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Why AdaptHealth Dived by Nearly 12% Today

By Eric Volkman – May 6, 2021 at 4:42PM

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That's what can happen when you post big earnings misses.

What happened

AdaptHealth (AHCO -1.90%), a company specializing in home medical equipment (HME), was not a healthy stock on Thursday. It cratered by 11.8% following the release of its first-quarter results.

So what

For the quarter, thanks in no small part to recent acquisitions, AdaptHealth booked just over $482 million in revenue, well up from the $191 million of Q1 2020. Meanwhile, the healthcare company's net loss narrowed to $4 million ($0.08 per share) from the year-ago shortfall of $34.6 million ($0.82 per share).

Stethoscope atop US currency and insurance claim form.

Image source: Getty Images.

While those improvements look encouraging on the surface, analysts were expecting better. On average, they were modeling over $486 million on the top line, and a net income well in the black of $0.23 per share.

In its earnings release, AdaptHealth pledged to explore ways of increasing sales and trimming expenses. "We are continuing to integrate and optimize technology across our organization to improve efficiencies, enhance sales, and increase customer satisfaction," President Josh Parnes said. He specifically mentioned the company's e-prescribe platform and other efficiency-boosting tech solutions.

Now what

It's admirable that AdaptHealth aims to make improvements where it counts, since vast swaths of the U.S. medical industry could use significant upgrades, not only the HME segment.

But those Q1 misses were wide, indicating a business that continued to struggle in a quarter when it probably should have thrived -- the coronavirus pandemic has locked many patients at home, after all, and the U.S. population as a whole is aging.

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

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