AdaptHealth Secures S&P Upgrade After Significant Debt Reductions

AdaptHealth Corp. (NASDAQ: AHCO) has been upgraded by S&P Global Ratings, reflecting a stronger financial outlook following substantial reductions in its debt obligations. The credit rating agency raised AdaptHealth’s senior unsecured notes rating to ‘BB-’ from ‘B+’ and improved the recovery rating from ‘5’ to ‘4.’ This change is credited to the company’s prepayments of approximately $225 million on its senior secured term loan A, which is due in 2029.

The upgrade signifies enhanced recovery prospects for the company’s senior unsecured debt. According to S&P, these debt reductions increase the likelihood of recovery in the event of a hypothetical default scenario. CEO Suzanne Foster emphasized that this upgrade validates AdaptHealth’s ongoing initiatives to bolster its balance sheet and refine its strategic focus.

Since the close of the third quarter of 2024, AdaptHealth has managed to decrease its term loan A balance by $275 million, funded through robust free cash flow and the sale of non-core assets. Foster stated, “Debt reduction remains among our highest capital allocation priorities, as we believe a strong balance sheet is essential to unlocking and sustaining value for shareholders.”

Company Overview and Market Position

AdaptHealth is a national provider of healthcare-at-home solutions, serving around 4.2 million patients annually across all 50 states. The company operates through four primary segments: Sleep Health, Respiratory Health, Diabetes Health, and Wellness at Home. It supplies home medical equipment, remote monitoring technologies, chronic therapy support, and post-acute services.

The company’s extensive network includes approximately 630 locations in 47 states, collaborating with a variety of referral sources such as hospitals, pulmonologists, sleep labs, skilled nursing facilities, and clinics. AdaptHealth benefits from reimbursement programs through Medicare, Medicaid, and commercial insurers, further solidifying its position in the market.

The recent upgrade by S&P is indicative of a favorable financial trajectory as AdaptHealth continues to streamline its portfolio, reduce leverage, and concentrate on patient-centered home-care offerings. As the company moves forward, it aims to maintain this positive momentum while ensuring that its financial health supports long-term growth and shareholder value.