in investing activities | | | | | (111,329,662) | | | | | | (26,179,283) | | |
Cash flows from financing activities: | | | | | | | | | | | | | |
Proceeds from borrowings on long-term debt and lines of credit | | | | | 70,000,000 | | | | | | 317,000,000 | | |
Repayments on long-term debt and lines of credit | | | | | (984,480) | | | | | | (151,916,121) | | |
Payments on capital leases | | | | | (10,780,545) | | | | | | (9,874,276) | | |
Proceeds from issuance of promissory note payable | | | | | — | | | | | | 100,000,000 | | |
Proceeds from issuance of members’ interests | | | | | — | | | | | | 20,000,000 | | |
Payments for equity issuance costs | | | | | — | | | | | | (837,156) | | |
Payments of deferred financing costs | | | | | — | | | | | | (9,027,753) | | |
Distributions to members | | | | | — | | | | | | (250,000,000) | | |
Payment of contingent consideration | | | | | — | | | | | | (12,000,000) | | |
Payments for redemption of members’ interests | | | | | — | | | | | | (3,713,455) | | |
Net cash provided by (used in) financing activities | | | | | 58,234,975 | | | | | | (368,761) | | |
Net decrease in cash and cash equivalents | | | | | (28,714,433) | | | | | | (10,315,928) | | |
Cash and cash equivalents at beginning of period | | | | | 76,878,134 | | | | | | 25,185,681 | | |
Cash and cash equivalents at end of period | | | | $ | 48,163,701 | | | | | $ | 14,869,753 | | |
Supplemental disclosures: | | | | | | | | | | | | | |
Cash paid for interest | | | | $ | 7,704,405 | | | | | $ | 2,829,928 | | |
Cash paid for income taxes | | | | | 2,085,831 | | | | | | 39,244 | | |
Noncash investing and financing activities: | | | | | | | | | | | | | |
Equipment acquired under capital lease obligations | | | | $ | 9,757,735 | | | | | $ | 8,564,442 | | |
Unpaid equipment and other fixed asset purchases at end of period | | | | | 7,814,170 | | | | | | 11,073,629 | | |
Equity consideration issued in connection with an acquisition | | | | | 6,248,015 | | | | | | — | | |
Contingent purchase price in connection with an acquisition | | | | | — | | | | | | 1,500,000 | | |
Seller note issued in connection with an acquisition | | | | | — | | | | | | 2,000,000 | | |
| | | Three Months Ended March 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Insurance | | | | $ | 114,450,697 | | | | | $ | 67,717,162 | | |
Government | | | | | 51,244,994 | | | | | | 38,100,765 | | |
Patient pay | | | | | 25,743,343 | | | | | | 13,680,347 | | |
Net revenue | | | | $ | 191,439,034 | | | | | $ | 119,498,274 | | |
| | | Three Months Ended March 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Net sales revenue: | | | | | | | | | | | | | |
Sleep | | | | $ | 68,893,964 | | | | | $ | 47,127,169 | | |
Supplies to the home | | | | | 33,338,901 | | | | | | 2,028,936 | | |
HME | | | | | 11,579,127 | | | | | | 10,489,009 | | |
Respiratory | | | | | 2,768,427 | | | | | | 1,279,075 | | |
Other | | | | | 12,393,306 | | | | | | 8,031,775 | | |
Total net sales revenue | | | | $ | 128,973,725 | | | | | $ | 68,955,964 | | |
Net revenue from fixed monthly equipment reimbursements: | | | | | | | | | | | | | |
Sleep | | | | $ | 22,668,559 | | | | | $ | 18,056,858 | | |
HME | | | | | 12,177,277 | | | | | | 10,242,636 | | |
Respiratory | | | | | 25,006,951 | | | | | | 20,429,189 | | |
Other | | | | | 2,612,522 | | | | | | 1,813,627 | | |
Total net revenue from fixed monthly equipment reimbursements | | | | $ | 62,465,309 | | | | | $ | 50,542,310 | | |
Total net revenue: | | | | | | | | | | | | | |
Sleep | | | | $ | 91,562,523 | | | | | $ | 65,184,027 | | |
Supplies to the home | | | | | 33,338,901 | | | | | | 2,028,936 | | |
HME | | | | | 23,756,404 | | | | | | 20,731,645 | | |
Respiratory | | | | | 27,775,378 | | | | | | 21,708,264 | | |
Other | | | | | 15,005,828 | | | | | | 9,845,402 | | |
Total net revenue | | | | $ | 191,439,034 | | | | | $ | 119,498,274 | | |
| Cash consideration | | | | $ | 106,178,017 | | |
| Equity consideration | | | | | 6,248,015 | | |
| Deferred payments | | | | | 14,250 | | |
| Total | | | | $ | 112,440,282 | | |
| Cash | | | | $ | 337,087 | | |
| Accounts receivable | | | | | 19,573,766 | | |
| Inventory | | | | | 4,780,439 | | |
| Prepaid and other current assets | | | | | 1,334,306 | | |
| Equipment and other fixed assets | | | | | 24,406,410 | | |
| Goodwill | | | | | 74,016,335 | | |
| Accounts payable and accrued expenses | | | | | (6,494,599) | | |
| Contract liabilities | | | | | (2,467,643) | | |
| Unfavorable lease liability | | | | | (1,418,931) | | |
| Capital lease obligations | | | | | (1,626,888) | | |
| Net assets acquired | | | | $ | 112,440,282 | | |
| Cash consideration | | | | $ | 21,562,495 | | |
| Seller note | | | | | 2,000,000 | | |
| Estimated contingent consideration | | | | | 1,500,000 | | |
| Total | | | | $ | 25,062,495 | | |
| Cash | | | | $ | 117,000 | | |
| Accounts receivable | | | | | 3,691,030 | | |
| Inventory | | | | | 2,468,427 | | |
| Prepaid and other current assets | | | | | 11,835 | | |
| Equipment and other fixed assets | | | | | 1,658,714 | | |
| Goodwill | | | | | 19,381,515 | | |
| Accounts payable and accrued expenses | | | | | (2,266,026) | | |
| Net assets acquired | | | | $ | 25,062,495 | | |
| | | Three Months Ended March 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Net revenue | | | | $ | 204,619,618 | | | | | $ | 181,724,059 | | |
Operating income (loss) | | | | $ | 9,082,482 | | | | | $ | (4,746,892) | | |
| | | Three Months Ended March 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Net revenue | | | | $ | 40,724,747 | | | | | $ | 8,626,378 | | |
Operating income (loss) | | | | $ | (5,559,851) | | | | | $ | 1,431,523 | | |
| | | March 31, 2020 | | | December 31, 2019 | | ||||||
Patient medical equipment | | | | $ | 132,311,790 | | | | | $ | 112,070,831 | | |
Vehicles | | | | | 6,916,895 | | | | | | 4,461,041 | | |
Other | | | | | 18,456,871 | | | | | | 15,474,589 | | |
| | | | | 157,685,556 | | | | | | 132,006,461 | | |
Less accumulated depreciation | | | | | (70,384,632) | | | | | | (68,447,381) | | |
| | | | $ | 87,300,924 | | | | | $ | 63,559,080 | | |
| Balance at December 31, 2019 | | | | $ | 266,790,518 | | |
| Acquired goodwill during the period | | | | | 74,016,335 | | |
| Balance at March 31, 2020 | | | | $ | 340,806,853 | | |
Level input | | | Input Definition | |
Level 1 | | | Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date. | |
Level 2 | | | Inputs, other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data at the measurement date. | |
Level 3 | | | Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. | |
March 31, 2020 | | | Level 1 | | | Level 2 | | | Level 3 | | | Fair Value | | ||||||||||||
Assets | | | | | | | | | | | | | | | | | | | | | | | | | |
Money market accounts | | | | $ | 4,117,161 | | | | | $ | — | | | | | $ | — | | | | | $ | 4,117,161 | | |
Total assets measured at fair value | | | | $ | 4,117,161 | | | | | $ | — | | | | | $ | — | | | | | $ | 4,117,161 | | |
Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | |
Acquisition-related contingent consideration-short term | | | | $ | — | | | | | $ | — | | | | | $ | 7,675,000 | | | | | $ | 7,675,000 | | |
Acquisition-related contingent consideration-long term | | | | | — | | | | | | — | | | | | | 5,050,000 | | | | | | 5,050,000 | | |
Interest rate swap agreements-short term | | | | | — | | | | | | 5,373,647 | | | | | | — | | | | | | 5,373,647 | | |
Interest rate swap agreements-long term | | | | | — | | | | | | 13,675,476 | | | | | | — | | | | | | 13,675,476 | | |
Total liabilities measured at fair value | | | | $ | — | | | | | $ | 19,049,123 | | | | | $ | 12,725,000 | | | | | $ | 31,774,123 | | |
|
December 31, 2019 | | | Level 1 | | | Level 2 | | | Level 3 | | | Fair Value | | ||||||||||||
Assets | | | | | | | | | | | | | | | | | | | | | | | | | |
Money market accounts | | | | $ | 54,014,591 | | | | | $ | — | | | | | $ | — | | | | | $ | 54,014,591 | | |
Total assets measured at fair value | | | | $ | 54,014,591 | | | | | $ | — | | | | | $ | — | | | | | $ | 54,014,591 | | |
Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | |
Acquisition-related contingent consideration-short term | | | | $ | — | | | | | $ | — | | | | | $ | 4,825,000 | | | | | $ | 4,825,000 | | |
Acquisition-related contingent consideration-long term | | | | | — | | | | | | — | | | | | | 9,900,000 | | | | | | 9,900,000 | | |
Interest rate swap agreements-short term | | | | | — | | | | | | 2,157,324 | | | | | | — | | | | | | 2,157,324 | | |
Interest rate swap agreements-long term | | | | | — | | | | | | 6,181,964 | | | | | | — | | | | | | 6,181,964 | | |
Total liabilities measured at fair value | | | | $ | — | | | | | $ | 8,339,288 | | | | | $ | 14,725,000 | | | | | $ | 23,064,288 | | |
Three Months Ended March 31, 2020 | | | Beginning Balance | | | Additions | | | Payments | | | Change in Fair Value | | | Ending Balance | | |||||||||||||||
Contingent consideration – Level 3 liabilities | | | | $ | 14,725,000 | | | | | $ | — | | | | | $ | — | | | | | $ | (2,000,000) | | | | | $ | 12,725,000 | | |
Three Months Ended March 31, 2019 | | | Beginning Balance | | | Additions | | | Payments | | | Change in Fair Value | | | Ending Balance | | |||||||||||||||
Contingent consideration – Level 3 liabilities | | | | $ | 15,250,000 | | | | | $ | 1,500,000 | | | | | $ | (12,000,000) | | | | | $ | — | | | | | $ | 4,750,000 | | |
| | | As of March 31, 2020 | | ||||||
| | | Balance Sheet Location | | | Fair Value Asset (Liability) | | |||
Derivatives designated as hedging instruments: | | | | | | | | | | |
Interest rate swap agreements | | | Other current liabilities | | | | $ | (5,373,647) | | |
Interest rate swap agreements | | | Other long-term liabilities | | | | | (13,675,476) | | |
Total derivatives designated as hedging instruments | | | | | | | $ | (19,049,123) | | |
|
| | | As of December 31, 2019 | | ||||||
| | | Balance Sheet Location | | | Fair Value Asset (Liability) | | |||
Derivatives designated as hedging instruments: | | | | | | | | | | |
Interest rate swap agreements | | | Other current liabilities | | | | $ | (2,157,324) | | |
Interest rate swap agreements | | | Other long-term liabilities | | | | | (6,181,964) | | |
Total derivatives designated as hedging instruments | | | | | | | $ | (8,339,288) | | |
| | | March 31, 2020 | | | December 31, 2019 | | ||||||
Accounts payable | | | | $ | 105,194,402 | | | | | $ | 79,237,323 | | |
Employee related accruals | | | | | 9,002,909 | | | | | | 12,319,746 | | |
Accrued interest | | | | | 4,672,868 | | | | | | 4,021,660 | | |
Other | | | | | 17,201,708 | | | | | | 7,149,364 | | |
Total | | | | $ | 136,071,887 | | | | | $ | 102,728,093 | | |
| | | March 31, 2020 | | | December 31, 2019 | | ||||||
Secured term loans | | | | $ | 295,937,500 | | | | | $ | 246,250,000 | | |
Revolving credit facility | | | | | 32,000,000 | | | | | | 12,000,000 | | |
Note payable | | | | | 143,500,000 | | | | | | 143,500,000 | | |
Other | | | | | 1,053,205 | | | | | | 1,725,185 | | |
Unamortized deferred financing fees | | | | | (6,322,104) | | | | | | (6,642,490) | | |
| | | | | 466,168,601 | | | | | | 396,832,695 | | |
Current portion | | | | | (2,615,705) | | | | | | (1,721,132) | | |
Long-term portion | | | | $ | 463,552,896 | | | | | $ | 395,111,563 | | |
| | | Number of Shares of Restricted Stock | | | Weighted- Average Grant Date Fair Value per Share | | ||||||
Non-vested balance at January 1, 2020 | | | | | 901,250 | | | | | $ | 5.83 | | |
Granted | | | | | 621,123 | | | | | $ | 16.35 | | |
Vested | | | | | (15,417) | | | | | $ | 16.35 | | |
Forfeited | | | | | (20,000) | | | | | $ | 8.11 | | |
Non-vested balance at March 31, 2020 | | | | | 1,486,956 | | | | | $ | 10.09 | | |
Twelve months ended March 31, | | | | | | | |
2021 | | | | $ | 20,442,099 | | |
2022 | | | | | 215,164 | | |
Total | | | | | 20,657,263 | | |
Less amount representing interest | | | | | (70,192) | | |
| | | | | 20,587,071 | | |
Current portion | | | | | (20,421,195) | | |
Long-term portion | | | | $ | 165,876 | | |
Twelve months ended March 31, | | | | | | | |
2021 | | | | $ | 16,547,233 | | |
2022 | | | | | 11,746,784 | | |
2023 | | | | | 9,823,064 | | |
2024 | | | | | 8,316,930 | | |
2025 | | | | | 6,390,029 | | |
Thereafter | | | | | 17,668,659 | | |
Total minimum payments required(a) | | | | $ | 70,492,699 | | |
AdaptHealth Corp:
March 6, 2020
| | | December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Assets | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents | | | | $ | 76,878,134 | | | | | $ | 25,185,681 | | |
Accounts receivable | | | | | 78,619,230 | | | | | | 53,016,649 | | |
Inventory | | | | | 13,239,037 | | | | | | 7,672,646 | | |
Prepaid and other current assets | | | | | 12,678,423 | | | | | | 4,915,277 | | |
Total current assets | | | | | 181,414,824 | | | | | | 90,790,253 | | |
Equipment and other fixed assets, net | | | | | 63,559,080 | | | | | | 61,601,350 | | |
Goodwill | | | | | 266,790,518 | | | | | | 202,436,212 | | |
Other assets | | | | | 6,851,892 | | | | | | 5,049,628 | | |
Deferred tax asset | | | | | 27,505,379 | | | | | | 9,079,190 | | |
Total Assets | | | | $ | 546,121,693 | | | | | $ | 368,956,633 | | |
Liabilities and Stockholders’ Equity (Deficit) / Members’ Equity (Deficit) | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable and accrued expenses | | | | $ | 102,728,093 | | | | | $ | 85,558,419 | | |
Current portion of capital lease obligations | | | | | 19,749,854 | | | | | | 20,814,404 | | |
Current portion of long-term debt | | | | | 1,721,132 | | | | | | 7,089,976 | | |
Contract liabilities | | | | | 9,556,423 | | | | | | 7,508,428 | | |
Other liabilities | | | | | 17,138,684 | | | | | | 14,705,719 | | |
Total current liabilities | | | | | 150,894,186 | | | | | | 135,676,946 | | |
Long-term debt, less current portion | | | | | 395,111,563 | | | | | | 127,094,723 | | |
Capital lease obligations, less current portion | | | | | 233,139 | | | | | | 172,467 | | |
Other long-term liabilities | | | | | 29,131,012 | | | | | | 3,243,839 | | |
Total Liabilities | | | | | 575,369,900 | | | | | | 266,187,975 | | |
Commitments and contingencies (note 2(p)) | | | | | | | | | | | | | |
Stockholders’ Equity (Deficit) / Members’ Equity (Deficit) | | | | | | | | | | | | | |
Class A Common Stock, par value of $0.0001 per share, 210,000,000 shares authorized; 40,816,292 shares issued and outstanding as of December 31, 2019 | | | | | 4,082 | | | | | | — | | |
Class B Common Stock, par value of $0.0001 per share, 35,000,000 shares authorized; 31,563,799 shares issued and outstanding as of December 31, 2019 | | | | | 3,156 | | | | | | — | | |
Preferred Stock, par value of $0.0001 per share, 5,000,000 shares authorized; 0 shares issued and outstanding as of December 31, 2019 | | | | | — | | | | | | — | | |
Additional paid-in capital | | | | | 11,252,052 | | | | | | — | | |
Accumulated deficit | | | | | (27,209,514) | | | | | | — | | |
Members’ interest | | | | | — | | | | | | 113,274,181 | | |
Controlling interest members’ deficit | | | | | — | | | | | | (13,370,648) | | |
Accumulated other comprehensive income | | | | | 1,431,029 | | | | | | — | | |
Total stockholders’ equity (deficit) / members’ equity (deficit) attributable to AdaptHealth Corp. | | | | | (14,519,195) | | | | | | 99,903,533 | | |
Noncontrolling interests in subsidiaries | | | | | (14,729,012) | | | | | | 2,865,125 | | |
Total Stockholders’ Equity (Deficit) / Members’ Equity (Deficit) | | | | | (29,248,207) | | | | | | 102,768,658 | | |
Total Liabilities and Stockholders’ Equity (Deficit) / Members’ Equity (Deficit) | | | | $ | 546,121,693 | | | | | $ | 368,956,633 | | |
| | | Year Ended December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Revenue: | | | | | | | | | | | | | |
Revenue, net of contractual allowances and discounts | | | | | | | | | | $ | 361,053,975 | | |
Provision for doubtful accounts | | | | | | | | | | | (15,775,638) | | |
Net revenue | | | | $ | 529,644,247 | | | | | | 345,278,337 | | |
Costs and expenses: | | | | | | | | | | | | | |
Cost of net revenue | | | | | 440,386,387 | | | | | | 293,384,635 | | |
General and administrative expenses | | | | | 56,492,554 | | | | | | 18,068,821 | | |
Depreciation, excluding patient equipment depreciation | | | | | 3,068,477 | | | | | | 2,733,807 | | |
Total costs and expenses | | | | | 499,947,418 | | | | | | 314,187,263 | | |
Operating income | | | | | 29,696,829 | | | | | | 31,091,074 | | |
Interest expense, net | | | | | 39,304,488 | | | | | | 7,452,737 | | |
Loss on extinguishment of debt, net | | | | | 2,121,451 | | | | | | 1,398,929 | | |
(Loss) income before income taxes | | | | | (11,729,110) | | | | | | 22,239,408 | | |
Income tax expense (benefit) | | | | | 1,156,002 | | | | | | (2,097,705) | | |
Net (loss) income | | | | | (12,885,112) | | | | | | 24,337,113 | | |
Income attributable to noncontrolling interests | | | | | 2,110,783 | | | | | | 1,076,766 | | |
Net (loss) income attributable to AdaptHealth Corp. | | | | $ | (14,995,895) | | | | | $ | 23,260,347 | | |
Net (loss) income per common share: | | | | | | | | | | | | | |
Basic and diluted | | | | $ | (0.66) | | | | | $ | 1.95 | | |
Weighted average shares outstanding for net (loss) income attributable to AdaptHealth Corp.: | | | | | | | | | | | | | |
Basic and diluted | | | | | 22,557,213 | | | | | | 11,899,898 | | |
| | | Year Ended December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Net (loss) income | | | | $ | (12,885,112) | | | | | $ | 24,337,113 | | |
Other comprehensive income: | | | | | | | | | | | | | |
Interest rate swap agreements, net of reclassification adjustment | | | | | 2,536,836 | | | | | | — | | |
Comprehensive (loss) income | | | | | (10,348,276) | | | | | | 24,337,113 | | |
Net income attributable to noncontrolling interests | | | | | 2,110,783 | | | | | | 1,076,766 | | |
Comprehensive (loss) income attributable to AdaptHealth Corp. | | | | $ | (12,459,059) | | | | | $ | 23,260,347 | | |
| | | Class A Common Stock | | | Class B Common Stock | | | Preferred Stock | | | Additional paid-in capital | | | Members’ interest | | | Controlling interest members’ deficit | | | Accumulated Deficit | | | Accumulated other comprehensive income | | | Noncontrolling interests in subsidiaries | | | Total | | ||||||||||||||||||||||||||||||||||||||||||||||||
| | | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2017 | | | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | | | | $ | — | | | | | $ | 33,455,223 | | | | | $ | (36,180,242) | | | | | $ | — | | | | | $ | — | | | | | $ | 2,088,359 | | | | | $ | (636,660) | | |
Accrued return on members’ interest | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 316,403 | | | | | | (316,403) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Issuance of members’ interest for acquisitions | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 78,484,832 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 78,484,832 | | |
Cashless exercise of members’ interest | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 134,350 | | | | | | (134,350) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Equity-based compensation | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 883,373 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 883,373 | | |
Distributions to noncontrolling interest | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (300,000) | | | | | | (300,000) | | |
Net income | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 23,260,347 | | | | | | — | | | | | | — | | | | | | 1,076,766 | | | | | | 24,337,113 | | |
Balance, December 31, 2018 | | | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | | | | | — | | | | | $ | — | | | | | $ | — | | | | | $ | 113,274,181 | | | | | $ | (13,370,648) | | | | | $ | — | | | | | $ | — | | | | | $ | 2,865,125 | | | | | $ | 102,768,658 | | |
Activity prior to the Business Combination: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Issuance of members’ interest, net of offering costs of $837,156 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 19,162,844 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 19,162,844 | | |
Redemption of members’ interest | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (2,112,500) | | | | | | (1,600,955) | | | | | | — | | | | | | — | | | | | | — | | | | | | (3,713,455) | | |
Distributions to members | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (250,000,000) | | | | | | — | | | | | | — | | | | | | — | | | | | | (250,000,000) | | |
Distributions to noncontrolling interest | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,338,383) | | | | | | (1,338,383) | | |
Equity-based compensation | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,914,677 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,914,677 | | |
Net income (loss) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (16,315,045) | | | | | | — | | | | | | — | | | | | | 1,531,838 | | | | | | (14,783,207) | | |
Effects of the Business Combination: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Recapitalization | | | | | 27,796,166 | | | | | | 2,780 | | | | | | 34,113,799 | | | | | | 3,411 | | | | | | — | | | | | | — | | | | | | — | | | | | | (137,239,202) | | | | | | 281,286,648 | | | | | | (63,289,710) | | | | | | — | | | | | | (47,995,919) | | | | | | 32,768,008 | | |
Proceeds from sale of Class A Common Stock | | | | | 12,500,000 | | | | | | 1,250 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 69,561,286 | | | | | | — | | | | | | 55,437,464 | | | | | | 125,000,000 | | |
Redemption of Class B Common Stock | | | | | — | | | | | | — | | | | | | (2,000,000) | | | | | | (200) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (11,129,806) | | | | | | — | | | | | | (8,869,994) | | | | | | (20,000,000) | | |
Conversion of equity to long-term debt | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (24,207,763) | | | | | | — | | | | | | (19,292,237) | | | | | | (43,500,000) | | |
Forgiveness of employee loan | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 537,329 | | | | | | — | | | | | | 428,221 | | | | | | 965,550 | | |
Activity subsequent to the Business Combination: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Equity-based compensation | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 4,155,398 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 4,155,398 | | |
Shares withheld to pay withholding taxes | | | | | (29,874) | | | | | | (3) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (283,805) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (283,808) | | |
Exchange of Class B Common Stock to Class A Common Stock | | | | | 550,000 | | | | | | 55 | | | | | | (550,000) | | | | | | (55) | | | | | | — | | | | | | — | | | | | | (820,121) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 820,121 | | | | | | — | | |
Net income (loss) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,319,150 | | | | | | — | | | | | | 578,945 | | | | | | 1,898,095 | | |
Equity activity resulting from Tax Receivable Agreement | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 8,200,580 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 8,200,580 | | |
Change in fair value of interest rate swaps, net of reclassification adjustment | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,431,029 | | | | | | 1,105,807 | | | | | | 2,536,836 | | |
Balance, December 31, 2019 | | | | | 40,816,292 | | | | | $ | 4,082 | | | | | | 31,563,799 | | | | | $ | 3,156 | | | | | | — | | | | | $ | — | | | | | $ | 11,252,052 | | | | | $ | — | | | | | $ | — | | | | | $ | (27,209,514) | | | | | $ | 1,431,029 | | | | | $ | (14,729,012) | | | | | $ | (29,248,207) | | |
| | | Year Ended December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Cash flows from operating activities: | | | | | | | | | | | | | |
Net (loss) income | | | | $ | (12,885,112) | | | | | $ | 24,337,113 | | |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | | | | | | | | | | | | | |
Depreciation | | | | | 62,566,500 | | | | | | 47,876,835 | | |
Equity-based compensation | | | | | 11,070,075 | | | | | | 883,373 | | |
Deferred income tax | | | | | 895,298 | | | | | | (2,875,895) | | |
Change in fair value of interest rate swaps, net of reclassification adjustment | | | | | 11,425,921 | | | | | | (546,832) | | |
Gain on change in fair value of contingent consideration | | | | | (150,000) | | | | | | — | | |
Provision for doubtful accounts | | | | | — | | | | | | 15,775,638 | | |
Amortization of deferred financing costs | | | | | 1,311,573 | | | | | | 477,781 | | |
Write-off of deferred financing costs | | | | | 2,121,451 | | | | | | 1,219,205 | | |
Forgiveness of employee loan | | | | | 965,550 | | | | | | — | | |
Gain on debt extinguishment | | | | | — | | | | | | (800,000) | | |
Changes in operating assets and liabilities, net of effects from acquisitions: | | | | | | | | | | | | | |
Accounts receivable | | | | | (20,197,521) | | | | | | (22,042,721) | | |
Due from affiliates and related parties | | | | | — | | | | | | 700,791 | | |
Inventory | | | | | (1,305,350) | | | | | | 2,309,508 | | |
Prepaid and other assets | | | | | (9,558,118) | | | | | | (1,579,969) | | |
Accounts payable and accrued expenses | | | | | 14,157,579 | | | | | | 2,691,981 | | |
Net cash provided by operating activities | | | | | 60,417,846 | | | | | | 68,426,808 | | |
Cash flows from investing activities: | | | | | | | | | | | | | |
Purchases of equipment and other fixed assets | | | | | (21,331,581) | | | | | | (9,949,930) | | |
Payments for business acquisitions, net of cash acquired | | | | | (63,538,392) | | | | | | (86,334,011) | | |
Net cash used in investing activities | | | | | (84,869,973) | | | | | | (96,283,941) | | |
Cash flows from financing activities: | | | | | | | | | | | | | |
Proceeds from borrowings on long-term debt | | | | | 305,000,000 | | | | | | 140,000,000 | | |
Payments on long-term debt | | | | | (194,071,757) | | | | | | (24,830,307) | | |
Proceeds from issuance of promissory note payable | | | | | 100,000,000 | | | | | | — | | |
Increase in cash from the Business Combination | | | | | 43,911,748 | | | | | | — | | |
Proceed from sale of Class A Common Stock | | | | | 125,000,000 | | | | | | — | | |
Proceeds from issuance of members’ interests | | | | | 20,000,000 | | | | | | — | | |
Payments for equity issuance costs | | | | | (837,156) | | | | | | — | | |
Payments for redemptions of Class B Common Stock | | | | | (20,000,000) | | | | | | — | | |
Payments of deferred financing costs | | | | | (9,027,753) | | | | | | (2,715,849) | | |
Payments on capital leases | | | | | (37,271,512) | | | | | | (27,936,993) | | |
Borrowings on lines of credit | | | | | 55,500,000 | | | | | | 24,750,000 | | |
Payments on lines of credit | | | | | (43,500,000) | | | | | | (59,218,647) | | |
Distributions to members | | | | | (250,000,000) | | | | | | — | | |
Payments for redemption of members’ interests | | | | | (3,713,455) | | | | | | — | | |
Payments of contingent consideration | | | | | (13,000,000) | | | | | | — | | |
Payments for debt prepayment penalties | | | | | — | | | | | | (979,724) | | |
Payments for tax withholdings from equity-based compensation activity, net | | | | | (507,152) | | | | | | — | | |
Distributions to noncontrolling interests | | | | | (1,338,383) | | | | | | (300,000) | | |
Net cash provided by financing activities | | | | | 76,144,580 | | | | | | 48,768,480 | | |
Net increase in cash and cash equivalents | | | | | 51,692,453 | | | | | | 20,911,347 | | |
Cash and cash equivalents at beginning of year | | | | | 25,185,681 | | | | | | 4,274,334 | | |
Cash and cash equivalents at end of year | | | | $ | 76,878,134 | | | | | $ | 25,185,681 | | |
Supplemental disclosures: | | | | | | | | | | | | | |
Cash paid for interest | | | | $ | 23,074,703 | | | | | $ | 7,327,942 | | |
Cash paid for income taxes | | | | | 1,318,330 | | | | | | 405,205 | | |
Noncash investing and financing activities: | | | | | | | | | | | | | |
Equipment acquired under capital lease obligations | | | | | 36,267,634 | | | | | | 27,079,171 | | |
Unpaid equipment and other fixed asset purchases at end of year | | | | | 8,514,047 | | | | | | 12,557,763 | | |
Seller note issued in connection with an acquisition | | | | | 2,000,000 | | | | | | — | | |
Contingent purchase price in connection with acquisitions | | | | | 12,625,000 | | | | | | 15,250,000 | | |
Deferred purchase price in connection with acquisitions | | | | | 1,572,500 | | | | | | 500,000 | | |
Conversion of equity to debt | | | | | 43,500,000 | | | | | | 16,845,937 | | |
December 31, 2019 And 2018
| | | Class A Common Stock | | | Class B Common Stock | | ||||||
Total shares outstanding prior to the Business Combination | | | | | 31,250,000 | | | | | | — | | |
Less: redemption of public shares | | | | | (20,840,035) | | | | | | — | | |
Add: shares issued in private placement | | | | | 12,500,000 | | | | | | — | | |
Add: shares issued in connection with the Business Combination | | | | | 17,386,201 | | | | | | 32,113,799 | | |
Total shares outstanding at the closing date of the Business Combination | | | | | 40,296,166 | | | | | | 32,113,799 | | |
December 31, 2019 And 2018
December 31, 2019 And 2018
December 31, 2019 And 2018
December 31, 2019 And 2018
| | | Year Ended December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Government | | | | $ | 168,686,247 | | | | | $ | 128,278,922 | | |
Insurance | | | | | 300,360,975 | | | | | | 178,726,197 | | |
Patient pay | | | | | 60,597,025 | | | | | | 38,273,218 | | |
Net revenue | | | | $ | 529,644,247 | | | | | $ | 345,278,337 | | |
| | | Year Ended December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Net sales revenue – Point in time | | | | | | | | | | | | | |
Sleep | | | | $ | 224,542,433 | | | | | $ | 123,585,029 | | |
Respiratory | | | | | 5,779,842 | | | | | | 4,910,755 | | |
HME | | | | | 45,948,275 | | | | | | 36,724,311 | | |
Other | | | | | 40,180,387 | | | | | | 24,651,320 | | |
Total Net sales revenue | | | | $ | 316,450,937 | | | | | $ | 189,871,415 | | |
Net revenue from fixed monthly equipment reimbursements | | | | | | | | | | | | | |
Sleep | | | | $ | 80,846,378 | | | | | $ | 52,703,572 | | |
Respiratory | | | | | 81,417,997 | | | | | | 66,341,108 | | |
HME | | | | | 43,212,228 | | | | | | 35,941,985 | | |
Other | | | | | 7,716,707 | | | | | | 420,257 | | |
Total Net revenue from fixed monthly equipment reimbursements | | | | $ | 213,193,310 | | | | | $ | 155,406,922 | | |
Total net revenue | | | | | | | | | | | | | |
Sleep | | | | $ | 305,388,811 | | | | | $ | 176,288,601 | | |
Respiratory | | | | | 87,197,839 | | | | | | 71,251,863 | | |
HME | | | | | 89,160,503 | | | | | | 72,666,296 | | |
Other | | | | | 47,897,094 | | | | | | 25,071,577 | | |
Total net revenue | | | | $ | 529,644,247 | | | | | $ | 345,278,337 | | |
|
December 31, 2019 And 2018
December 31, 2019 And 2018
Level input | | | Input definition | |
Level 1 | | | Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date. | |
Level 2 | | | Inputs, other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data at the measurement date. | |
Level 3 | | | Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. | |
| | | December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Cash | | | | $ | 22,863,543 | | | | | $ | 9,058,782 | | |
Money market accounts | | | | | 54,014,591 | | | | | | 16,126,899 | | |
Total | | | | $ | 76,878,134 | | | | | $ | 25,185,681 | | |
| Patient medical equipment | | | 13 months – 5 years | |
| Vehicles | | | 5 years | |
| Other | | | 2 – 7 years | |
December 31, 2019 And 2018
December 31, 2019 And 2018
December 31, 2019 And 2018
| | | Year ended December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Cost of products, supplies and patient equipment depreciation | | | | $ | 215,927,438 | | | | | $ | 140,034,522 | | |
Salaries, labor and benefits | | | | | 154,030,773 | | | | | | 107,484,610 | | |
Occupancy | | | | | 13,407,384 | | | | | | 8,869,386 | | |
Other operating costs | | | | | 57,020,792 | | | | | | 36,996,117 | | |
Total | | | | $ | 440,386,387 | | | | | $ | 293,384,635 | | |
December 31, 2019 And 2018
December 31, 2019 And 2018
December 31, 2019 And 2018
December 31, 2019 And 2018
December 31, 2019 And 2018
| | | Goulds | | | SleepMed | | | Choice | | | Other | | | Total | | |||||||||||||||
Cash | | | | $ | — | | | | | | — | | | | | | — | | | | | | 91,894 | | | | | | 91,894 | | |
Accounts receivable | | | | | 3,968,011 | | | | | | — | | | | | | 758,558 | | | | | | 678,491 | | | | | | 5,405,060 | | |
Inventory | | | | | 2,452,777 | | | | | | 266,759 | | | | | | 33,880 | | | | | | 1,507,625 | | | | | | 4,261,041 | | |
Prepaid and other current assets | | | | | 11,835 | | | | | | — | | | | | | 110,212 | | | | | | — | | | | | | 122,047 | | |
Equipment and other fixed assets | | | | | 3,352,330 | | | | | | 1,401,491 | | | | | | 107,120 | | | | | | 6,107,790 | | | | | | 10,968,731 | | |
Goodwill | | | | | 17,947,636 | | | | | | 14,064,750 | | | | | | 18,908,961 | | | | | | 14,348,123 | | | | | | 65,269,470 | | |
Contract liabilities | | | | | (509,000) | | | | | | (328,000) | | | | | | (22,000) | | | | | | (849,995) | | | | | | (1,708,995) | | |
Accounts payable and accrued expenses | | | | | (2,959,245) | | | | | | — | | | | | | (1,212,899) | | | | | | (744,349) | | | | | | (4,916,493) | | |
Net assets acquired | | | | $ | 24,264,344 | | | | | | 15,405,000 | | | | | | 18,683,832 | | | | | | 21,139,579 | | | | | | 79,492,755 | | |
December 31, 2019 And 2018
December 31, 2019 And 2018
| | | PPS | | | Verus | | | HME | | | Other | | | Total | | |||||||||||||||
Cash | | | | $ | 407,456 | | | | | | 1,449,817 | | | | | | 100,000 | | | | | | 57,000 | | | | | | 2,014,273 | | |
Accounts receivable | | | | | 12,126,481 | | | | | | 7,795,765 | | | | | | 2,200,774 | | | | | | 445,000 | | | | | | 22,568,020 | | |
Inventory | | | | | 1,344,535 | | | | | | 2,923,211 | | | | | | 75,493 | | | | | | 674,678 | | | | | | 5,017,917 | | |
Prepaid and other current assets | | | | | 995,048 | | | | | | 466,114 | | | | | | 35,960 | | | | | | — | | | | | | 1,497,122 | | |
Equipment and other fixed assets | | | | | 20,357,062 | | | | | | 5,895,113 | | | | | | 2,165,448 | | | | | | 3,229,983 | | | | | | 31,647,606 | | |
Deferred tax asset | | | | | — | | | | | | 6,525,269 | | | | | | — | | | | | | — | | | | | | 6,525,269 | | |
Other assets | | | | | 1,927,355 | | | | | | 838,008 | | | | | | 37,956 | | | | | | — | | | | | | 2,803,319 | | |
Goodwill | | | | | 49,660,338 | | | | | | 91,829,157 | | | | | | 13,230,987 | | | | | | 10,037,339 | | | | | | 164,757,821 | | |
Accounts payable and accrued expenses | | | | | (20,484,673) | | | | | | (11,963,664) | | | | | | (3,180,531) | | | | | | (995,000) | | | | | | (36,623,868) | | |
Contract liabilities | | | | | (1,677,813) | | | | | | (306,194) | | | | | | (341,667) | | | | | | — | | | | | | (2,325,674) | | |
Capital lease obligations | | | | | (6,395,438) | | | | | | (3,793,103) | | | | | | (1,074,420) | | | | | | — | | | | | | (11,262,961) | | |
Deferred tax liability | | | | | (321,974) | | | | | | — | | | | | | — | | | | | | — | | | | | | (321,974) | | |
Other long-term liabilities | | | | | (738,099) | | | | | | (1,260,225) | | | | | | — | | | | | | — | | | | | | (1,998,324) | | |
Net assets acquired | | | | $ | 57,200,278 | | | | | | 100,399,268 | | | | | | 13,250,000 | | | | | | 13,449,000 | | | | | | 184,298,546 | | |
| | | Year ended December 31, | | |||||||||
Pro-forma financial information: | | | 2019 | | | 2018 | | ||||||
Net revenue | | | | $ | 551,754,097 | | | | | $ | 477,649,368 | | |
Operating income | | | | | 31,304,194 | | | | | | 25,352,321 | | |
December 31, 2019 And 2018
| | | Year ended December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Net revenue | | | | $ | 53,295,178 | | | | | $ | 107,047,267 | | |
Operating income (loss) | | | | | 7,406,919 | | | | | | (6,597,299) | | |
| | | 2019 | | | 2018 | | ||||||
Patient medical equipment | | | | $ | 112,070,831 | | | | | $ | 123,881,314 | | |
Vehicles | | | | | 4,461,041 | | | | | | 3,903,819 | | |
Other | | | | | 15,474,589 | | | | | | 12,704,131 | | |
| | | | | 132,006,461 | | | | | | 140,489,264 | | |
Less accumulated depreciation | | | | | (68,447,381) | | | | | | (78,887,914) | | |
| | | | $ | 63,559,080 | | | | | $ | 61,601,350 | | |
| | | Gross carrying amount | | | Accumulated impairment losses | | | Net carrying amount | | |||||||||
Balance at December 31, 2017 | | | | $ | 38,628,391 | | | | | | — | | | | | | 38,628,391 | | |
Acquired goodwill during the period | | | | | 164,757,821 | | | | | | — | | | | | | 164,757,821 | | |
Decrease | | | | | (950,000) | | | | | | — | | | | | | (950,000) | | |
Balance at December 31, 2018 | | | | $ | 202,436,212 | | | | | | — | | | | | | 202,436,212 | | |
Acquired goodwill during the period | | | | | 65,269,470 | | | | | | — | | | | | | 65,269,470 | | |
Receipt of prior escrow payment | | | | | (504,000) | | | | | | | | | | | | (504,000) | | |
Decrease | | | | | (411,164) | | | | | | — | | | | | | (411,164) | | |
Balance at December 31, 2019 | | | | $ | 266,790,518 | | | | | | — | | | | | | 266,790,518 | | |
|
December 31, 2019 And 2018
December 31, 2019 And 2018
| | | Level 1 | | | Level 2 | | | Level 3 | | | Fair Value | | ||||||||||||
December 31, 2019 | | | | | | | | | | | | | | | | | | | | | | | | | |
Assets | | | | | | | | | | | | | | | | | | | | | | | | | |
Money market accounts | | | | $ | 54,014,591 | | | | | $ | — | | | | | $ | — | | | | | $ | 54,014,591 | | |
Total assets measured at fair value | | | | $ | 54,014,591 | | | | | $ | — | | | | | $ | — | | | | | $ | 54,014,591 | | |
Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | |
Acquisition-related contingent consideration obligations-short term | | | | $ | — | | | | | $ | — | | | | | $ | 4,825,000 | | | | | $ | 4,825,000 | | |
Acquisition-related contingent consideration obligations-long term | | | | | — | | | | | | — | | | | | | 9,900,000 | | | | | | 9,900,000 | | |
Interest rate swap agreements | | | | | — | | | | | | 8,339,288 | | | | | | — | | | | | | 8,339,288 | | |
Total liabilities measured at fair value | | | | $ | — | | | | | $ | 8,339,288 | | | | | $ | 14,725,000 | | | | | $ | 23,064,288 | | |
|
| | | Level 1 | | | Level 2 | | | Level 3 | | | Fair Value | | ||||||||||||
December 31, 2018 | | | | | | | | | | | | | | | | | | | | | | | | | |
Assets | | | | | | | | | | | | | | | | | | | | | | | | | |
Money market accounts | | | | $ | 16,126,899 | | | | | $ | — | | | | | $ | — | | | | | $ | 16,126,899 | | |
Interest rate swap agreement | | | | | — | | | | | | 943,134 | | | | | | — | | | | | | 943,134 | | |
Total assets measured at fair value | | | | $ | 16,126,899 | | | | | $ | 943,134 | | | | | $ | — | | | | | $ | 17,070,033 | | |
Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | |
Acquisition-related contingent consideration obligations-short term | | | | $ | — | | | | | $ | — | | | | | $ | 13,625,000 | | | | | $ | 13,625,000 | | |
Acquisition-related contingent consideration obligations-long term | | | | | — | | | | | | — | | | | | | 1,625,000 | | | | | | 1,625,000 | | |
Interest rate swap agreements | | | | | — | | | | | | 396,302 | | | | | | — | | | | | | 396,302 | | |
Total liabilities measured at fair value | | | | $ | — | | | | | $ | 396,302 | | | | | $ | 15,250,000 | | | | | $ | 15,646,302 | | |
December 31, 2019 And 2018
| | | Beginning Balance | | | Additions | | | Payments | | | Gain | | | Ending Balance | | |||||||||||||||
Year Ended December 31, 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Contingent consideration | | | | $ | 15,250,000 | | | | | $ | 12,625,000 | | | | | $ | (13,000,000) | | | | | $ | (150,000) | | | | | $ | 14,725,000 | | |
Total Level 3 liabilities | | | | $ | 15,250,000 | | | | | $ | 12,625,000 | | | | | $ | (13,000,000) | | | | | $ | (150,000) | | | | | $ | 14,725,000 | | |
Year Ended December 31, 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Contingent consideration | | | | $ | — | | | | | $ | 15,250,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 15,250,000 | | |
Total Level 3 liabilities | | | | $ | — | | | | | $ | 15,250,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 15,250,000 | | |
| | | As of December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Significant unobservable inputs (Level 3): | | | | | | | | | | | | | |
Goodwill (annual impairment assessment) | | | | $ | 266,790,518 | | | | | $ | 202,436,212 | | |
December 31, 2019 And 2018
December 31, 2019 And 2018
| | | As of December 31, 2019 | | ||||||
| | | Balance Sheet Location | | | Fair Value Asset (Liability) | | |||
Derivatives designated as hedging instruments: | | | | | | | | | | |
Interest rate swap agreements | | | Other current liabilities | | | | $ | (2,157,324) | | |
Interest rate swap agreements | | | Other long-term liabilities | | | | | (6,181,964) | | |
Total derivatives designated as hedging instruments | | | | | | | $ | (8,339,288) | | |
|
| | | As of December 31, 2018 | | ||||||
| | | Balance Sheet Location | | | Fair Value Asset (Liability) | | |||
Derivatives not designated as hedging instruments: | | | | | | | | | | |
Interest rate swap agreements | | | Prepaid and other current assets | | | | $ | 943,134 | | |
Interest rate swap agreements | | | Other current liabilities | | | | | (396,302) | | |
Total derivatives not designated as hedging instruments | | | | | | | $ | 546,832 | | |
| | | Year Ended December 31, 2019 | | ||||||||||||
| | | Amount of Gain or (Loss) Recognized in OCI on Derivative | | | Location of Gain or (Loss) Reclassified from Accumulated OCI into Income | | | Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income | | ||||||
Derivatives in cash flow hedging relationships: | | | | | | | | | | | | | | | | |
Interest rate swap agreements | | | | $ | 3,469,643 | | | | Interest expense | | | | $ | 932,807 | | |
Total | | | | $ | 3,469,643 | | | | | | | | $ | 932,807 | | |
| | | Year Ended December 31, 2019 | | ||||||
| | | Location of Gain or (Loss) Recognized in Loss on Derivative | | | Amount of Gain or (Loss) Recognized in Loss on Derivative | | |||
Derivatives Not Designated as Hedging Instruments: | | | | | | | | | | |
Interest rate swap agreements | | | Interest Expense | | | | $ | (12,358,728) | | |
Total | | | | | | | $ | (12,358,728) | | |
|
December 31, 2019 And 2018
| | | Year Ended December 31, 2018 | | ||||||
| | | Location of Gain or (Loss) Recognized in Income on Derivative | | | Amount of Gain or (Loss) Recognized in Income on Derivative | | |||
Derivatives Not Designated as Hedging Instruments: | | | | | | | | | | |
Interest rate swap agreements | | | Interest Expense | | | | $ | 546,832 | | |
Total | | | | | | | $ | 546,832 | | |
| | | 2019 | | | 2018 | | ||||||
Balance at January 1 | | | | $ | 2,258,253 | | | | | $ | 1,342,379 | | |
Capitalized fees | | | | | 9,027,753 | | | | | | 2,612,860 | | |
Amortization | | | | | (1,311,573) | | | | | | (477,781) | | |
Write-off due to debt refinancing | | | | | (2,121,451) | | | | | | (1,219,205) | | |
Balance at December 31 | | | | $ | 7,852,982 | | | | | $ | 2,258,253 | | |
| | | December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Accounts payable | | | | $ | 79,237,323 | | | | | $ | 70,603,562 | | |
Employee related accruals | | | | | 12,319,746 | | | | | | 9,142,347 | | |
Self insurance reserves | | | | | 1,166,014 | | | | | | 1,304,335 | | |
Accrued interest | | | | | 4,021,660 | | | | | | 404,015 | | |
Other | | | | | 5,983,350 | | | | | | 4,104,160 | | |
Total | | | | $ | 102,728,093 | | | | | $ | 85,558,419 | | |
December 31, 2019 And 2018
| | | December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Secured term loans | | | | $ | 246,250,000 | | | | | $ | 134,875,000 | | |
Revolving credit facility | | | | | 12,000,000 | | | | | | — | | |
Note payable | | | | | 143,500,000 | | | | | | — | | |
Seller note (see Note 3) | | | | | 1,666,667 | | | | | | — | | |
Other | | | | | 58,518 | | | | | | 171,942 | | |
Unamortized deferred financing fees | | | | | (6,642,490) | | | | | | (862,243) | | |
| | | | | 396,832,695 | | | | | | 134,184,699 | | |
Current portion | | | | | (1,721,132) | | | | | | (7,089,976) | | |
Long-term portion | | | | $ | 395,111,563 | | | | | $ | 127,094,723 | | |
Twelve months ended December 31, | | | | | | | |
2020 | | | | $ | 1,721,132 | | |
2021 | | | | | 4,053 | | |
2022 | | | | | — | | |
2023 | | | | | 2,500,000 | | |
2024 | | | | | 255,750,000 | | |
Thereafter | | | | | 143,500,000 | | |
Total debt maturity | | | | $ | 403,475,185 | | |
December 31, 2019 And 2018
December 31, 2019 And 2018
December 31, 2019 And 2018
December 31, 2019 And 2018
| Cash and cash equivalents | | | | $ | 43,911,748 | | |
| Current assets | | | | | 70,763 | | |
| Current liabilities | | | | | (11,214,503) | | |
| Net assets of DFB | | | | $ | 32,768,008 | | |
Sources | | | | | | | |
DFB’s cash and cash equivalents on hand | | | | $ | 43,911,748 | | |
Private placement(1) | | | | | 125,000,000 | | |
Total Sources | | | | $ | 168,911,748 | | |
|
Uses | | | | | | | |
Cash to balance sheet(2) | | | | $ | 52,845,206 | | |
Legacy AdaptHealth Holdings LLC redemptions(3) | | | | | 20,000,000 | | |
Debt repayment(4) | | | | | 81,500,000 | | |
Transaction expenses(5) | | | | | 14,566,542 | | |
Total Uses | | | | $ | 168,911,748 | | |
December 31, 2019 And 2018
December 31, 2019 And 2018
| | | 2019 Incentive Units | | | 2018 Incentive Units | |
Expected volatility(1) | | | 40.0% | | | 35.0% | |
Risk-free interest rate(2) | | | 2.0% | | | 2.3% | |
Expected term(3) | | | 1.5 years | | | 1.5 years | |
Discount for lack of marketability(4) | | | 25.0% | | | 30.0% | |
December 31, 2019 And 2018
| | | 2019 | |
Expected volatility | | | 35.9% | |
Risk-free interest rate | | | 1.7% | |
Expected term | | | 6.0 years | |
Dividend yield | | | N/A | |
December 31, 2019 And 2018
| | | Year Ended December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Basic net (loss) income per common share | | | | | | | | | | | | | |
Numerator: | | | | | | | | | | | | | |
Basic net (loss) income attributable to AdaptHealth Corp. | | | | $ | (14,995,895) | | | | | $ | 23,260,347 | | |
Denominator: | | | | | | | | | | | | | |
Basic and diluted weighted average shares outstanding | | | | | 22,557,213 | | | | | | 11,899,898 | | |
Basic and diluted net (loss) income per share attributable to Class A shareholders | | | | $ | (0.66) | | | | | $ | 1.95 | | |
| 2020 | | | | $ | 19,813,539 | | |
| 2021 | | | | | 255,652 | | |
| Total | | | | | 20,069,191 | | |
| Less amount representing interest | | | | | (86,198) | | |
| | | | | | 19,982,993 | | |
| Current portion | | | | | (19,749,854) | | |
| Long-term portion | | | | $ | 233,139 | | |
|
December 31, 2019 And 2018
| 2020 | | | | $ | 12,291,753 | | |
| 2021 | | | | | 7,811,982 | | |
| 2022 | | | | | 5,632,124 | | |
| 2023 | | | | | 4,492,642 | | |
| 2024 | | | | | 3,082,588 | | |
| Thereafter | | | | | 4,036,732 | | |
| | | | | $ | 37,347,821 | | |
December 31, 2019 And 2018
December 31, 2019 And 2018
| | | 2019 | | | 2018 | | ||||||
Current: | | | | | | | | | | | | | |
Federal | | | | $ | (961,588) | | | | | $ | — | | |
State | | | | | 1,222,292 | | | | | | 778,190 | | |
| | | | | 260,704 | | | | | | 778,190 | | |
Deferred: | | | | | | | | | | | | | |
Federal | | | | | 673,664 | | | | | | (1,549,549) | | |
State | | | | | 221,634 | | | | | | (1,326,346) | | |
| | | | | 895,298 | | | | | | (2,875,895) | | |
Total income tax (benefit) expense | | | | $ | 1,156,002 | | | | | $ | (2,097,705) | | |
|
December 31, 2019 And 2018
| | | 2019 | | | 2018 | | ||||||
Federal tax at statutory rate | | | | | 21.0% | | | | | | 21.0% | | |
Non-taxable income | | | | | (46.6)% | | | | | | 0.8% | | |
State income taxes, net of federal benefit | | | | | (9.6)% | | | | | | (3.2)% | | |
Change in valuation allowance | | | | | 5.3% | | | | | | (32.3)% | | |
Net operating loss write-offs | | | | | — | | | | | | 3.6% | | |
Deferred adjustments | | | | | 18.1 | | | | | | —% | | |
Other | | | | | 1.9% | | | | | | 0.7% | | |
Effective income tax rate (benefit) | | | | | (9.9)% | | | | | | (9.4)% | | |
| | | 2019 | | | 2018 | | ||||||
Deferred income tax assets: | | | | | | | | | | | | | |
Accounts receivable | | | | $ | 3,188,976 | | | | | $ | 1,575,902 | | |
Goodwill | | | | | 4,805,554 | | | | | | 5,401,652 | | |
Investment in partnership | | | | | 41,745,232 | | | | | | — | | |
Inventory | | | | | 60,677 | | | | | | 54,239 | | |
Accruals | | | | | 249,595 | | | | | | 615,327 | | |
Net operating losses and credits | | | | | 3,494,969 | | | | | | 4,986,913 | | |
Charitable contribution | | | | | 16,942 | | | | | | 16,420 | | |
Start-up / organizational costs | | | | | 509,221 | | | | | | — | | |
AMT credit | | | | | 208,056 | | | | | | 208,056 | | |
Total deferred income tax assets | | | | | 54,279,222 | | | | | | 12,858,509 | | |
Valuation allowance | | | | | (22,502,544) | | | | | | — | | |
Net deferred income tax assets | | | | $ | 31,776,678 | | | | | $ | 12,858,509 | | |
Deferred income tax liabilities: | | | | | | | | | | | | | |
Equipment and other fixed assets | | | | | (4,271,299) | | | | | | (3,779,319) | | |
Total deferred income tax liabilities | | | | | (4,271,299) | | | | | | (3,779,319) | | |
Noncurrent net deferred income tax assets | | | | $ | 27,505,379 | | | | | $ | 9,079,190 | | |
December 31, 2019 And 2018
December 31, 2019 And 2018
December 31, 2019 And 2018
AdaptHealth Corp.
January 17, 2020
(In thousands)
| | | Years Ended | | |||||||||
| | | March 31, 2019 | | | March 31, 2018 | | ||||||
Revenues | | | | $ | 134,774 | | | | | $ | 144,461 | | |
Cost of sales | | | | | (84,995) | | | | | | (91,040) | | |
Gross profit | | | | | 49,779 | | | | | | 53,421 | | |
Operating expenses | | | | | | | | | | | | | |
Selling, distribution and administrative expenses | | | | | (86,269) | | | | | | (106,196) | | |
Restructuring charges | | | | | (7,601) | | | | | | (2,887) | | |
Total operating expenses | | | | | (93,870) | | | | | | (109,083) | | |
Operating loss | | | | | (44,091) | | | | | | (55,662) | | |
Other expense, net | | | | | 62 | | | | | | (11) | | |
Loss from operations before income taxes | | | | | (44,029) | | | | | | (55,673) | | |
Income tax expense | | | | | — | | | | | | — | | |
Net loss attributable to Patient Care Solutions Business | | | | | (44,029) | | | | | | (55,673) | | |
Comprehensive loss | | | | | (44,029) | | | | | | (55,673) | | |
Comprehensive loss attributable to Patient Care Solutions | | | | $ | (44,029) | | | | | $ | (55,673) | | |
(In thousands)
| | | As of March 31, 2019 | | | As of March 31, 2018 | | ||||||
ASSETS | | | | | | | | | | | | | |
Current assets | | | | | | | | | | | | | |
Cash and cash equivalents | | | | $ | 18,908 | | | | | $ | 17,659 | | |
Receivables, net | | | | | 16,997 | | | | | | 17,140 | | |
Contract assets | | | | | 7,548 | | | | | | — | | |
Prepaid expenses and other | | | | | 915 | | | | | | 719 | | |
Total current assets | | | | | 44,368 | | | | | | 35,518 | | |
Property, plant and equipment, net | | | | | 9,263 | | | | | | 1,127 | | |
Other noncurrent assets | | | | | 15 | | | | | | 16 | | |
Total assets | | | | $ | 53,646 | | | | | $ | 36,661 | | |
LIABILITIES AND EQUITY | | | | | | | | | | | | | |
Current liabilities | | | | | | | | | | | | | |
Drafts and accounts payable | | | | $ | 4,103 | | | | | $ | 6,607 | | |
Other accrued liabilities | | | | | 5,880 | | | | | | 21,293 | | |
Total current liabilities | | | | | 9,983 | | | | | | 27,900 | | |
Other noncurrent liabilities | | | | | 89 | | | | | | 72 | | |
Net parent investment | | | | | 43,574 | | | | | | 8,689 | | |
Total liabilities and equity | | | | $ | 53,646 | | | | | $ | 36,661 | | |
(In thousands)
| | | Net Parent Investment | | |||
Balance as of March 31, 2017 | | | | $ | 18,628 | | |
Net loss | | | | | (55,673) | | |
Net transfers from parent | | | | | 45,734 | | |
Balance as of March 31, 2018 | | | | | 8,689 | | |
Net loss | | | | | (44,029) | | |
Cumulative effect on opening net parent investment of adopting accounting standards and other | | | | | 7,964 | | |
Net transfers from parent | | | | | 70,950 | | |
Balance as of March 31, 2019 | | | | $ | 43,574 | | |
(In thousands)
| | | Years Ended | | |||||||||
| | | March 31, 2019 | | | March 31, 2018 | | ||||||
Net loss | | | | $ | (44,029) | | | | | $ | (55,673) | | |
Adjustments to reconcile to net cash used in operating activities: | | | | | | | | | | | | | |
Depreciation | | | | | 314 | | | | | | 485 | | |
Provision for bad debts | | | | | (1,547) | | | | | | (11,007) | | |
Other non-cash items | | | | | 437 | | | | | | | | |
Changes in assets and liabilities: | | | | | | | | | | | | | |
Receivables, net | | | | | 1,690 | | | | | | 14,351 | | |
Contract assets | | | | | 416 | | | | | | — | | |
Prepaid expenses and other | | | | | (65) | | | | | | 225 | | |
Drafts and accounts payable | | | | | (2,504) | | | | | | (6,945) | | |
Other accrued liabilities | | | | | (15,413) | | | | | | 14,349 | | |
Net cash used in operating activities | | | | | (60,701) | | | | | | (44,215) | | |
Investing Activities | | | | | | | | | | | | | |
Payments for property, plant and equipment | | | | | (9,000) | | | | | | (130) | | |
Net cash used in investing activities | | | | | (9,000) | | | | | | (130) | | |
Financing Activities | | | | | | | | | | | | | |
Net transfers from parent | | | | | 70,950 | | | | | | 45,734 | | |
Net cash provided by financing activities | | | | | 70,950 | | | | | | 45,734 | | |
Net increase in cash and cash equivalents | | | | | 1,249 | | | | | | 1,389 | | |
Cash and cash equivalents at beginning of year | | | | | 17,659 | | | | | | 16,270 | | |
Cash and cash equivalents at end of year | | | | $ | 18,908 | | | | | $ | 17,659 | | |
(In thousands)
(In thousands)
(In thousands)
(In thousands) | | | | | | | |
Balance as of March 31, 2018 | | | | $ | — | | |
Cumulative effect adjustment at April 1, 2018 | | | | | 7,964 | | |
Revenue recognized | | | | | 134,774 | | |
Amounts collected or invoiced | | | | | (135,190) | | |
Balance as of March 31, 2019 | | | | $ | 7,548 | | |
|
(In thousands)
(In thousands)
(In thousands)
| | | Year Ended March 31, 2019 | | |||||||||||||||
(In thousands) | | | As Reported | | | Effect of Change | | | Amount Without Adoption of ASC 606 | | |||||||||
Revenues | | | | $ | 134,774 | | | | | $ | 416 | | | | | $ | 135,190 | | |
Gross profit | | | | | 49,779 | | | | | | 416 | | | | | | 50,195 | | |
Operating loss | | | | | (44,091) | | | | | | 416 | | | | | | (43,675) | | |
Net loss | | | | | (44,029) | | | | | | 416 | | | | | | (43,613) | | |
Current assets | | | | | | | | | | | | | | | | | | | |
Contract assets | | | | | 7,548 | | | | | | (7,548) | | | | | | — | | |
Net parent investment | | | | | | | | | | | | | | | | | | | |
Net parent investment | | | | | (43,574) | | | | | | (7,548) | | | | | | (51,122) | | |
(In thousands)
| | | Years Ended | | |||||||||
(In thousands) | | | March 31, 2019 | | | March 31, 2018 | | ||||||
Cost of sales | | | | $ | (2,357) | | | | | $ | (1,969) | | |
Selling, distribution and administrative | | | | | 15,825 | | | | | | 17,176 | | |
Total corporate allocations | | | | $ | 13,468 | | | | | $ | 15,207 | | |
(In thousands)
| | | Years Ended | | |||||||||
(In thousands) | | | March 31, 2019 | | | March 31, 2018 | | ||||||
Severance and employee-related costs, net | | | | $ | 1,790 | | | | | $ | 1,637 | | |
Exit and other-related costs | | | | | 5,334 | | | | | | 1,250 | | |
Asset impairments and accelerated depreciation | | | | | 477 | | | | | | — | | |
Total | | | | $ | 7,601 | | | | | $ | 2,887 | | |
(In thousands)
(In thousands) | | | | | | | |
Balance as of March 31, 2017 | | | | $ | 475 | | |
Restructuring charges recognized | | | | | 2,887 | | |
Non-cash charges | | | | | — | | |
Cash payments | | | | | (100) | | |
Temporary charges | | | | | (800) | | |
Balance as of March 31, 2018 | | | | | 2,462 | | |
Restructuring charges recognized | | | | | 7,601 | | |
Non-cash charges | | | | | (477) | | |
Cash payments | | | | | (1,823) | | |
Temporary charges | | | | | (5,281) | | |
Balance as of March 31, 2019 | | | | $ | 2,482 | | |
| | | Years Ended March 31, | | |||||||||
(In thousands) | | | 2019 | | | 2018 | | ||||||
Total income from continuing operations before income taxes (United States) | | | | $ | (44,029) | | | | | $ | (55,673) | | |
| | | Years Ended March 31, | | |||||||||
(In thousands) | | | 2019 | | | 2018 | | ||||||
Current | | | | | | | | | | | | | |
Federal | | | | $ | — | | | | | $ | — | | |
State | | | | | — | | | | | | — | | |
Total current | | | | | — | | | | | | — | | |
Deferred | | | | | | | | | | | | | |
Federal | | | | | — | | | | | | — | | |
State | | | | | — | | | | | | — | | |
Total deferred | | | | | — | | | | | | — | | |
Income tax expense (benefit) | | | | $ | — | | | | | $ | — | | |
|
(In thousands)
| | | Years Ended March 31, | | |||||||||
(In thousands) | | | 2019 | | | 2018 | | ||||||
Income tax expense at federal statutory rate | | | | $ | (9,246) | | | | | $ | (17,537) | | |
State income taxes net of federal tax benefit | | | | | (1,179) | | | | | | (1,931) | | |
Other | | | | | 45 | | | | | | 40 | | |
Change in tax rate | | | | | | | | | | | 28,490 | | |
Valuation allowance | | | | | 10,380 | | | | | | (9,062) | | |
Income tax expense (benefit) | | | | $ | — | | | | | $ | — | | |
| | | Years Ended March 31, | | |||||||||
(In thousands) | | | 2019 | | | 2018 | | ||||||
Assets | | | | | | | | | | | | | |
Receivable allowances | | | | $ | 179 | | | | | $ | 6,706 | | |
Compensation and benefit related accruals | | | | | 974 | | | | | | 722 | | |
Accrued Litigation | | | | | — | | | | | | 3,866 | | |
Federal and state net operating loss | | | | | 62,996 | | | | | | 40,614 | | |
Intangibles | | | | | 4,929 | | | | | | 6,549 | | |
Other | | | | | 246 | | | | | | 487 | | |
Subtotal | | | | | 69,324 | | | | | | 58,944 | | |
Less: valuation allowance | | | | | (69,324) | | | | | | (58,944) | | |
Net deferred tax | | | | $ | — | | | | | $ | — | | |
(In thousands)
(In thousands) | | | March 31, 2019 | | | March 31, 2018 | | ||||||
Trade receivables | | | | $ | 21,481 | | | | | $ | 24,589 | | |
Other receivables(1) | | | | | 1,439 | | | | | | 2,383 | | |
Total | | | | | 22,920 | | | | | | 26,972 | | |
Allowances | | | | | (5,923) | | | | | | (9,832) | | |
Net | | | | $ | 16,997 | | | | | $ | 17,140 | | |
(In thousands) | | | March 31, 2019 | | | March 31, 2018 | | ||||||
Machinery and equipment | | | | $ | 1,684 | | | | | $ | 3,665 | | |
Leasehold improvements | | | | | 732 | | | | | | 1,067 | | |
Construction in progress | | | | | 9,005 | | | | | | 21 | | |
Accumulated depreciation | | | | | (2,158) | | | | | | (3,626) | | |
Property, plant and equipment, net | | | | $ | 9,263 | | | | | $ | 1,127 | | |
(In thousands)
(In thousands) | | | March 31, 2019 | | | March 31, 2018 | | ||||||
Restructuring reserves | | | | $ | 2,482 | | | | | $ | 2,462 | | |
Accrued employee expenses | | | | | 1,651 | | | | | | 1,731 | | |
Accrued taxes | | | | | 329 | | | | | | 310 | | |
Accrued legal | | | | | — | | | | | | 15,204 | | |
Accrued other | | | | | 1,418 | | | | | | 1,586 | | |
Other accrued liabilities | | | | $ | 5,880 | | | | | $ | 21,293 | | |
| | | Noncancelable Operating leases | | |||
2020 | | | | $ | 2,187 | | |
2021 | | | | | 2,168 | | |
2022 | | | | | 1,846 | | |
2023 | | | | | 1,635 | | |
2024 | | | | | 1,665 | | |
Thereafter | | | | | 3,140 | | |
Total minimun lease payments | | | | $ | 12,641 | | |
(In thousands)
| | | Nine months ended December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Revenues | | | | $ | 99,544 | | | | | $ | 101,433 | | |
Cost of sales | | | | | (63,863) | | | | | | (66,594) | | |
Gross profit | | | | | 35,681 | | | | | | 34,839 | | |
Operating expenses | | | | | | | | | | | | | |
Selling, distribution and administrative expenses | | | | | (58,876) | | | | | | (62,662) | | |
Restructuring charges | | | | | (3,245) | | | | | | (6,009) | | |
Total operating expenses | | | | | (62,121) | | | | | | (68,671) | | |
Operating loss | | | | | (26,440) | | | | | | (33,832) | | |
Other expense, net | | | | | 76 | | | | | | 35 | | |
Loss from operations before income taxes | | | | | (26,364) | | | | | | (33,797) | | |
Income tax expense | | | | | — | | | | | | — | | |
Net loss attributable to Patient Care Solutions Business | | | | | (26,364) | | | | | | (33,797) | | |
Comprehensive loss | | | | | (26,364) | | | | | | (33,797) | | |
Comprehensive loss attributable to Patient Care Solutions Business | | | | $ | (26,364) | | | | | $ | (33,797) | | |
| | | As of December 31, 2019 | | | As of March 31, 2019 | | ||||||
ASSETS | | | | | | | | | | | | | |
Current assets | | | | | | | | | | | | | |
Cash and cash equivalents | | | | $ | 70 | | | | | $ | 18,908 | | |
Receivables, net | | | | | 16,341 | | | | | | 16,997 | | |
Contract assets | | | | | 5,550 | | | | | | 7,548 | | |
Prepaid expenses and other | | | | | 793 | | | | | | 915 | | |
Total current assets | | | | | 22,754 | | | | | | 44,368 | | |
Property, plant and equipment, net | | | | | 9,118 | | | | | | 9,263 | | |
Other noncurrent assets | | | | | 9,763 | | | | | | 15 | | |
Total assets | | | | $ | 41,635 | | | | | $ | 53,646 | | |
LIABILITIES AND EQUITY | | | | | | | | | | | | | |
Current liabilities | | | | | | | | | | | | | |
Drafts and accounts payable | | | | $ | 2,651 | | | | | $ | 4,103 | | |
Other accrued liabilities | | | | | 6,260 | | | | | | 5,880 | | |
Total current liabilities | | | | | 8,911 | | | | | | 9,983 | | |
Other noncurrent liabilities | | | | | 8,200 | | | | | | 89 | | |
Net parent investment | | | | | 24,524 | | | | | | 43,574 | | |
Total liabilities and equity | | | | $ | 41,635 | | | | | $ | 53,646 | | |
| | | Net Parent Investment | | |||
Balance as of March 31, 2018 | | | | $ | 8,689 | | |
Net loss | | | | | (33,797) | | |
Cumulative effect on opening net parent investment of adopting accounting standards and other | | | | | 7,964 | | |
Net transfers from parent | | | | | 58,608 | | |
Balance as of December 31, 2018 | | | | $ | 41,464 | | |
Balance as of March 31, 2019 | | | | $ | 43,574 | | |
Net loss | | | | | (26,364) | | |
Net transfers from parent | | | | | 7,314 | | |
Balance as of December 31, 2019 | | | | $ | 24,524 | | |
| | | Nine months ended December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Net loss | | | | $ | (26,364) | | | | | $ | (33,797) | | |
Adjustments to reconcile to net cash provided by operating activities: | | | | | | | | | | | | | |
Depreciation | | | | | 263 | | | | | | 790 | | |
Provision for bad debts | | | | | (1,295) | | | | | | (1,388) | | |
Non-cash operating lease expense | | | | | 1,568 | | | | | | — | | |
Changes in assets and liabilities, net of acquisitions: | | | | | | | | | | | | | |
Receivables | | | | | 1,951 | | | | | | 3,758 | | |
Contract assets | | | | | 1,998 | | | | | | (157) | | |
Prepaid expenses and other | | | | | 122 | | | | | | (322) | | |
Drafts and accounts payable | | | | | (1,452) | | | | | | (5,362) | | |
Other accrued liabilities | | | | | (1,576) | | | | | | (14,531) | | |
Operating leases | | | | | (1,223) | | | | | | — | | |
Other | | | | | (26) | | | | | | 15 | | |
Net cash used in operating activities | | | | | (26,034) | | | | | | (50,994) | | |
Investing Activities | | | | | | | | | | | | | |
Payments for property, plant and equipment | | | | | (118) | | | | | | (6,198) | | |
Net cash used in investing activities | | | | | (118) | | | | | | (6,198) | | |
Financing Activities | | | | | | | | | | | | | |
Net transfers from parent | | | | | 7,314 | | | | | | 58,608 | | |
Net cash provided by financing activities | | | | | 7,314 | | | | | | 58,608 | | |
Net increase in cash and cash equivalents | | | | | (18,838) | | | | | | 1,416 | | |
Cash and cash equivalents at beginning of year | | | | | 18,908 | | | | | | 17,659 | | |
Cash and cash equivalents at end of year | | | | $ | 70 | | | | | $ | 19,075 | | |
| | | Nine months ended December 31, | | |||||||||
(In thousands) | | | 2019 | | | 2018 | | ||||||
Cost of sales | | | | $ | (1,768) | | | | | $ | (1,768) | | |
Selling, distribution and administrative expenses | | | | $ | 12,546 | | | | | $ | 12,175 | | |
Total corporate allocations | | | | $ | 10,778 | | | | | $ | 10,408 | | |
|
| | | Nine months ended December 31, | | |||||||||
(In thousands) | | | 2019 | | | 2018 | | ||||||
Severance and employee-related costs, net | | | | $ | (250) | | | | | $ | 3,249 | | |
Exit and other-related costs | | | | | 3,499 | | | | | | 3,231 | | |
Asset impairments and accelerated depreciation | | | | | (4) | | | | | | 477 | | |
Total | | | | $ | 3,245 | | | | | $ | 6,957 | | |
(In thousands) | | | | | | | |
Balance as of March 31, 2019 | | | | $ | 2,482 | | |
Restructuring charges recognized | | | | | 3,245 | | |
Non-cash charges | | | | | (4) | | |
Cash payments | | | | | (1,267) | | |
Temporary costs | | | | | (3,488) | | |
Balance as of December 31, 2019 | | | | $ | 968 | | |
(In thousands) | | | December 31, 2019 | | | March 31, 2019 | | ||||||
Restructuring reserves | | | | $ | 968 | | | | | $ | 2,482 | | |
Accrued employee expenses | | | | | 1,497 | | | | | | 1,651 | | |
Operating lease liability – current | | | | | 1,956 | | | | | | — | | |
Accrued taxes | | | | | 300 | | | | | | 329 | | |
Refunds payable | | | | | 410 | | | | | | 461 | | |
Accrued other | | | | | 1,129 | | | | | | 957 | | |
Other accrued liabilities | | | | $ | 6,260 | | | | | $ | 5,880 | | |
(In thousands) | | | December 31, 2019 | | |||
Operating leases | | | | | | | |
Operating lease right-of-use assets | | | | $ | 9,747 | | |
Current portion of operating lease liabilities | | | | | 1,956 | | |
Long-term operating lease liabilities | | | | | 8,136 | | |
Total operating lease liabilities | | | | $ | 10,092 | | |
Weighted average remaining lease term (years) | | | | | | | |
Operating leases | | | | | 5.62 | | |
Weighted average discount rate | | | | | | | |
Operating leases | | | | | 3.31 | | |
(In thousands) | | | Nine months ended December 31, 2019 | | |||
Short-term lease cost | | | | $ | 1,597 | | |
Operating lease cost | | | | | 237 | | |
Variable lease cost(1) | | | | | 230 | | |
Total lease cost(2) | | | | $ | 2,064 | | |
(In thousands) | | | Nine months ended December 31, 2019 | | |||
Cash paid for amounts included in the measurement of lease liabilities: | | | | | | | |
Operating cash flows from operating leases | | | | $ | 1,654 | | |
Right-of-use assets obtained in exchange for lease obligations: | | | | | | | |
Operating leases | | | | | 11,481 | | |
(In thousands) | | | Operating leases | | |||
The remainder of 2020 | | | | $ | 558 | | |
2021 | | | | | 2,199 | | |
2022 | | | | | 1,862 | | |
2023 | | | | | 1,651 | | |
2024 | | | | | 1,666 | | |
Thereafter | | | | | 3,140 | | |
Total lease payments | | | | | 11,076 | | |
Less imputed interest | | | | | 985 | | |
Present value of lease liabilities | | | | $ | 10,091 | | |
(In thousands) | | | Noncancelable operating leases | | |||
2020 | | | | $ | 2,187 | | |
2021 | | | | | 2,168 | | |
2022 | | | | | 1,846 | | |
2023 | | | | | 1,635 | | |
2024 | | | | | 1,665 | | |
Thereafter | | | | | 3,140 | | |
Total minimum lease payments | | | | $ | 12,641 | | |
| | | | | F-107 | | | |
| | | | | F-108 | | | |
| | | | | F-109 | | | |
| | | | | F-110 | | | |
| | | | | F-111 | | |
(UNAUDITED)
| | | March 31, 2020 | | | December 31, 2019 | | ||||||
ASSETS | | | | | | | | | | | | | |
Current Assets | | | | | | | | | | | | | |
Cash | | | | $ | 21,579,000 | | | | | $ | 9,768,000 | | |
Accounts Receivable, Net | | | | | 25,991,000 | | | | | | 26,970,000 | | |
Inventory | | | | | 9,373,000 | | | | | | 18,213,000 | | |
Prepaid Expenses and Other Current Assets | | | | | 3,974,000 | | | | | | 3,155,000 | | |
Total Current Assets | | | | $ | 60,917,000 | | | | | $ | 58,106,000 | | |
Property and Equipment, Net | | | | | 2,517,000 | | | | | | 2,181,000 | | |
Rental Pumps, Net | | | | | 1,994,000 | | | | | | 2,323,000 | | |
Goodwill | | | | | 110,355,000 | | | | | | 110,355,000 | | |
Intangible Assets, Net | | | | | 53,170,000 | | | | | | 54,801,000 | | |
Other Assets | | | | | 70,000 | | | | | | 70,000 | | |
TOTAL ASSETS | | | | $ | 229,023,000 | | | | | $ | 227,836,000 | | |
LIABILITIES AND MEMBERS’ EQUITY | | | | | | | | | | | | | |
Current Liabilities | | | | | | | | | | | | | |
Accounts Payable | | | | $ | 13,555,000 | | | | | $ | 26,498,000 | | |
Accrued Expenses | | | | | 16,576,000 | | | | | | 19,527,000 | | |
Debt, Current Portion | | | | | 1,660,000 | | | | | | 1,660,000 | | |
Contingent Consideration, Current Portion | | | | | 5,212,000 | | | | | | 5,156,000 | | |
Total Current Liabilities | | | | $ | 37,003,000 | | | | | $ | 52,841,000 | | |
Debt, Net of Debt Acquisition Costs | | | | | 179,467,000 | | | | | | 159,708,000 | | |
Other Long-Term Liabilities | | | | | 144,000 | | | | | | 149,000 | | |
TOTAL LIABILITIES | | | | $ | 216,614,000 | | | | | $ | 212,698,000 | | |
Commitments and Contingencies (Note 5) | | | | | | | | | | | | | |
Members’ Equity | | | | | | | | | | | | | |
Common Units | | | | | 944,000 | | | | | | 944,000 | | |
Preferred Units (Class A) | | | | | 63,240,000 | | | | | | 63,240,000 | | |
Preferred Units (Class B) | | | | | 25,740,000 | | | | | | 25,740,000 | | |
Accumulated Deficit | | | | | (77,515,000) | | | | | | (74,786,000) | | |
TOTAL MEMBERS’ EQUITY | | | | $ | 12,409,000 | | | | | $ | 15,138,000 | | |
TOTAL LIABILITIES AND MEMBERS’ EQUITY | | | | $ | 229,023,000 | | | | | $ | 227,836,000 | | |
(UNAUDITED)
| | | Three Months Ended March 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Revenue, Net | | | | $ | 39,681,000 | | | | | $ | 37,676,000 | | |
Cost of Goods Sold | | | | | 24,387,000 | | | | | | 23,666,000 | | |
Gross Profit | | | | $ | 15,294,000 | | | | | $ | 14,010,000 | | |
Operating Expenses | | | | | | | | | | | | | |
Selling, General and Administrative Expenses | | | | | 12,398,000 | | | | | | 11,531,000 | | |
Operating Income | | | | $ | 2,896,000 | | | | | $ | 2,479,000 | | |
Interest Expense | | | | | (3,565,000) | | | | | | (2,395,000) | | |
Other Income | | | | | 31,000 | | | | | | 26,000 | | |
(Loss) Income Before Income Taxes | | | | $ | (638,000) | | | | | $ | 110,000 | | |
Income Tax Expense | | | | | — | | | | | | (73,000) | | |
Net (Loss) Income | | | | $ | (638,000) | | | | | $ | 37,000 | | |
(UNAUDITED)
| | | Common Units | | | Preferred Units (Class A) | | | Preferred Units (Class B) | | | Accumulated Deficit | | | Total Members’ Equity | | |||||||||||||||||||||||||||||||||
| | | Amount | | | Number of Units | | | Amount | | | Number of Units | | | Amount | | | Number of Units | | ||||||||||||||||||||||||||||||
Balance at December 31, 2019 | | | | $ | 944,000 | | | | | | 898,740 | | | | | $ | 63,240,000 | | | | | | 63,240 | | | | | $ | 25,740,000 | | | | | | 25,740 | | | | | $ | (74,786,000) | | | | | $ | 15,138,000 | | |
Distributions to Members | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (2,091,000) | | | | | | (2,091,000) | | |
Net Loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (638,000) | | | | | | (638,000) | | |
Balance at March 31, 2020 | | | | $ | 944,000 | | | | | | 898,740 | | | | | $ | 63,240,000 | | | | | | 63,240 | | | | | $ | 25,740,000 | | | | | | 25,740 | | | | | $ | (77,515,000) | | | | | $ | 12,409,000 | | |
|
| | | Common Units | | | Preferred Units (Class A) | | | Preferred Units (Class B) | | | | | | | | | | | | | | |||||||||||||||||||||||||||
| | | Amount | | | Number of Units | | | Amount | | | Number of Units | | | Amount | | | Number of Units | | | Accumulated Deficit | | | Total Members’ Equity | | ||||||||||||||||||||||||
Balance at December 31, 2018 | | | | $ | 896,000 | | | | | | 895,740 | | | | | $ | 62,938,000 | | | | | | 62,938 | | | | | $ | 25,740,000 | | | | | | 25,740 | | | | | $ | (4,573,000) | | | | | $ | 85,001,000 | | |
Members Contributions | | | | | 48,000 | | | | | | 3,000 | | | | | | 302,000 | | | | | | 302 | | | | | | — | | | | | | — | | | | | | — | | | | | | 350,000 | | |
Distributions to Members | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (71,059,000) | | | | | | (71,059,000) | | |
Net Income | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 37,000 | | | | | | 37,000 | | |
Balance at March 31, 2019 | | | | $ | 944,000 | | | | | | 898,740 | | | | | $ | 63,240,000 | | | | | | 63,240 | | | | | $ | 25,740,000 | | | | | | 25,740 | | | | | $ | (75,595,000) | | | | | $ | 14,329,000 | | |
(UNAUDITED)
| | | Three Months Ended March 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Cash Flows from Operating Activities: | | | | | | | | | | | | | |
Net income/(Loss) | | | | $ | (638,000) | | | | | $ | 37,000 | | |
Adjustments to Reconcile Net Income/(Loss) to Net Cash Used in Operating Activities | | | | | | | | | | | | | |
Depreciation and Amortization | | | | | 1,791,000 | | | | | | 1,767,000 | | |
Rental Pump Amortization | | | | | 1,127,000 | | | | | | 956,000 | | |
Deferred Rent | | | | | (5,000) | | | | | | — | | |
Change in Fair Value of Contingent Liability | | | | | 56,000 | | | | | | 171,000 | | |
Bad Debt Expense and Contractual Allowance | | | | | 1,202,000 | | | | | | 3,214,000 | | |
Amortization of Debt Acquisition Costs | | | | | 178,000 | | | | | | 160,000 | | |
Changes in Operating Assets and Liabilities | | | | | | | | | | | | | |
Accounts Receivable, Net | | | | | (223,000) | | | | | | (362,000) | | |
Inventory | | | | | 8,041,000 | | | | | | (20,000) | | |
Prepaid Expenses and Other Current Assets | | | | | (819,000) | | | | | | (509,000) | | |
Accounts Payable | | | | | (12,943,000) | | | | | | (4,086,000) | | |
Accrued Expenses | | | | | (2,950,000) | | | | | | (3,117,000) | | |
Net Cash Used in Operating Activities | | | | $ | (5,183,000) | | | | | $ | (1,789,000) | | |
Cash Flows from Investing Activities: | | | | | | | | | | | | | |
Purchases of Property and Equipment | | | | | (496,000) | | | | | | (67,000) | | |
Purchase Price Adjustment | | | | | — | | | | | | (126,000) | | |
Net Cash Used in Investing Activities | | | | $ | (496,000) | | | | | $ | (193,000) | | |
Cash Flows from Financing Activities: | | | | | | | | | | | | | |
Proceeds from Term Loan | | | | | — | | | | | | 72,000,000 | | |
Proceeds from Revolving Line of Credit | | | | | 20,000,000 | | | | | | — | | |
Payments of Debt Acquisition Costs | | | | | — | | | | | | (2,170,000) | | |
Term Loan Repayments | | | | | (419,000) | | | | | | (380,000) | | |
Distributions to Members | | | | | (2,091,000) | | | | | | (71,059,000) | | |
Members Contributions | | | | | — | | | | | | 350,000 | | |
Net Cash Provided by/(Used in) Financing Activities | | | | $ | 17,490,000 | | | | | $ | (1,259,000) | | |
Increase (Decrease) in Cash | | | | $ | 11,811,000 | | | | | $ | (3,241,000) | | |
Cash, Beginning of Period | | | | | 9,768,000 | | | | | | 10,643,000 | | |
Cash, End of Period | | | | $ | 21,579,000 | | | | | $ | 7,402,000 | | |
Supplemental Disclosures of Cash Flow Information: | | | | | | | | | | | | | |
Cash Paid During the Period for Interest | | | | $ | 3,387,000 | | | | | $ | 2,235,000 | | |
Cash Paid During the Period for Income Taxes | | | | | — | | | | | | 73,000 | | |
| | | Three Months Ended March 31, | | | | | |||||||||
Performance Obligations | | | 2020 | | | 2019 | | | Timing of Transfer | | ||||||
Product Sales | | | | $ | 38,386,000 | | | | | $ | 36,507,000 | | | | Point in Time | |
Pump Equipment Rentals | | | | | 1,295,000 | | | | | | 1,169,000 | | | | Over Time | |
| | | | $ | 39,681,000 | | | | | $ | 37,676,000 | | | | | |
| Payor contracts | | | 10 years | |
| Trademarks | | | 10 years | |
| Leasehold Interest | | | 5 years | |
| Domain Name | | | 10 years | |
| | | Fair Value Measurements at Reporting Date Using | | |||||||||||||||||||||
| | | Balance | | | Level 1 Inputs | | | Level 2 Inputs | | | Level 3 Inputs | | ||||||||||||
March 31, 2020: | | | | | | | | | | | | | | | | | | | | | | | | | |
Contingent Consideration | | | | $ | 5,212,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 5,212,000 | | |
December 31, 2019: | | | | | | | | | | | | | | | | | | | | | | | | | |
Contingent Consideration | | | | $ | 5,156,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 5,156,000 | | |
| Three Months Ended March 31, 2020: | | | | | | | |
| Beginning Balance | | | | $ | 5,156,000 | | |
| Adjustment in Fair Value of Contingent Consideration | | | | | 56,000 | | |
| Ending Balance | | | | $ | 5,212,000 | | |
|
| Three Months Ended March 31, 2019: | | | | | | | |
| Beginning Balance | | | | $ | 20,266,000 | | |
| Adjustment in Fair Value of Contingent Consideration | | | | | 171,000 | | |
| Ending Balance | | | | $ | 20,437,000 | | |
| | | Useful Life | | | March 31, 2020 | | | December 31, 2019 | | ||||||
Leasehold Improvements | | | 5 Years (or remaining lease term) | | | | $ | 851,000 | | | | | $ | 848,000 | | |
Furniture and Fixtures | | | 7 Years | | | | | 477,000 | | | | | | 476,000 | | |
Software | | | 3 Years | | | | | 361,000 | | | | | | 361,000 | | |
Computer Equipment | | | 5 Years | | | | | 246,000 | | | | | | 206,000 | | |
Vehicles | | | 6 Years | | | | | 13,000 | | | | | | 13,000 | | |
Construction in Process | | | | | | | | 1,019,000 | | | | | | 567,000 | | |
| | | | | | | $ | 2,967,000 | | | | | $ | 2,471,000 | | |
Less Accumulated Depreciation and Amortization | | | | | | | | (450,000) | | | | | | (290,000) | | |
Total | | | | | | | $ | 2,517,000 | | | | | $ | 2,181,000 | | |
|
| | | March 31, 2020 | | | December 31, 2019 | | ||||||
Accrued Distribution to Members | | | | $ | 2,091,000 | | | | | $ | 1,709,000 | | |
Third-Party Overpayments | | | | | 8,544,000 | | | | | | 8,263,000 | | |
Customer Deposits | | | | | 1,788,000 | | | | | | 1,415,000 | | |
Payroll Liabilities | | | | | 1,611,000 | | | | | | 2,846,000 | | |
Sales and Use Tax Payable | | | | | 1,273,000 | | | | | | 1,693,000 | | |
Other Accrued Liabilities | | | | | 1,269,000 | | | | | | 3,601,000 | | |
Total | | | | $ | 16,576,000 | | | | | $ | 19,527,000 | | |
Twelve Months Ending March 31, | | | | | | | |
2021 | | | | $ | 761,000 | | |
2022 | | | | | 914,000 | | |
2023 | | | | | 715,000 | | |
2024 | | | | | 805,000 | | |
| | | | $ | 3,195,000 | | |
| | | Payor Contracts | | | Trademarks | | | Leasehold Interest | | | Domain Name | | ||||||||||||
Three Months Ended March 31, 2020: | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning Balance | | | | $ | 38,724,000 | | | | | $ | 15,992,000 | | | | | $ | 61,000 | | | | | $ | 24,000 | | |
Amortization Expense | | | | | (1,151,000) | | | | | | (475,000) | | | | | | (4,000) | | | | | | (1,000) | | |
Ending Balance | | | | $ | 37,573,000 | | | | | $ | 15,517,000 | | | | | $ | 57,000 | | | | | $ | 23,000 | | |
|
| | | Payor Contracts | | | Trademarks | | | Leasehold Interest | | |||||||||
Three Months Ended March 31, 2019: | | | | | | | | | | | | | | | | | | | |
Beginning Balance | | | | $ | 43,325,000 | | | | | $ | 17,892,000 | | | | | $ | 79,000 | | |
Amortization Expense | | | | | (1,151,000) | | | | | | (475,000) | | | | | | (4,000) | | |
Ending Balance | | | | $ | 42,174,000 | | | | | $ | 17,417,000 | | | | | $ | 75,000 | | |
Years Ending March 31, | | | | | | | |
2021 | | | | $ | 6,520,000 | | |
2022 | | | | | 6,520,000 | | |
2023 | | | | | 6,520,000 | | |
2024 | | | | | 6,520,000 | | |
2025 | | | | | 6,520,000 | | |
Thereafter | | | | | 20,570,000 | | |
| | | | $ | 53,170,000 | | |
(SUCCESSOR),
| | | | ||
| | | | ||
| | | | ||
| | | | ||
| | | | ||
| | | | ||
| | | |
Solara Medical Supplies, LLC
Chula Vista, CA
June 16, 2020
DECEMBER 31, 2019 AND 2018 (SUCCESSOR)
| | | Successor | | | Successor | | ||||||
| | | December 31, 2019 | | | December 31, 2018 | | ||||||
ASSETS | | | | | | | | | | | | | |
Current Assets | | | | | | | | | | | | | |
Cash | | | | $ | 9,768,000 | | | | | $ | 10,643,000 | | |
Accounts Receivable, Net | | | | | 26,970,000 | | | | | | 21,889,000 | | |
Inventory | | | | | 18,213,000 | | | | | | 8,528,000 | | |
Prepaid Expenses and Other Current Assets | | | | | 3,155,000 | | | | | | 811,000 | | |
Total Current Assets | | | | $ | 58,106,000 | | | | | $ | 41,871,000 | | |
Property and Equipment, Net | | | | | 2,181,000 | | | | | | 2,088,000 | | |
Rental Pumps, Net | | | | | 2,323,000 | | | | | | 1,922,000 | | |
Goodwill | | | | | 110,355,000 | | | | | | 110,924,000 | | |
Intangible Assets, Net | | | | | 54,801,000 | | | | | | 61,296,000 | | |
Other Assets | | | | | 70,000 | | | | | | 36,000 | | |
TOTAL ASSETS | | | | $ | 227,836,000 | | | | | $ | 218,137,000 | | |
LIABILITIES AND MEMBERS’ EQUITY | | | | | | | | | | | | | |
Current Liabilities | | | | | | | | | | | | | |
Accounts Payable | | | | $ | 26,498,000 | | | | | $ | 17,717,000 | | |
Accrued Expenses | | | | | 19,527,000 | | | | | | 18,049,000 | | |
Debt, Current Portion | | | | | 1,660,000 | | | | | | 4,000,000 | | |
Contingent Consideration, Current Portion | | | | | 5,156,000 | | | | | | 15,750,000 | | |
Total Current Liabilities | | | | $ | 52,841,000 | | | | | $ | 55,516,000 | | |
Debt, Net of Debt Acquisition Costs | | | | | 159,708,000 | | | | | | 72,770,000 | | |
Contingent Consideration, Long-Term | | | | | — | | | | | | 4,516,000 | | |
Other Long-Term Liabilities | | | | | 149,000 | | | | | | 334,000 | | |
TOTAL LIABILITIES | | | | $ | 212,698,000 | | | | | $ | 133,136,000 | | |
Commitments and Contingencies (Notes 5 and 6) | | | | | | | | | | | | | |
Members’ Equity | | | | | | | | | | | | | |
Common Units | | | | | 944,000 | | | | | | 896,000 | | |
Preferred Units (Class A) | | | | | 63,240,000 | | | | | | 62,938,000 | | |
Preferred Units (Class B) | | | | | 25,740,000 | | | | | | 25,740,000 | | |
Accumulated Deficit | | | | | (74,786,000) | | | | | | (4,573,000) | | |
TOTAL MEMBERS’ EQUITY | | | | $ | 15,138,000 | | | | | $ | 85,001,000 | | |
TOTAL LIABILITIES AND MEMBERS’ EQUITY | | | | $ | 227,836,000 | | | | | $ | 218,137,000 | | |
FOR THE YEAR ENDED DECEMBER 31, 2019 (SUCCESSOR)
AND THE PERIOD FROM JUNE 1, 2018 TO DECEMBER 31, 2018 (SUCCESSOR),
AND STATEMENT OF OPERATIONS FOR THE PERIOD FROM JANUARY 1, 2018
TO MAY 31, 2018 (PREDECESSOR)
| | | Successor | | | | Predecessor | | ||||||||||||
| | | Year End December 31, 2019 | | | Period from January 1, 2018 to December 31, 2018 | | | | Period from June 1, 2018 to May 31, 2018 | | |||||||||
Revenue, Net | | | | $ | 183,352,000 | | | | | $ | 99,928,000 | | | | | | $ | 44,186,000 | | |
Cost of Goods Sold | | | | | 113,335,000 | | | | | | 63,184,000 | | | | | | | 29,660,000 | | |
Gross Profit | | | | $ | 70,017,000 | | | | | $ | 36,744,000 | | | | | | $ | 14,526,000 | | |
Operating Expenses | | | | | | | | | | | | | | | | | | | | |
Selling, General and Administrative Expenses | | | | | 44,360,000 | | | | | | 22,400,000 | | | | | | | 6,039,000 | | |
Operating Income | | | | $ | 25,657,000 | | | | | $ | 14,344,000 | | | | | | $ | 8,487,000 | | |
Interest Expense | | | | | (13,261,000) | | | | | | (5,201,000) | | | | | | | — | | |
Other Income | | | | | 135,000 | | | | | | 107,000 | | | | | | | 80,000 | | |
Income Before Income Taxes | | | | $ | 12,531,000 | | | | | $ | 9,250,000 | | | | | | $ | 8,567,000 | | |
Income Tax Expense | | | | | (294,000) | | | | | | (7,000) | | | | ��� | | | (120,000) | | |
Net Income | | | | $ | 12,237,000 | | | | | $ | 9,243,000 | | | | | | $ | 8,447,000 | | |
FOR THE YEAR ENDED DECEMBER 31, 2019 (SUCCESSOR)
AND THE PERIOD FROM JUNE 1, 2018 TO DECEMBER 31, 2018 (SUCCESSOR)
| | | Common Units | | | Preferred Units (Class A) | | | Preferred Units (Class B) | | | | | | | | | Total Members’ Equity | | ||||||||||||||||||||||||||||||
| | | Amount | | | Number of Units | | | Amount | | | Number of Units | | | Amount | | | Number of Units | | | Accumulated Deficit | | |||||||||||||||||||||||||||
Balance at June 1, 2018 | | | | $ | 896,000 | | | | | | 895,740 | | | | | $ | 62,938,000 | | | | | | 62,938 | | | | | $ | 25,740,000 | | | | | | 25,740 | | | | | $ | (7,528,000) | | | | | $ | 82,046,000 | | |
Distributions to Members | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (6,288,000) | | | | | | (6,288,000) | | |
Net Income | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 9,243,000 | | | | | | 9,243,000 | | |
Balance at December 31, 2018 | | | | $ | 896,000 | | | | | | 895,740 | | | | | $ | 62,938,000 | | | | | | 62,938 | | | | | $ | 25,740,000 | | | | | | 25,740 | | | | | $ | (4,573,000) | | | | | $ | 85,001,000 | | |
Members Contributions | | | | | 48,000 | | | | | | 3,000 | | | | | | 302,000 | | | | | | 302 | | | | | | — | | | | | | — | | | | | | — | | | | | | 350,000 | | |
Distributions to Members | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (82,450,000) | | | | | | (82,450,000) | | |
Net Income | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 12,237,000 | | | | | | 12,237,000 | | |
Balance at December 31, 2019 | | | | $ | 944,000 | | | | | | 898,740 | | | | | $ | 63,240,000 | | | | | | 63,240 | | | | | $ | 25,740,000 | | | | | | 25,740 | | | | | $ | (74,786,000) | | | | | $ | 15,138,000 | | |
FOR THE PERIOD FROM JANUARY 1, 2018 TO MAY 31, 2018 (PREDECESSOR)
| | | Common Stock | | | | | | | | | Total Stockholder’s Equity | | ||||||||||||
| | | Amount | | | Number of Shares | | | Retained Earnings | | |||||||||||||||
Balance at December 31, 2017 | | | | $ | 20,000 | | | | | | 20,000 | | | | | $ | 18,855,000 | | | | | $ | 18,875,000 | | |
Net Income | | | | | — | | | | | | — | | | | | | 8,447,000 | | | | | | 8,447,000 | | |
Dividends | | | | | — | | | | | | — | | | | | | (12,668,000) | | | | | | (12,668,000) | | |
Balance at May 31, 2018 | | | | $ | 20,000 | | | | | | 20,000 | | | | | $ | 14,634,000 | | | | | $ | 14,654,000 | | |
FOR THE YEAR ENDED DECEMBER 31, 2019 (SUCCESSOR)
AND THE PERIOD FROM JUNE 1, 2018 TO DECEMBER 31, 2018 (SUCCESSOR),
AND STATEMENT OF CASH FLOWS FOR THE PERIOD FROM JANUARY 1, 2018
TO MAY 31, 2018 (PREDECESSOR)
| | | Successor | | | Predecessor | | ||||||||||||
| | | Year Ended December 31, 2019 | | | Period from June 1, 2018 to December 31, 2018 | | | Period from January 1, 2018 to May 31, 2018 | | |||||||||
Cash Flows from Operating Activities | | | | | | | | | | | | | | | | | | | |
Net Income | | | | $ | 12,237,000 | | | | | $ | 9,243,000 | | | | | $ | 8,447,000 | | |
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities | | | | | | | | | | | | | | | | | | | |
Depreciation and Amortization | | | | | 7,110,000 | | | | | | 4,232,000 | | | | | | 135,000 | | |
Rental Pump Amortization | | | | | 4,173,000 | | | | | | 1,671,000 | | | | | | 912,000 | | |
Loss on Disposition of Assets | | | | | — | | | | | | — | | | | | | 166,000 | | |
Deferred Rent | | | | | 62,000 | | | | | | 190,000 | | | | | | — | | |
Change in Fair Value of Contingent Liability | | | | | 640,000 | | | | | | 576,000 | | | | | | — | | |
Bad Debt Expense and Contractual Allowance | | | | | 6,730,000 | | | | | | 3,649,000 | | | | | | 394,000 | | |
Amortization of Debt Acquisition Costs | | | | | 640,000 | | | | | | 1,088,000 | | | | | | — | | |
Changes in Operating Assets and Liabilities | | | | | | | | | | | | | | | | | | | |
Accounts Receivable, Net | | | | | (11,811,000) | | | | | | (13,511,000) | | | | | | 7,433,000 | | |
Inventory | | | | | (14,259,000) | | | | | | (8,616,000) | | | | | | 2,329,000 | | |
Prepaid Expenses and Other Current Assets | | | | | (2,378,000) | | | | | | 150,000 | | | | | | (114,000) | | |
Accounts Payable | | | | | 8,781,000 | | | | | | 14,090,000 | | | | | | (5,425,000) | | |
Accrued Expenses | | | | | 1,479,000 | | | | | | 8,565,000 | | | | | | 2,368,000 | | |
Net Cash Provided by Operating Activities | | | | $ | 13,404,000 | | | | | $ | 21,327,000 | | | | | $ | 16,645,000 | | |
Cash Flows from Investing Activities | | | | | | | | | | | | | | | | | | | |
Purchases of Property and Equipment | | | | | (930,000) | | | | | | (1,351,000) | | | | | | (248,000) | | |
Purchase of Intangible Asset | | | | | (25,000) | | | | | | — | | | | | | — | | |
Purchase Price Adjustment | | | | | 569,000 | | | | | | — | | | | | | — | | |
Net Investment in Acquired Business | | | | | — | | | | | | (1,506,000) | | | | | | — | | |
Net Cash Used in Investing Activities | | | | $ | (386,000) | | | | | $ | (2,857,000) | | | | | $ | (248,000) | | |
Cash Flows from Financing Activities | | | | | | | | | | | | | | | | | | | |
Proceeds from Term Loan | | | | | 87,700,000 | | | | | | — | | | | | | — | | |
Payments of Debt Acquisition Costs | | | | | (2,173,000) | | | | | | — | | | | | | — | | |
Term Loan Repayments | | | | | (1,570,000) | | | | | | (2,000,000) | | | | | | (25,000) | | |
Dividends | | | | | — | | | | | | — | | | | | | (12,668,000) | | |
Distributions | | | | | (82,450,000) | | | | | | (13,816,000) | | | | | | — | | |
Contributions | | | | | 350,000 | | | | | | — | | | | | | — | | |
Payments of Contingent Consideration | | | | | (15,750,000) | | | | | | — | | | | | | — | | |
Net Cash Used in Financing Activities | | | | $ | (13,893,000) | | | | | $ | (15,816,000) | | | | | $ | (12,693,000) | | |
(Decrease) Increase in Cash | | | | $ | (875,000) | | | | | $ | 2,654,000 | | | | | $ | 3,704,000 | | |
Cash, Beginning of the Year | | | | | 10,643,000 | | | | | | 7,989,000 | | | | | | 6,522,000 | | |
Cash, End of the Year | | | | $ | 9,768,000 | | | | | $ | 10,643,000 | | | | | $ | 10,226,000 | | |
Supplemental Disclosures of Cash Flow Information | | | | | | | | | | | | | | | | | | | |
Cash Paid During the Period for Interest | | | | $ | 12,621,000 | | | | | $ | 4,113,000 | | | | | $ | — | | |
Cash Paid During the Period for Income Taxes | | | | | 294,000 | | | | | | 7,000 | | | | | | 120,000 | | |
Contingent Liability Recognized at Purchase Date | | | | | — | | | | | | 19,690,000 | | | | | | — | | |
| | | Revenues, Net | | | | | |||||||||||||||
| | | Successor | | | Predecessor | | | | | ||||||||||||
Performance Obligations | | | Year Ended December 31, 2019 | | | Period from June 1, 2018 to December 31, 2018 | | | Period from January 1, 2018 to May 31, 2018 | | | Timing of Transfer | | |||||||||
Product Sales | | | | $ | 178,205,000 | | | | | $ | 97,764,000 | | | | | $ | 42,979,000 | | | | Point in Time | |
Pump Equipment Rentals | | | | | 5,147,000 | | | | | | 2,164,000 | | | | | | 1,207,000 | | | | Over Time | |
| | | | $ | 183,352,000 | | | | | $ | 99,928,000 | | | | | $ | 44,186,000 | | | | | |
| Payor Contracts | | | 10 years | |
| Trademarks | | | 10 years | |
| Leasehold Interest | | | 5 years | |
| Domain Name | | | 10 years | |
| | | | | | | | | Fair Value Measurements at Reporting Date Using | | |||||||||||||||
| | | Balance | | | Quoted Prices in Active Market for Identical Assets (Level 1) | | | Significant Other Observable Inputs (Level 2) | | | Significant Unobservable Inputs (Level 3) | | ||||||||||||
Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Contingent Consideration, 2019 | | | | $ | 5,156,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 5,156,000 | | |
Contingent Consideration, 2018 | | | | $ | 20,266,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 20,266,000 | | |
| | | Fair Value Measurements at Reporting Date Using Significant Unobservable Inputs (Level 3) | | |||
Balance at May 31, 2018 | | | | $ | — | | |
Establishment of Contingent Consideration | | | | | 19,690,000 | | |
Adjustment in Fair Value of Contingent Consideration | | | | | 576,000 | | |
Balance at December 31, 2018 | | | | $ | 20,266,000 | | |
Payments of Contingent Consideration | | | | | (15,750,000) | | |
Adjustment in Fair Value of Contingent Consideration | | | | | 640,000 | | |
Balance at December 31, 2019 | | | | $ | 5,156,000 | | |
| | | As of December 31, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Significant unobservable inputs (Level 3): | | | | | | | | | | | | | |
Goodwill (annual impairment assessment) | | | | $ | 110,355,000 | | | | | $ | 110,924,000 | | |
| | | | | | Successor | | |||||||||
| | | Useful Life | | | As of December 31, 2019 | | | As of December 31, 2018 | | ||||||
Leasehold Improvements | | | 5 Years (or remaining lease term) | | | | $ | 848,000 | | | | | $ | 1,072,000 | | |
Furniture and Fixtures | | | 7 Years | | | | | 476,000 | | | | | | 574,000 | | |
Software | | | 3 Years | | | | | 361,000 | | | | | | 173,000 | | |
Computer Equipment | | | 5 Years | | | | | 206,000 | | | | | | 401,000 | | |
Office Equipment | | | 4 Years | | | | | — | | | | | | 15,000 | | |
Telephone System | | | 4 Years | | | | | — | | | | | | 39,000 | | |
Vehicles | | | 6 Years | | | | | 13,000 | | | | | | 13,000 | | |
Construction in Process | | | | | | | | 567,000 | | | | | | — | | |
| | | | | | | $ | 2,471,000 | | | | | $ | 2,287,000 | | |
Less Accumulated Depreciation and Amortization | | | | | | | | (290,000) | | | | | | (199,000) | | |
Total | | | | | | | $ | 2,181,000 | | | | | $ | 2,088,000 | | |
| | | Successor | | |||||||||
| | | As of December 31, 2019 | | | As of December 31, 2018 | | ||||||
Accrued Distribution to Members | | | | $ | 1,709,000 | | | | | $ | 6,288,000 | | |
Third-Party Overpayments | | | | | 8,263,000 | | | | | | 6,477,000 | | |
Customer Deposits | | | | | 1,415,000 | | | | | | 2,100,000 | | |
Payroll Liabilities | | | | | 2,846,000 | | | | | | 1,329,000 | | |
Sales and Use Tax Payable | | | | | 1,693,000 | | | | | | 526,000 | | |
Other Accrued Liabilities | | | | | 3,601,000 | | | | | | 1,329,000 | | |
Total | | | | $ | 19,527,000 | | | | | $ | 18,049,000 | | |
Years Ending December 31, | | | | | | | |
2020 | | | | $ | 1,660,000 | | |
2021 | | | | | 1,660,000 | | |
2022 | | | | | 1,660,000 | | |
2023 | | | | | 1,660,000 | | |
2024 | | | | | 157,490,000 | | |
| | | | $ | 164,130,000 | | |
Years Ending December 31, | | | | | | | |
2020 | | | | $ | 1,010,000 | | |
2021 | | | | | 914,000 | | |
2022 | | | | | 715,000 | | |
2023 | | | | | 480,000 | | |
2024 | | | | | 325,000 | | |
| | | | $ | 3,444,000 | | |
| Cash | | | | $ | 114,801,000 | | |
| Equity Rollover | | | | | 26,000,000 | | |
| Contingent Consideration | | | | | 19,690,000 | | |
| Escrow | | | | | 16,000,000 | | |
| Seller’s Fees | | | | | 2,199,000 | | |
| | | | | $ | 178,690,000 | | |
| | | Solara Medical Supplies, Inc. | | | J.M.R. | | | Huey | | | Pal-Med | | | Total | | |||||||||||||||
Assets Acquired: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash | | | | $ | — | | | | | $ | — | | | | | $ | 10,000 | | | | | $ | 176,000 | | | | | $ | 186,000 | | |
Accounts Receivable | | | | | 12,028,000 | | | | | | — | | | | | | 14,000 | | | | | | 298,000 | | | | | | 12,340,000 | | |
Inventories | | | | | 1,991,000 | | | | | | — | | | | | | — | | | | | | 176,000 | | | | | | 2,167,000 | | |
Prepaid Expenses and Other | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Current Assets | | | | | 726,000 | | | | | | — | | | | | | 2,000 | | | | | | 101,000 | | | | | | 829,000 | | |
Property and Equipment | | | | | 1,164,000 | | | | | | — | | | | | | 3,000 | | | | | | 30,000 | | | | | | 1,197,000 | | |
Goodwill | | | | | 109,153,000 | | | | | | 195,000 | | | | | | 367,000 | | | | | | 1,209,000 | | | | | | 110,924,000 | | |
Intangible Assets | | | | | 65,099,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | 65,099,000 | | |
Other Assets | | | | | 1,406,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,406,000 | | |
Total Assets Acquired | | | | $ | 191,567,000 | | | | | $ | 195,000 | | | | | $ | 396,000 | | | | | $ | 1,990,000 | | | | | $ | 194,148,000 | | |
Liabilities Assumed: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accounts Payable | | | | | (4,156,000) | | | | | | — | | | | | | (2,000) | | | | | | (50,000) | | | | | | (4,208,000) | | |
Accrued Expenses and Other | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Current Liabilities | | | | | (8,721,000) | | | | | | — | | | | | | (49,000) | | | | | | (90,000) | | | | | | (8,860,000) | | |
Total Liabilities Assumed | | | | $ | (12,877,000) | | | | | $ | — | | | | | $ | (51,000) | | | | | $ | (140,000) | | | | | $ | (13,068,000) | | |
Total Net Assets Acquired | | | | $ | 178,690,000 | | | | | $ | 195,000 | | | | | $ | 345,000 | | | | | $ | 1,850,000 | | | | | $ | 181,080,000 | | |
| | | Gross Carrying Amount | | |||
Successor Balance at June 1, 2018 | | | | $ | 109,153,000 | | |
Acquired Goodwill During the Period | | | | | 1,771,000 | | |
Successor Balance at December 31, 2018 | | | | $ | 110,924,000 | | |
Measurement Period Adjustment | | | | | (569,000) | | |
Successor Balance at December 31, 2019 | | | | $ | 110,355,000 | | |
| | | Payor Contracts | | | Trademarks | | | Leasehold Interest | | | Domain Name | | ||||||||||||
Successor Balance at June 1, 2018 | | | | $ | 46,010,000 | | | | | $ | 19,000,000 | | | | | $ | 89,000 | | | | | $ | — | | |
Amortization Expense | | | | | (2,685,000) | | | | | | (1,108,000) | | | | | | (10,000) | | | | | | — | | |
Successor Balance at December 31, 2018 | | | | $ | 43,325,000 | | | | | $ | 17,892,000 | | | | | $ | 79,000 | | | | | $ | — | | |
Purchase of Intangible Asset | | | | | — | | | | | | — | | | | | | — | | | | | | 25,000 | | |
Decrease | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Amortization Expense | | | | | (4,601,000) | | | | | | (1,900,000) | | | | | | (18,000) | | | | | | (1,000) | | |
Successor Balance at December 31, 2019 | | | | $ | 38,724,000 | | | | | $ | 15,992,000 | | | | | $ | 61,000 | | | | | $ | 24,000 | | |
Year Ending December 31, | | | | | | | |
2020 | | | | $ | 6,520,000 | | |
2021 | | | | | 6,520,000 | | |
2022 | | | | | 6,520,000 | | |
2023 | | | | | 6,520,000 | | |
2024 | | | | | 6,520,000 | | |
Thereafter | | | | | 22,201,000 | | |
| | | | $ | 54,801,000 | | |