SVB Leerink starts AdaptHealth at OP; PT $21


SVB Leerink launched coverage of AdaptHealth (NASDAQ:AHCO) with an “outperform” rating and $21 price target. The stock closed at $16.10 on June 30.

Analyst Stephen Tanal writes that AdaptHealth is fast becoming the consolidator of choice in the home medical equipment industry, which is a large, growing and fragmented space awash with independent and often struggling suppliers.

“AdaptHealth’s proven platform for acquiring and integrating businesses supports our estimate for a 38% revenue and 30% adjusted EBITDA compound annual growth rate from 2019-to-2022,” he added.

AdaptHealth’s pending acquisitions of Solara Medical Supplies and ActivStyle are financially and strategically attractive, and not yet factored into consensus estimates, Mr. Tanal said, adding that the deals are expected to be significantly accretive. Solara will also make AdaptHealth the largest distributor of continuous glucose monitors, a rapidly growing market.

AdaptHealth expects to close its acquisitions of Solara and ActivStyle during the third quarter, “which we believe will catalyze material upward estimate revisions,” Mr. Tanal said.