AdaptHealth Sells Diabetes Unit to Cardinal Health for $235 Million
AdaptHealth (AHCO) agreed to sell its Diabetes Health segment to Cardinal Health for $235 million in cash, narrowing its business to three segments after a year in which Adjusted EBITDA fell 10.5%.
AdaptHealth (AHCO), a provider of home medical equipment and services, agreed to sell its Diabetes Health segment to Cardinal Health for $235 million in cash in a transaction signed July 19, 2026. The deal was absent from all four of the company's prior quarterly releases, which had described Diabetes Health as one of four core reportable segments alongside Sleep Health, Respiratory Health and Wellness at Home.
The divestiture narrows AdaptHealth's portfolio to three segments and comes after a year of volatile results that left revenue growth and profitability trending in opposite directions across recent quarters. The sale is expected to improve its revenue growth profile and Adjusted EBITDA margins going forward, though the company deferred financial and guidance implications, including discontinued-operations treatment, to its second-quarter call on August 4, 2026.
The portfolio shift follows a sharp deceleration in underlying performance during the second half of 2025. Organic growth peaked at 5.1% in the third quarter, the highest since early 2024, before falling to 1.7% in the fourth quarter, while headline net revenue growth flipped from a 1.8% gain to a 1.2% decline year over year. Adjusted EBITDA followed the same arc, rising 3.5% to $170.1 million in the third quarter before dropping 18.7% to $163.1 million in the fourth, hit by a $14.5 million legal settlement and more than $10 million of costs tied to onboarding a new capitated contract.
Those fourth-quarter charges dragged down full-year 2025 results. Adjusted EBITDA declined 10.5% to $616.7 million from $688.7 million, and the company swung to a $70.8 million net loss for the year from a $90.4 million profit in 2024, a reversal that included a $128.0 million non-cash goodwill impairment recognized in the fourth quarter.
Results rebounded in the first quarter of 2026. Organic revenue growth accelerated to 9.1% from 1.7% in the prior period, and net revenue rose 5.4% to $819.8 million. Adjusted EBITDA still fell 5.3% to $121.2 million from $127.9 million, as the company absorbed $12.0 million in elevated, largely transitional labor costs tied to the largest de novo home medical equipment expansion in industry history. The net loss widened to $16.0 million from $7.2 million a year earlier, and free cash flow swung to negative $27.5 million from roughly breakeven, driven by the same capitated-contract transition costs.
Despite the first-quarter EBITDA pressure, AdaptHealth raised its full-year 2026 net revenue guidance by $10 million, to a range of $3.45 billion to $3.52 billion from the $3.44 billion to $3.51 billion range issued February 24, 2026. Adjusted EBITDA guidance of $680 million to $730 million and free cash flow guidance of $175 million to $225 million were left unchanged from both the February and May 5, 2026 updates.
The company also shifted its approach to debt management. After cutting debt by $50 million in the third quarter and another $25 million in the fourth, bringing net leverage to 2.68 times against a 2.50 times target and full-year 2025 reduction to $250 million, AdaptHealth pivoted in April 2026 to a $1.1 billion credit facility refinancing. The refinancing lowered the facility's lowest pricing tier to 1.125% over SOFR from 1.50% and extended maturity roughly two years to April 2031, a move aimed at lowering its cost of debt ahead of redeeming its 6.125% senior notes due 2028.
Engagement with AdaptHealth's myApp digital platform continued to grow but at a slower pace. User counts roughly doubled year over year in both the third quarter, to 271,000, and the fourth quarter, to 327,300, before growth slowed to a 26% sequential increase, reaching 412,000 by the first quarter of 2026.