Why AdaptHealth Stock Plummeted This Week

AdaptHealth (NASDAQ: AHCO) stock got crushed this week after the company reported disappointing quarterly results. The company's share price ended the week's trading down 47% from where it stood at the end of the previous week's market close.

AdaptHealth reported its second-quarter results before the market opened on Aug. 4, with both sales and earnings for the period coming in below the market's expectations. With the big pullback this week, AdaptHealth stock is now down 38% over the last year.

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AdaptHealth's Q2 results were a big disappointment

AdaptHealth's Q2 results came in far below Wall Street's targets. While the average analyst estimate had targeted a per-share profit of $0.15 in the quarter, the business actually wound up posting a loss of $1.07 per share in the period.

Sales increased roughly 12.7% year over year to reach $740.3 million, but the performance came in roughly $106.5 million lower than the average analyst forecast. Registered users on the company's myApp platform increased roughly 56% year over year to reach 512,000 but user growth for the service hardly excited investors in light of weak second-quarter numbers and downward guidance revisions.

AdaptHealth also issued disappointing guidance

With its Q2 report, AdaptHealth issued new forward guidance that disappointed investors. The company now expects sales to come in between $2.85 billion and $2.89 billion. The company had previously guided for sales to be between $3.45 billion and $3.52 billion for the year. Meanwhile, the average analyst estimate had called for sales of roughly $3.49 billion. The big downward revision was largely due to the discontinuation of its Diabetes Health business and shifting its guidance to only include continuing operations, but the forecast was disappointing nonetheless.

Non-GAAP (adjusted) earnings before interest, taxes, depreciation, and amortization (EBITDA) is now expected to come in between $490 million and $520 million -- down from its previous guidance range between $680 million and $730 million. Including contributions from discontinued units, the company is now targeting free cash flow (FCF) between $80 million and $120 million -- down from its previous guidance for FCF to be between $175 million and $225 million. AdaptHealth's Q2 performance and new guidance have raised some big questions, and there's pressure on the company to show that it can right the ship.

Keith Noonan 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.