AdaptHealth CEO Stephen Griggs to Step Down; Company Searching for Successor
By Mark Terry
May 9, 2023
Along with the company’s first-quarter financial report, Plymouth Meeting, Pa.-based AdaptHealth Corp. announced that Stephen Griggs will step down as CEO effective June 30, 2023. In addition to that news, the company reported that although the first quarter didn’t meet expectations, executives believe they have implemented strategies to meet their original full-year financial goals.
The company provides patient-centered, healthcare-at-home solutions that include home medical equipment, medical supplies and related services. The company’s services and product lines include respiratory therapy, sleep therapy, diabetes supplies, breast pumps/storkpump, incontinence/ActivStyle, orthotics and bracing, AdaptRehab, pharmacy and additional products.
Speaking during the first-quarter conference call, Board Chairman Richard Barasch announced Griggs will be stepping down, saying, he “is leaving the company in sound condition and strong financial health.” The company was working with an executive search firm to find his successor and noted, “We are quite pleased with the candidates we’ve seen so far.”
If they haven’t found a replacement by June 30, Barasch will act as interim CEO.
Griggs joined AdaptHealth in February 2021 as co-CEO after the company bought AeroCare Holdings. Griggs founded AeroCare in 2000 and was president and CEO until the acquisition.
The company reported net revenue of $744.6 million for the first quarter, an increase of 5.4%. However, the big note was that its Sleep categories bolstered revenues with 17.6% growth.
In the conference call, Griggs said that the company has seen a “rebound in our Respiratory business as we exited the pandemic” although that was offset by a “decline in our Diabetes business, largely driven by the pump and supplies categories.”
Another obstacle the company faced was a major recall starting in June 2021 of Philips Respironics Sleep and Respiratory Care devices, such as CPAP, BiPAP and Mechanical Ventilator devices. Philips noted that as of April 14, 2023, it had produced over 95% of new devices and repair kits needed to replace affected devices, which includes about 2.8 million new devices and repair kits.
“Our respiratory business is now in a steady state where we expect to start steady quarterly growth,” Griggs said.
He also pointed out that the first quarter also “reflected the evolution of our diabetes and CGM (continuous glucose monitors) product lines…. We expect continued growth through our strategic approaches.”
Those strategies include a cost management program targeting restructuring its supply chain infrastructure, rationalizing its real estate footprint, and restructuring its operating model to pre-pandemic levels.
Joshua Parnes, president of AdaptHealth, provided an update on the company’s myAPP, which allows the user to order medical equipment, check on the status of services and other interactions with the AdaptHealth team. Parnes said myAPP is “focused initially on the diabetes product line with 50,000 downloads,” noting that the company and Medicare had demonstrated evidence that “proper usage of data from CGM leads to better patient outcomes.” The next place the company will focus myAPP usage was on Sleep and Respiratory.
Jason Clemens, AdaptHealth’s CFO, indicated that cash flow from operations was $140.2 million in the first quarter, a dramatic increase from $66.5 million during the same period in 2022. Adjusted EBITDA was $134.0 million, down 2.7% from $137.6 million in the first quarter of 2022.
“Even though the first quarter did not meet our expectations, we’re not changing our full-year guidance,” Clemens said. “We believe we have a strategy for meeting those expectations in mid-year. We believe will maintain the revenue expectations we set out.”
The company’s earnings improved this year, demonstrating an earnings growth of 12.75%. Earnings growth in 2022 was -58.22%. Over the next five years, expected earnings growth is 12.0%. Last year revenue growth was 21.02%.
Guidance for 2023, originally announced on January 10, included net revenue of $3.21 billion to $3.29 billion, adjusted EBITDA of $690 million to $750 million, and total capital expenditures projected to be 9-11% of net revenue.
Griggs concluded, saying, “A lot has been accomplished over the years, but I’m excited for how we will meet the needs of our patients and shareholders moving forward.”
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Mark Terry is a freelance writer, editor, novelist and ghostwriter. He holds a degree in microbiology & public health and spent 18 years in infectious disease research and clinical and research genetics prior to his transition to a writing career. His areas of expertise include biotechnology, pharma, clinical diagnostics, and medical practice management. He has written literally thousands of articles, as well as market research reports, white papers, more than 20 books, and many other written materials. He currently lives in Michigan with his family.
