AdaptHealth (AHCO), mcap=$2.5bn, price $18.51 vs $16.60

– Semi-busted rollup of home medical equipment products with questionable ROIC from the acquisitions.
– Author argues that the business acquired in 2020 is actually good and growing nicely.
– The shortfall in growth stems from businesses owned prior to the 2020 M&A spree as well as from fixable operational issues of fast expansion.
– Potential for further M&A with 15% ROIC.

– Trades at EV of 0.9x capital deployed in M&A.
– The market is assuming the company is worth less than what they paid for existing deals.
– By 2025 Expected to generate $300m in FCFE organically (vs $2.2bn market cap)

Exp. gain: Not specified.

Full AHCO write-up (free guest account required):

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