The following discussion should be read in conjunction with AdaptHealth Corp.'s
("AdaptHealth" or the "Company") consolidated interim financial statements and
the accompanying notes included in this report. All amounts presented are in
accordance with U.S. generally accepted accounting principles ("U.S. GAAP"),
except as noted. In addition to historical information, this discussion contains
forward-looking statements that involve risks, uncertainties and assumptions
that could cause actual results to differ materially from management's
expectations. Factors that could cause such differences include, but are not
limited to, those discussed in "Risk Factors" in Part II, Item 1A of this report
on Form 10-Q.

                           AdaptHealth Corp. Overview

AdaptHealth is a national leader in providing patient-centered,
healthcare-at-home solutions including home medical equipment, medical supplies,
and related services. The Company focuses primarily on providing (i) sleep
therapy equipment, supplies and related services (including CPAP and bi PAP
services) to individuals suffering from obstructive sleep apnea ("OSA"), (ii)
medical devices and supplies to patients for the treatment of diabetes
(including continuous glucose monitors and insulin pumps), (iii) home medical
equipment ("HME") to patients discharged from acute care and other facilities,
(iv) oxygen and related chronic therapy services in the home, and (v) other HME
medical devices and supplies on behalf of chronically ill patients with wound
care, urological, incontinence, ostomy and nutritional supply needs. The Company
services beneficiaries of Medicare, Medicaid and commercial insurance payors. As
of June 30, 2021, AdaptHealth serviced approximately 3.3 million patients
annually in all 50 states through its network of 678 locations in 47 states. The
Company's principal executive offices are located at 220 West Germantown Pike,
Suite 250, Plymouth Meeting, Pennsylvania 19462.

Impact of the COVID-19 pandemic

The COVID-19 pandemic impacted AdaptHealth's business, as well as its patients,
communities, and employees. AdaptHealth's priorities during the COVID-19
pandemic remain protecting the health and safety of its employees (including
patient-facing employees providing respiratory and other services), maximizing
the availability of its services and products to support patient health needs,
and the operational and financial stability of its business.

In response to the COVID-19 pandemic and the National Emergency Declaration,
dated March 13, 2020, in the first quarter of 2020, AdaptHealth activated
certain business interruption protocols, including acquisition and distribution
of personal protective equipment (PPE) to its patient-facing employees,
accelerated capital expenditures of certain products and relocation of
significant portions of its workforce to "work-from-home" status. Federal,
state, and local authorities have taken several actions designed to assist
healthcare providers in providing care to COVID-19 and other patients and to
mitigate the adverse economic impact of the COVID-19 pandemic. Legislative
actions taken by the federal government include the Coronavirus Aid, Relief, and
Economic Security Act (the "CARES Act"), which was signed into law on March 27,
2020. Through the CARES Act, the federal government has authorized payments to
be distributed to healthcare providers through the Public Health and Social
Services Emergency Fund ("Provider Relief Fund" or "PRF"). Additionally, the
CARES Act revised the Medicare accelerated and advance payment program in an
attempt to disburse payments to healthcare providers more quickly to mitigate
the financial impact on healthcare providers. AdaptHealth increased its cash
liquidity by, among other things, seeking recoupable advance payments of $45.8
million made available by CMS under the CARES Act legislation, which was
received in April 2020. In addition, in connection with an acquisition completed
in July 2020, AdaptHealth assumed a liability of $3.7 million relating to funds
received by the acquired company prior to the date of acquisition for CMS
recoupable advance payments. The recoupment of the advance payments by CMS has
begun in April 2021 and is being applied to services provided and revenue
recognized during the period in which the recoupment occurs, and will impact the
Company's cash receipts for services provided until such time all amounts have
been recouped. During the three months ended June 30, 2021, CMS has recouped a
total of $15.9 million. At June 30, 2021, the Company has deferred a total of
$33.6 million related to CMS recoupable advance payments, which is included in
other current liabilities in the consolidated balance sheet as of June 30, 2021.
In addition, in April 2020, AdaptHealth received distributions of the CARES Act
PRF of $17.2 million which are targeted to offset lost revenue and expenditures
incurred in connection with the COVID-19 pandemic. The PRF payments are subject
to certain restrictions and are subject to recoupment if not used for designated
purposes. As a

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condition to receiving distributions, providers must agree to certain terms and
conditions, including, among other things, that the funds are being used for
lost revenues and unreimbursed COVID-19 related expenses as defined by the U.S.
Department of Health and Human Services ("HHS"). All recipients of PRF payments
are required to comply with the reporting requirements described in the terms
and conditions and as determined by HHS. AdaptHealth recognizes grant payments
as income when there is reasonable assurance that it has complied with the
conditions associated with the grant. During the year ended December 31, 2020,
AdaptHealth recognized grant income of $14.3 million related to the PRF payments
received. As of June 30, 2021, AdaptHealth has deferred $2.9 million of the PRF
payments received in April 2020. In addition, in connection with certain
acquisitions completed prior to June 30, 2021, AdaptHealth assumed liabilities
of $7.7 million relating to CARES Act provider relief fund payments received by
the acquired companies prior to the dates of acquisition. At June 30, 2021,
AdaptHealth has deferred a total of $10.6 million related to CARES Act provider
relief funds, which is included in other current liabilities in the consolidated
balance sheet as of June 30, 2021. HHS has indicated that the CARES Act PRF are
subject to ongoing reporting and changes to the terms and conditions, and there
have been several updates to such reporting requirements and terms and
conditions since they were issued by HHS. Such updates have related to changes
to the guidance regarding utilization of the funds granted from the PRF and
updates to the reporting requirements of such funds, among other updates. As a
result of any future updated guidance from HHS, AdaptHealth could be required to
reverse the recognition of the grant income recorded and return a portion of the
funds recognized, which could be material to AdaptHealth. AdaptHealth is
continuing to monitor the reporting requirements issued by HHS. To the extent
that reporting requirements and terms and conditions are modified in the future,
it may affect AdaptHealth's ability to comply and may require the return of
funds. Furthermore, HHS has indicated that it will be closely monitoring and,
along with the Office of Inspector General (United States) (OIG), auditing
providers to ensure that recipients comply with the terms and conditions of
relief programs and to prevent fraud and abuse. All providers will be subject to
civil and criminal penalties for any deliberate omissions, misrepresentations or
falsifications of any information given to HHS. Also, as permitted under the
CARES Act, AdaptHealth has elected to defer certain portions of employer-paid
FICA taxes otherwise payable from March 27, 2020 to January 1, 2021, which will
be paid in two equal installments on December 31, 2021 and December 31, 2022.
AdaptHealth has deferred a total of $8.6 million pursuant to this provision, of
which $4.3 million is included in other current liabilities and $4.3 million is
included in other long-term liabilities in the consolidated balance sheet as of
June 30, 2021.

While the impact of the COVID-19 pandemic, the National Emergency Declaration
and the various state and local government imposed stay-at-home restrictions did
not have a material impact on AdaptHealth's consolidated operating results for
the three months ended March 31, 2020, AdaptHealth began to experience declines
in net revenues in certain services associated with elective medical procedures
(such as commencement of new CPAP services and medical equipment and orthopedic
supply related to facility discharges) in the three months ended June 30, 2020,
and such declines may continue during the duration of the COVID-19 pandemic. In
response to these declines, as well as certain over staffing related to recent
acquisitions, AdaptHealth conducted a workforce assessment and implemented a
reduction in force in April 2020 resulting in the elimination of approximately
6% of its workforce at that time. In connection with the workforce reductions,
AdaptHealth incurred a one-time charge for severance and related expenses of
approximately $1.6 million during the second quarter of 2020.

Offsetting these declines in net revenue, AdaptHealth has experienced an
increase in net revenue related to increased demand for certain respiratory
products (such as oxygen), increased sales in its resupply businesses (primarily
as a result of the increased ability to contact patients at home as a result of
state and local government imposed stay-at-home orders) and the one-time sale of
certain respiratory equipment (primarily ventilators, bi-level PAP devices and
oxygen concentrators) to hospitals and local health agencies. Additionally,
suspension of Medicare sequestration through December 31, 2021 (resulting in an
approximate 2% increase in Medicare payments to all providers), and regulatory
guidance from CMS expanding telemedicine and reducing documentation requirements
during the emergency period, have resulted in increased net revenues for certain
products and services.

The full extent of the impact of the COVID-19 pandemic on AdaptHealth's
business, results of operations, and financial condition is highly uncertain and
will depend on future developments and numerous evolving factors that it may not
be able to accurately predict, and could be material to AdaptHealth's
consolidated financial statements in future reporting periods. For additional
information on risk factors that could impact AdaptHealth's results, please
refer to "Risk Factors" in Part II, Item 1A of this report on Form 10-Q.

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Key components of operating results

Net Revenue. Net revenue is recorded for services that AdaptHealth provides to
patients for home healthcare equipment, medical supplies to the home and related
services. AdaptHealth's primary service lines are (i) sleep therapy equipment,
supplies and related services (including CPAP and bi PAP services) to
individuals suffering from OSA, (ii) medical devices and supplies to patients
for the treatment of diabetes (including continuous glucose monitors and insulin
pumps), (iii) home medical equipment to patients discharged from acute care and
other facilities, (iv) oxygen and related chronic therapy services in the home,
and (v) other HME medical devices and supplies on behalf of chronically ill
patients with wound care, urological, incontinence, ostomy and nutritional
supply needs. Revenues are recorded either (x) at a point in time for the sale
of supplies and disposables, or (y) over the service period for equipment rental
(including, but not limited to, CPAP machines, hospital beds, wheelchairs and
other equipment), at amounts estimated to be received from patients or under
reimbursement arrangements with Medicare, Medicaid and other third-party payors,
including private insurers.

Cost of Net Revenue. Cost of net revenue primarily includes the cost of
non-capitalized medical equipment and supplies, distribution expenses, labor
costs, facilities rental costs, third-party revenue cycle management costs and
depreciation for capitalized patient equipment. Distribution expenses represent
the cost incurred to coordinate and deliver products and services to the
patients. Included in distribution expenses are leasing, maintenance, licensing
and fuel costs for the vehicle fleet; salaries, benefits and other costs related
to drivers and dispatch personnel; and amounts paid to couriers.

General and Administrative Expenses. General and administrative expenses consist
of corporate support costs including information technology, human resources,
finance, contracting, legal, compliance leadership, equity-based compensation,
transaction expenses and other administrative costs.

Depreciation and amortization, excluding depreciation of patient equipment. Depreciation charges include depreciation charges for fixed assets other than patient equipment (which are included in the cost of net revenues). Depreciation expense includes the amortization of identifiable intangible assets.

Factors Affecting AdaptHealth’s Operating Results

AdaptHealth results of operations and financial performance are influenced by certain unique events during the periods described in this document, including the following:

Acquisitions

AdaptHealth accounts for its acquisitions in accordance with Financial
Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic
805, Business Combinations, and the operations of the acquired entities are
included in the historical results of AdaptHealth for the periods following the
closing of the acquisition. The most significant of these acquisitions impacting
the comparability of AdaptHealth's operating results in the three and six months
ended June 30, 2021 compared to the three and six months ended June 30, 2020
were as follows:

? Healthline Medical Equipment, LLC (“Healthline”) acquired in February 2020,

? Advanced Home Care, Inc. (“Advanced”) acquired in March 2020,

? Solara Medical Supplies, LLC (“Solara”) acquired in july 2020,

? ActivStyle, Inc. (“ActivStyle”) acquired in july 2020,

? Family Medical Supply, Inc. (“Family”) acquired in August 2020,

? Pinnacle Medical Solutions, Inc. (“Pinnacle”) acquired in October 2020,

? Diabetes Management and Supplies, LLC (“DMS”) acquired in december 2020,

? AeroCare Holdings, Inc. (“AeroCare”) acquired in February 2021,

? Verio Health, Inc. (“Verio”) acquired in February 2021,

? Allina Health System (“Allina”) acquired in February 2021,

? Supplier Plus, Inc. (“Provider Plus”) acquired in March 2021,

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? Spiro Health Services, LLC (“Spiro”) acquired in April 2021, and

? Healthy Living Medical Supply, LLC (“Healthy lifestyle”) acquired in June 2021.




Refer to Note 3, Acquisitions, included in our consolidated interim financial
statements for the three and six months ended June 30, 2021 included in this
report for additional information regarding AdaptHealth's acquisitions.



Debt and recapitalization

In January 2021, AdaptHealth refinanced its debt borrowings and entered into a
new credit agreement with its existing bank group, which was subsequently
amended in April 2021 (the 2021 Credit Agreement). The 2021 Credit Agreement
consists of a $800 million term loan (the 2021 Term Loan) and $450 million in
commitments for revolving credit loans with a $55 million letter of credit
sublimit (the 2021 Revolver), both with maturities in January 2026. The
borrowings under the 2021 Term Loan requires quarterly principal repayments of
$5.0 million beginning June 30, 2021 through March 31, 2023, increasing to $10.0
million beginning June 30, 2023 through December 31, 2025, and the unpaid
principal balance is due at maturity in January 2026. Borrowings under the 2021
Revolver may be used for working capital and other general corporate purposes,
including for capital expenditures and acquisitions permitted under the 2021
Credit Agreement. Amounts borrowed under the 2021 Credit Agreement bear interest
quarterly at variable rates based upon the sum of (a) the Adjusted LIBOR Rate
(subject to a floor) equal to the LIBOR (as defined) for the applicable interest
period multiplied by the statutory reserve rate, plus (b) an applicable margin
(as defined) ranging from 1.50% to 3.25% per annum based on the Consolidated
Senior Secured Leverage Ratio (as defined). The 2021 Revolver carries a
commitment fee during the term of the 2021 Credit Agreement ranging from 0.25%
to 0.50% per annum of the average daily undrawn portion of the 2021 Revolver
based on the Consolidated Senior Secured Leverage Ratio.

In January 2021, AdaptHealth issued $500.0 million aggregate principal amount of
4.625% senior unsecured notes due 2029 (the 4.625% Senior Notes). The 4.625%
Senior Notes will mature on August 1, 2029. Interest on the 4.625% Senior Notes
is payable on February 1st and August 1st of each year, beginning on August 1,
2021.

In July 2020, AdaptHealth issued $350.0 million aggregate principal amount of
6.125% senior unsecured notes due 2028 (the "6.125% Senior Notes"). The 6.125%
Senior Notes will mature on August 1, 2028. Interest on the 6.125% Senior Notes
is payable on February 1st and August 1st of each year, beginning on February 1,
2021.

In July 2020, AdaptHealth refinanced its then current debt borrowings and
entered into a new credit agreement with a new bank group (the "2020 Credit
Agreement"). The 2020 Credit Agreement consisted of a $250 million term loan
(the "2020 Term Loan") and $200 million in commitments for revolving credit
loans, both with maturities in July 2025. The amount borrowed under the 2020
Term Loan bore interest quarterly at variable rates based upon the sum of (a)
the Adjusted LIBOR Rate (subject to a floor) equal to the LIBOR (as defined in
the 2020 Credit Agreement) for the applicable interest period, plus (b) an
applicable margin ranging from 2.50% to 3.75% per annum based on the
Consolidated Total Leverage Ratio (as defined in the 2020 Credit Agreement).
Outstanding amounts borrowed under the 2020 Credit Agreement were repaid in full
in connection with the January 2021 refinancing transaction discussed above.



In March 2019, AdaptHealth restructured its then existing debt borrowings which
consisted of $425 million in credit facilities, including a $300 million initial
term loan, $50 million delayed draw term loan, and $75 million revolving credit
facility. In November 2019, the Company repaid $50 million under the initial
term loan. Outstanding amounts borrowed under such credit facility were repaid
in full in connection with the July 2020 refinancing transaction discussed
above.

In March 2019, AdaptHealth signed a Note and Unit Purchase Agreement with an
investor. Pursuant to the agreement, AdaptHealth issued a promissory note with a
principal amount of $100 million (the Promissory Note). In connection with the
transactions completed as part of the Business Combination, the Promissory Note
was replaced with a new amended and restated promissory note with a principal
amount of $100 million, and the investor converted certain of its members'
interests to a $43.5 million promissory note. The new $100 million promissory
note, together with the $43.5 million promissory note, are collectively referred
to herein as the New Promissory Note. In June 2021,

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AdaptHealth agreed with the holders of the New Promissory Note to repay $71.8
million of the outstanding principal amount under the New Promissory Note, and
wrote off $1.4 million of unamortized deferred financing costs relating to such
principal amount, which is included in loss on extinguishment of debt in the
accompanying consolidated statements of operations during the three and six
months ended June 30, 2021. In addition, in connection with the prepayment of
such principal amount, AdaptHealth paid a debt prepayment penalty of $8.5
million, reflecting the previously disclosed 10% prepayment penalty plus an
incremental amount negotiated as part of the June 2021 agreement, which is
included in loss on extinguishment of debt in the accompanying consolidated
statements of operations during the three and six months ended June 30, 2021.
The outstanding principal balance under the New Promissory Note currently bears
interest at 12% and is required to be paid in cash.

Seasonality

AdaptHealth's business experiences some seasonality. Its patients are generally
responsible for a greater percentage of the cost of their treatment or therapy
during the early months of the year due to co-insurance, co-payments and
deductibles, and therefore may defer treatment and services of certain therapies
until meeting their annual deductibles. In addition, changes to employer
insurance coverage often go into effect at the beginning of each calendar year
which may impact eligibility requirements and delay or defer treatment. Also,
net revenue generated by the Company's diabetes product line is typically higher
in the fourth quarter compared to the earlier part of the year due to the timing
of when patients meet their annual deductibles and their associated reordering
patterns. These factors may lead to lower net revenue and cash flow in the early
part of the year versus the latter half of the year. Additionally, the increased
incidence of respiratory infections during the winter season may result in
initiation of additional respiratory services such as oxygen therapy for certain
patient populations. AdaptHealth's quarterly operating results may fluctuate
significantly in the future depending on these and other factors.

Key business indicators

AdaptHealth focuses on net revenue, EBITDA, Adjusted EBITDA and Adjusted EBITDA
less Patient Equipment Capex as it reviews its performance. Total net revenue is
comprised of net sales revenue and net revenue from fixed monthly equipment
reimbursements less implicit price concessions. Net sales revenue consists of
revenue recognized at a point in time for the sale of supplies and disposables.
Net revenue from fixed monthly equipment reimbursements consists of revenue
recognized over the service period for equipment (including, but not limited to,
CPAP machines, hospital beds, wheelchairs and other equipment).



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                                                         Three Months Ended
                                              June 30, 2021             June 30, 2020
Net Revenue                                            Revenue                   Revenue
(in thousands)                            Dollars     Percentage     Dollars    Percentage

                                                             (Unaudited)
Net sales revenue - Point in time
Sleep                                    $ 163,331          26.5 %  $  84,421         36.4 %
Diabetes                                   123,314          20.0 %      6,372          2.7 %
Supplies to the home                        42,675           6.9 %     27,868         12.0 %
Respiratory                                 13,154           2.1 %     18,114          7.8 %
HME                                         30,360           4.9 %     12,727          5.5 %
Other                                       27,763           4.5 %     11,463          4.9 %
Total Net sales revenue                  $ 400,597          64.9 %  $ 160,965         69.3 %

Net revenue from fixed monthly
equipment reimbursements
Sleep                                    $  66,335          10.8 %  $  22,644          9.8 %
Diabetes                                     3,216           0.5 %          -            - %
Respiratory                                111,528          18.1 %     30,856         13.3 %
HME                                         24,431           4.0 %     13,262          5.7 %
Other                                       10,910           1.7 %      4,389          1.9 %
Total Net revenue from fixed monthly
equipment reimbursements                 $ 216,420          35.1 %  $  71,151         30.7 %

Total net revenue
Sleep                                    $ 229,666          37.3 %  $ 107,065         46.2 %
Diabetes                                   126,530          20.5 %      6,372          2.7 %
Supplies to the home                        42,675           6.9 %     27,868         12.0 %
Respiratory                                124,682          20.2 %     48,970         21.1 %
HME                                         54,791           8.9 %     25,989         11.2 %
Other                                       38,673           6.2       15,852          6.8 %
Total net revenue                        $ 617,017         100.0 %  $ 232,116        100.0 %




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                                                           Six Months Ended
                                               June 30, 2021              June 30, 2020
Net Revenue                                              Revenue                   Revenue
(in thousands)                             Dollars      Percentage     Dollars    Percentage

                                                              (Unaudited)
Net sales revenue - Point in time
Sleep                                    $   292,013          26.6 %  $ 153,315         36.2 %
Diabetes                                     218,331          19.9 %     11,679          2.8 %
Supplies to the home                          84,038           7.6 %     55,900         13.2 %
Respiratory                                   18,775           1.7 %     20,882          4.9 %
HME                                           54,516           5.0 %     24,306          5.7 %
Other                                         50,189           4.6 %     23,856          5.6 %
Total Net sales revenue                  $   717,862          65.4 %  $ 289,938         68.4 %

Net revenue from fixed monthly
equipment reimbursements
Sleep                                    $   114,444          10.4 %  $  45,313         10.7 %
Diabetes                                       6,069           0.6 %          -            - %
Respiratory                                  194,982          17.7 %     55,863         13.2 %
HME                                           44,811           4.1 %     25,439          6.0 %
Other                                         20,968           1.8 %      7,002          1.7 %
Total Net revenue from fixed monthly
equipment reimbursements                 $   381,274          34.6 %  $ 133,617         31.6 %

Total net revenue
Sleep                                    $   406,457          37.0 %  $ 198,628         46.9 %
Diabetes                                     224,400          20.5 %     11,679          2.8 %
Supplies to the home                          84,038           7.6 %     55,900         13.2 %
Respiratory                                  213,757          19.4 %     76,745         18.1 %
HME                                           99,327           9.1 %     49,745         11.7 %
Other                                         71,157           6.4       30,858          7.3 %
Total net revenue                        $ 1,099,136         100.0 %  $ 423,555        100.0 %






Results of Operations

Comparison of the three completed months June 30, 2021 and three months ended June 30, 2020.

The following table summarizes AdaptHealth consolidated operating results for the three months ended June 30, 2021 and 2020:

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                                           Three Months Ended June 30,
                                          2021                       2020
                                               Revenue                    Revenue        Increase/(Decrease)
(in thousands, except
percentages)                     Dollars      Percentage     Dollars     Percentage     Dollars      Percentage

                                                                  (unaudited)
Net revenue                     $  617,017         100.0 %  $ 232,116         100.0 %  $  384,901         165.8 %
Costs and expenses:
Cost of net revenue                490,720          79.5 %    198,418          85.5 %     292,302         147.3 %
General and administrative
expenses                            42,946           7.0 %     17,092           7.4 %      25,854         151.3 %
Depreciation and
amortization, excluding
patient equipment
depreciation                        17,944           2.9 %      1,036           0.4 %      16,908            NM %
Total costs and expenses           551,610          89.4 %    216,546          93.3 %     335,064         154.7 %
Operating income                    65,407          10.6 %     15,570           6.7 %      49,837         320.1 %
Interest expense, net               23,147           3.8 %      7,482           3.2 %      15,665         209.4 %
Loss on extinguishment of
debt                                 7,736           1.3 %          -             - %       7,736            NM %
Change in fair value of
contingent consideration
common shares liability           (22,079)         (3.6) %       (42)             - %    (22,037)            NM %
Change in fair value of
warrant liability                 (37,454)         (6.1) %      (654)         (0.3) %    (36,800)            NM %
Other income, net                    1,669           0.3 %      (900)         (0.4) %       2,569            NM %
Income (loss) before income
taxes                               92,388          14.9 %      9,684           4.2 %      82,704         854.0 %
Income tax expense                  12,330           2.0 %      1,826           0.8 %      10,504            NM %
Net income (loss)                   80,058          12.9 %      7,858           3.4 %      72,200         918.8 %
Income attributable to
noncontrolling interests               951           0.2 %      3,388           1.5 %     (2,437)        (71.9) %
Net income attributable to
AdaptHealth Corp.               $   79,107          12.7 %  $   4,470           1.9 %  $   74,637       1,669.7 %




Net Revenue. Net revenue for the three months ended June 30, 2021 was $617.0
million compared to $232.1 million for the three months ended June 30, 2020, an
increase of $384.9 million or 165.8%. Net revenue for the 2021 and 2020 periods
included $8.6 million and $28.4 million, respectively, from referral partners
and healthcare facilities in support of their urgent needs as the coronavirus
pandemic has led to an increased demand for respiratory equipment including
ventilators and oxygen concentrators. Excluding this revenue, net revenue was
$608.4 million and $203.7 million for the three months ended June 30, 2021 and
2020, respectively, an increase of $404.7 million. The increase in net revenue
was driven primarily by acquisitions completed after April 1, 2020, which
increased net revenue by $405.3 million. This increase in net revenue was
partially offset by planned declines in revenue from the Company's Patient Care
Solutions (PCS) supplies business (which was acquired in January 2020) in
connection with the Company's turnaround efforts of that business executed
subsequent to the acquisition. As previously disclosed by the Company, these
turnaround efforts at PCS reduced net revenues for the three months ended June
30, 2021 as a result of the Company's exit from poor performing payor contracts
and products, and resulted in improved profitability for PCS. Net revenue
generated by PCS for the three months ended June 30, 2021 and 2020 was $27.2
million and $33.0 million, respectively.

For the three months ended June 30, 2021, net sales revenue (recognized at a
point in time) comprised 65% of total net revenue, compared to 69% of total net
revenue for the three months ended June 30, 2020. For the three months ended
June 30, 2021, net revenue from fixed monthly equipment reimbursements comprised
35% of total net revenue, compared to 31% of total net revenue for the three
months ended June 30, 2020.

Cost of Net Revenue.

The following table summarizes cost of net revenue for the three months ended
June 30, 2021 and 2020:

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                                          Three Months Ended June 30,
                                        2021                       2020
                                             Revenue                    Revenue        Increase/(Decrease)
(in thousands, except
percentages)                    Dollars     Percentage     Dollars     Percentage     Dollars     Percentage

                                                                (unaudited)
Costs of net revenue:
Cost of products and
supplies                       $ 235,550          38.2 %  $  94,103          40.5 %  $ 141,447         150.3 %
Salaries, labor and
benefits                         147,606          23.9 %     58,465          25.2 %     89,141         152.5 %
Patient equipment
depreciation                      45,864           7.4 %     17,338           7.5 %     28,526         164.5 %
Rent and occupancy                11,938           1.9 %      5,119           2.2 %      6,819         133.2 %
Other operating expenses          48,072           7.8 %     20,069           8.7 %     28,003         139.5 %
Equity-based compensation          1,696           0.3 %      1,652           0.7 %         44           2.7 %
Severance                            (6)             - %      1,672           0.7 %    (1,678)       (100.4) %
Total cost of net revenue      $ 490,720          79.5 %  $ 198,418          85.5 %  $ 292,302         147.3 %




Cost of net revenue for the three months ended June 30, 2021 was $490.7 million
compared to $198.4 million for the three months ended June 30, 2020, an increase
of $292.3 million or 147.3%, which is primarily related to acquisition growth.
Costs of products and supplies increased by $141.4 million primarily as a result
of acquisition growth, primarily from the acquisition of AeroCare, and increased
net sales revenue. Salaries, labor and benefits increased by $89.1 million,
primarily related to acquisition growth and increased headcount, primarily from
the acquisition of AeroCare. The increase in rent and occupancy and other
operating expenses is related to acquisition growth.

Cost of net revenue was 79.5% of net revenue for the three months ended June 30,
2021 compared to 85.5% for the three months ended June 30, 2020. The cost of
products and supplies was 38.2% of net revenue in the 2021 period compared to
40.5% in the 2020 period, while salaries, labor and benefits was 23.9% of net
revenue in the 2021 period compared to 25.2% in the 2020 period, and patient
equipment depreciation was 7.4% of net revenue in the 2021 period compared to
7.5% in the 2020 period. These percentages are consistent as a result of the
consistent mix of net revenue between sales and fixed monthly equipment
reimbursements between the periods.

General and Administrative Expenses. General and administrative expenses for the
three months ended June 30, 2021 were $42.9 million compared to $17.1 million
for the three months ended June 30, 2020, an increase of $25.8 million or
151.3%. This increase is primarily due to (1) increased transaction costs
related to acquisition growth, (2) higher professional fees including legal,
accounting and consulting, including costs for Sarbanes Oxley compliance, (3)
higher labor costs associated with increased headcount, (4) higher equity-based
compensation expense as a result of the accelerated vesting of certain awards,
including $2.4 million in connection with the acceleration of vesting of certain
stock options and restricted stock in connection with the separation of the
Company's former Co-CEO, and (5) higher information technology related expenses.
General and administrative expenses as a percentage of net revenue was 7.0% in
the 2021 period, compared to 7.4% in the 2020 period. General and administrative
expenses in the 2021 period included $8.0 million in transaction costs, $5.8
million in equity-based compensation expense, and $0.6 million in severance
expense. General and administrative expenses in the 2020 period included $3.3
million in transaction costs, $1.6 million in equity-based compensation expense,
and $0.2 million in severance expense. Excluding the impact of these charges,
general and administrative expenses as a percentage of net revenue was 4.6% and
5.1% in the 2021 period and the 2020 period, respectively.

Depreciation and amortization, excluding patient equipment depreciation.
Depreciation and amortization, excluding patient equipment depreciation, for the
three months ended June 30, 2021 was $17.9 million compared to $1.0 million for
the three months ended June 30, 2020, an increase of $16.9 million. The increase
was primarily related to amortization expense of $13.9 million related to
identifiable intangible assets recognized during the 2021 period. There was no
amortization expense of identifiable intangible assets recognized during the
2020 period.

Interest Expense. Interest expense for the three months ended June 30, 2021 was
$23.1 million compared to $7.5 million for the three months ended June 30, 2020.
Interest expense related to long-term debt was higher in the 2021

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period compared to the period 2020 due to the higher outstanding long-term borrowings during this period. These borrowings were widely used to finance acquisitions.

Loss on Extinguishment of Debt. Loss on extinguishment of debt for the three
months ended June 30, 2021 was a result of the write-off of unamortized deferred
financing costs related to AdaptHealth refinancing its credit facility in
January 2021 and amending such agreement in April 2021, and also includes the
write-off of unamortized deferred financing costs and debt prepayment penalties
in connection with the early repayment of a portion of AdaptHealth's note
payable. In addition, during the second quarter of 2021, the Company corrected
an error that was identified relating to the accounting for the write off of
unamortized deferred financing costs recorded during the three months ended
March 31, 2021. As a result of this correction, the Company reversed $2.1
million of the write off that was recorded in the three months ended March 31,
2021, which was reflected as a reduction to the loss on extinguishment of debt
recognized during the three months ended June 30, 2021. The impact of such
correction was not considered material to the Company's unaudited consolidated
financial statements for the three months ended March 31, 2021 and the three
months ended June 30, 2021. There were no such transactions in the three months
ended June 30, 2020.

Change in Fair Value of Contingent Consideration Common Shares Liability. In
connection with the Business Combination, certain former owners of AdaptHealth
Holdings are entitled to contingent consideration common shares, as discussed in
Note 10, Stockholders' Equity - Contingent Consideration Common Shares, to the
accompanying interim consolidated financial statements. These shares are
liability-classified, and the change in fair value of the contingent
consideration common shares liability represents a non-cash gain for the change
in the estimated fair value of such liability during the period.

Change in Fair Value of Warrant Liability. AdaptHealth has outstanding warrants
to purchase shares of Common Stock, as discussed in Note 10, Stockholders'
Equity - Warrants, to the accompanying interim consolidated financial
statements. These warrants are liability-classified, and the change in fair
value of the warrant liability represents a non-cash gain for the change in the
estimated fair value of such liability during the period.

Other Income, net. Other income, net for the three months ended June 30, 2021
consisted of $0.3 million of equity income related to equity method investments,
offset by $0.9 million of expenses associated with legal settlements for
employee and other matters, $1.0 million of expenses associated with lease
terminations, and a $0.1 million charge for the increase in the fair value of a
contingent consideration liability related to an acquisition. Other income, net
for the three months ended June 30, 2020 consisted of a $0.9 million reduction
in the fair value of a contingent consideration liability related to an
acquisition.

Income Tax Benefit/Expense. Income tax expense for the three months ended June
30, 2021 was $12.3 million compared to income tax expense of $1.8 million for
the three months ended June 30, 2020. The expense recorded in the 2021 period
compared to the 2020 period was primarily related to increased pre-tax income
and AdaptHealth Holding's change in U.S. federal income tax classification as a
result of the Tax Restructuring, as discussed in note 13 to the accompanying
interim consolidated financial statements.

Comparison of the completed six months June 30, 2021 and six months over June 30, 2020.

The following table summarizes AdaptHealth consolidated operating results for the half-year ended June 30, 2021 and 2020:

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                                          Six Months Ended June 30,
                                       2021                         2020
                                             Revenue                     Revenue        Increase/(Decrease)
(in thousands, except
percentages)                   Dollars      Percentage     Dollars      Percentage     Dollars      Percentage

                                                                (unaudited)
Net revenue                  $ 1,099,136         100.0 %  $  423,555         100.0 %  $  675,581         159.5 %
Costs and expenses:
Cost of net revenue              887,418          80.7 %     366,048          86.4 %     521,370         142.4 %
General and
administrative expenses           99,578           9.1 %      31,439           7.4 %      68,139         216.7 %
Depreciation and
amortization, excluding
patient equipment
depreciation                      31,324           2.8 %       2,278           0.5 %      29,046            NM %
Total costs and expenses       1,018,320          92.6 %     399,765          94.3 %     618,555         154.7 %
Operating income                  80,816           7.4 %      23,790           5.7 %      57,026         239.7 %
Interest expense, net             45,332           4.1 %      15,420           3.6 %      29,912         194.0 %
Loss on extinguishment of
debt                              11,949           1.1 %           -             - %      11,949            NM %
Change in fair value of
contingent consideration
common shares liability         (24,044)         (2.2) %      16,325           3.9 %    (40,369)            NM %
Change in fair value of
warrant liability               (40,622)         (3.7) %      35,446           8.4 %    (76,068)            NM %
Other income, net                  1,150           0.1 %     (1,991)         (0.5) %       3,141            NM %
Income (loss) before
income taxes                      87,051           8.0 %    (41,410)         (9.7) %     128,461       (310.2) %
Income tax expense                10,635           1.0 %         185             - %      10,450            NM %
Net income (loss)                 76,416           7.0 %    (41,595)         (9.7) %     118,011       (283.7) %
Income (loss)
attributable to
noncontrolling interests           1,275           0.1 %    (11,514)         (2.7) %      12,789       (111.1) %
Net income (loss)
attributable to
AdaptHealth Corp.            $    75,141           6.9 %  $ (30,081)         (7.0) %  $  105,222       (349.8) %




Net Revenue. Net revenue for the six months ended June 30, 2021 was $1,099.1
million compared to $423.6 million for the six months ended June 30, 2020, an
increase of $675.5 million or 159.5%. Net revenue for the 2021 and 2020 periods
included $9.9 million and $29.6 million, respectively, from referral partners
and healthcare facilities in support of their urgent needs as the coronavirus
pandemic has led to an increased demand for respiratory equipment including
ventilators and oxygen concentrators. Excluding this revenue, net revenue was
$1,089.2 million and $394.0 million for the six months ended June 30, 2021 and
2020, respectively, an increase of $695.2 million. The increase in net revenue
was driven primarily by acquisitions completed after January 1, 2020, which
increased net revenue by $711.2 million. This increase in net revenue was
partially offset by planned declines in revenue from the Company's Patient Care
Solutions (PCS) supplies business (which was acquired in January 2020) in
connection with the Company's turnaround efforts of that business executed
subsequent to the acquisition. As previously disclosed by the Company, these
turnaround efforts at PCS reduced net revenues for the six months ended June 30,
2021 as a result of the Company's exit from poor performing payor contracts and
products, and resulted in improved profitability for PCS. Net revenue generated
by PCS for the six months ended June 30, 2021 and 2020 was $55.9 million and
$66.9 million, respectively.

For the six months ended June 30, 2021, net sales revenue (recognized at a point
in time) comprised 65% of total net revenue, compared to 68% of total net
revenue for the six months ended June 30, 2020. For the six months ended June
30, 2021, net revenue from fixed monthly equipment reimbursements comprised 35%
of total net revenue, compared to 32% of total net revenue for the six months
ended June 30, 2020.

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Cost of Net Revenue.

The following table summarizes cost of net revenue for the six months ended June
30, 2021 and 2020:






                                           Six Months Ended June 30,
                                        2021                       2020
                                             Revenue                    Revenue        Increase/(Decrease)
(in thousands, except
percentages)                    Dollars     Percentage     Dollars     Percentage     Dollars     Percentage

                                                                (unaudited)
Costs of net revenue:
Cost of products and
supplies                       $ 420,568          38.3 %  $ 166,106          39.2 %  $ 254,462         153.2 %
Salaries, labor and
benefits                         266,305          24.2 %    113,116          26.7 %    153,189         135.4 %
Patient equipment
depreciation                      79,703           7.3 %     32,836           7.8 %     46,867         142.7 %
Rent and occupancy                22,449           2.0 %      9,719           2.3 %     12,730         131.0 %
Other operating expenses          93,064           8.5 %     40,031           9.5 %     53,033         132.5 %
Equity-based compensation          4,932           0.4 %      2,203           0.5 %      2,729         123.9 %
Severance                            397             - %      2,037           0.4 %    (1,640)        (80.5) %
Total cost of net revenue      $ 887,418          80.7 %  $ 366,048        
 86.4 %  $ 521,370         142.4 %




Cost of net revenue for the six months ended June 30, 2021 was $887.4 million
compared to $366.0 million for the six months ended June 30, 2020, an increase
of $521.4 million or 142.4%, which is primarily related to acquisition growth.
Costs of products and supplies increased by $254.5 million primarily as a result
of acquisition growth, primarily from the acquisition of AeroCare, and increased
net sales revenue. Salaries, labor and benefits increased by $153.2 million,
primarily related to acquisition growth and increased headcount, primarily from
the acquisition of AeroCare. The increase in rent and occupancy and other
operating expenses is related to acquisition growth.

Cost of net revenue was 80.7% of net revenue for the six months ended June 30,
2021 compared to 86.4% for the six months ended June 30, 2020. The cost of
products and supplies was 38.3% of net revenue in the 2021 period compared to
39.2% in the 2020 period, while salaries, labor and benefits was 24.2% of net
revenue in the 2021 period compared to 26.7% in the 2020 period, and patient
equipment depreciation was 7.3 of net revenue in the 2021 period compared to
7.8% in the 2020 period. These percentages are consistent as a result of the
consistent mix of net revenue between sales and fixed monthly equipment
reimbursements between the periods.

General and Administrative Expenses. General and administrative expenses for the
six months ended June 30, 2021 were $99.6 million compared to $31.4 million for
the six months ended June 30, 2020, an increase of 68.2 million or 216.7%. This
increase is primarily due to (1) increased transaction costs related to
acquisition growth, primarily for from the acquisition of AeroCare, (2) higher
professional fees including legal, accounting and consulting, including costs
for Sarbanes Oxley compliance, (3) higher labor costs associated with increased
headcount, (4) higher equity-based compensation expense as a result of the
accelerated vesting of certain awards, including $2.4 million in connection with
the acceleration of vesting of certain stock options and restricted stock in
connection with the separation of the Company's former Co-CEO, and (5) higher
information technology related expenses. General and administrative expenses as
a percentage of net revenue was 9.1% in the 2021 period, compared to 7.4% in the
2020 period. General and administrative expenses in the 2021 period included
$39.3 million in transaction costs, $11.1 million in equity-based compensation
expense, and $1.1 million in severance expense. General and administrative
expenses in the 2020 period included $5.5 million in transaction costs, $3.3
million in equity-based compensation expense, and $0.3 million in severance
expense. Excluding the impact of these charges, general and administrative
expenses as a percentage of net revenue was 4.4% and 5.3% in the 2021 period and
the 2020 period, respectively.

Depreciation and amortization, excluding patient equipment depreciation.
Depreciation and amortization, excluding patient equipment depreciation, for the
six months ended June 30, 2021 was $31.3 million compared to $2.3 million for
the six months ended June 30, 2020, an increase of $29.0 million. The increase
was primarily related to amortization expense of $24.2 million related to
identifiable intangible assets recognized during the 2021 period. There was no
amortization expense of identifiable intangible assets recognized during the
2020 period.

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Interest Expense. Interest expense for the six months ended June 30, 2021 was
$45.3 million compared to $15.4 million for the six months ended June 30, 2020.
Interest expense related to long-term debt was higher in the 2021 period
compared to the 2020 period as a result of higher long-term debt borrowings
outstanding during that period. Such borrowings were largely used to fund
acquisitions.

Loss on Extinguishment of Debt. Loss on extinguishment of debt for the six
months ended June 30, 2021 was a result of the write-off of unamortized deferred
financing costs related to AdaptHealth refinancing its credit facility in
January 2021 and amending such agreement in April 2021, and also includes the
write-off of unamortized deferred financing costs and debt prepayment penalties
in connection with the early repayment of a portion of AdaptHealth's note
payable. There were no such transactions in the six months ended June 30, 2020.

Change in Fair Value of Contingent Consideration Common Shares Liability. In
connection with the Business Combination, certain former owners of AdaptHealth
Holdings are entitled to contingent consideration common shares, as discussed in
Note 10, Stockholders' Equity - Contingent Consideration Common Shares, to the
accompanying interim consolidated financial statements. These shares are
liability-classified, and the change in fair value of the contingent
consideration common shares liability represents a non-cash gain in the 2021
period and a non-cash charge in the 2020 period for the change in the estimated
fair value of such liability during the respective periods.

Change in Fair Value of Warrant Liability. AdaptHealth has outstanding warrants
to purchase shares of Common Stock, as discussed in Note 10, Stockholders'
Equity - Warrants, to the accompanying interim consolidated financial
statements. These warrants are liability-classified, and the change in fair
value of the warrant liability represents a non-cash gain in the 2021 period and
a non-cash charge in the 2020 period for the change in the estimated fair value
of such liability during the respective periods.

Other Income, net. Other income, net for the six months ended June 30, 2021
consisted of $0.5 million of equity income related to equity method investments,
and a gain of $0.5 million for the receipt of earnout proceeds in connection
with an investment that was sold in 2020, offset by $0.9 million of expenses
associated with legal settlements for employee and other matters, $1.0 million
of expenses associated with lease terminations, and a $0.3 million charge for
the increase in the fair value of a contingent consideration liability related
to an acquisition. Other income, net for the six months ended June 30, 2020
consisted of a $2.9 million reduction in the fair value of a contingent
consideration liability related to an acquisition, a gain of $0.6 million
related to the sale of an investment, offset by a $1.5 million expense related
to a transition services agreement executed in connection with an acquisition
completed in 2020.

Income Tax Benefit/Expense. Income tax expense for the six months ended June 30,
2021 was $10.6 million compared to income tax expense of $0.2 million for the
six months ended June 30, 2020. The increase in income tax expense was primarily
related to increased pre-tax income and AdaptHealth Holding's change in U.S.
federal income tax classification as a result of the Tax Restructuring, as
discussed in note 13 to the accompanying interim consolidated financial
statements.

EBITDA, Adjusted EBITDA and Adjusted EBITDA less equipment expenses for patients

AdaptHealth uses EBITDA, Adjusted EBITDA and Adjusted EBITDA less Patient
Equipment Capex, which are financial measures that are not prepared in
accordance with generally accepted accounting principles in the United States,
or U.S. GAAP, to analyze its financial results and believes that they are useful
to investors, as a supplement to U.S. GAAP measures. In addition, AdaptHealth's
ability to incur additional indebtedness and make investments under its existing
credit agreement is governed, in part, by its ability to satisfy tests based on
a variation of Adjusted EBITDA.

AdaptHealth defines EBITDA as the net profit (loss) attributable to AdaptHealth Corp., plus net income (loss) attributable to non-controlling interests, interest expense (income), income tax expense (benefit), and depreciation and amortization.

AdaptHealth defines Adjusted EBITDA as EBITDA (as defined above), plus loss on
extinguishment of debt, equity­based compensation expense, transaction costs,
severance, change in fair value of the contingent consideration common shares
liability, change in fair value of the warrant liability, and non-recurring
items of expense (income).

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AdaptHealth defines Adjusted EBITDA less Patient Equipment Capex as Adjusted
EBITDA (as defined above) less patient equipment acquired during the period
without regard to whether the equipment was purchased or financed through lease
transactions.

AdaptHealth believes Adjusted EBITDA less Patient Equipment Capex is useful to
investors in evaluating AdaptHealth's financial performance. AdaptHealth's
business requires significant investment in equipment purchases to maintain its
patient equipment inventory. Some equipment title transfers to patients'
ownership after a prescribed number of fixed monthly payments. Equipment that
does not transfer wears out or oftentimes is not recovered after a patient's use
of the equipment terminates. AdaptHealth uses this metric as the profitability
measure in its incentive compensation plans that have a profitability component
and to evaluate acquisition opportunities, where it is most often used for
purposes of contingent consideration arrangements. For purposes of this metric,
patient equipment capital expenditure is measured as the value of the patient
equipment received during the accounting period without regard to whether the
equipment is purchased or financed through lease transactions.

EBITDA, Adjusted EBITDA and Adjusted EBITDA less Patient Equipment Capex should
not be considered as measures of financial performance under U.S. GAAP, and the
items excluded from EBITDA, Adjusted EBITDA and Adjusted EBITDA less Patient
Equipment Capex are significant components in understanding and assessing
financial performance. Accordingly, these key business metrics have limitations
as an analytical tool. They should not be considered as an alternative to net
income or any other performance measures derived in accordance with U.S. GAAP or
as an alternative to cash flows from operating activities as a measure of
AdaptHealth's liquidity.

The following unaudited table presents the reconciliation of net loss
attributable to AdaptHealth, to EBITDA, Adjusted EBITDA and Adjusted EBITDA less
Patient Equipment Capex for the three and six months ended June 30, 2021 and
2020:




                                         Three Months Ended June 30,           Six Months Ended June 30,
(in thousands)                             2021                2020               2021             2020

                                                                    (Unaudited)
Net income (loss) attributable to
AdaptHealth Corp.                     $        79,107     $         4,470    $       75,141     $  (30,081)
Income (loss) attributable to
noncontrolling interests                          951               3,388  
          1,275        (11,514)
Interest expense, net                          23,147               7,482            45,332          15,420
Income tax expense                             12,330               1,826            10,635             185
Depreciation and amortization,
including patient equipment
depreciation                                   63,793              18,374           110,999          35,114
EBITDA                                        179,328              35,540           243,382           9,124
Loss on extinguishment of debt (a)              7,736                   -            11,949               -
Equity-based compensation expense
(b)                                             7,447               3,244            16,029           5,467
Transaction costs (c)                           8,100               3,541            39,954           6,399
Severance (d)                                     594               1,905             1,533           2,324
Change in fair value of contingent
consideration common shares
liability (e)                                (22,079)                (42)          (24,044)          16,325
Change in fair value of warrant
liability (f)                                (37,454)               (654)          (40,622)          35,446
Other non-recurring expense
(income) (g)                                    3,719               (900)             3,385         (1,991)
Adjusted EBITDA                               147,391              42,634           251,566          73,094
Less: Patient equipment capex (h)            (48,525)            (12,068)          (90,783)        (25,035)
Adjusted EBITDA less Patient
Equipment Capex                       $        98,866     $        30,566  

$ 160,783 $ 48,059

(a) Represents write-offs of deferred financing costs related to the refinancing of

debt and early repayment penalties in the event of early debt repayment.

Represents stock-based compensation expense for employee awards

and non-salaried directors. The increase in spending over the 2021 period is due to

(b) the overall increase in share-based compensation allocation activity during this period, as well as

as an expense resulting from the accelerated vesting of certain attributions in this

period, including the accelerated vesting of certain awards within the framework of

     the separation of the Company's former Co-CEO.


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(c) Represents transaction costs related to acquisitions.

(d) Represents severance payments related to the integration of acquisitions and

AdaptHealth restructuring and downsizing activities.

Represents a non-cash charge or gain for the change in estimated fair value

value of the contingent consideration common shares that may be issued under the

(e) Business combination. Refer to Note 10, Equity – Contingent

Counterparty Ordinary shares, included in the notes to the

interim consolidated financial statements for the three and six months ended

June 30, 2021 for further discussion of these non-monetary charges or gains.

Represents a non-cash charge or gain for the change in estimated fair value

value AdaptHealth mandates. Refer to Note 10, Equity –

(f) Warrants, included in the notes to the interim consolidated financial statements

     financial statements for the three and six months ended June 30, 2021 for
     additional discussion of such non-cash charge or gain.


     The 2021 year-to-date period includes $1.5 million of expenses related to

legal and other costs related to the separation of the former

Co-CEO, $ 0.9 million expenses associated with court settlements for

employee and other matters, $ 1.0 million lease expenses

terminations, a $ 0.3 million charge for increasing the fair value of a

a contingent consideration liability related to an acquisition, and $ 0.2

(g) millions of other non-recurring charges, offset by a gain of $ 0.5 million for

the receipt of a price supplement in connection with the sale of an investment.

The cumulative period of 2020 includes $ 2.9 million discounts at the fair

value of contingent consideration liabilities related to acquisitions, a 0.6 $

million dollars in gain on the sale of an investment, offset by a $ 1.5 million

costs related to a transition services agreement entered into as part of

with an acquisition completed in 2020.

Represents the value of the patient equipment obtained during the

(h) period regardless of whether the equipment is purchased or financed

through rental transactions.

Liquidity and capital resources

AdaptHealth's principal sources of liquidity are its operating cash flows,
borrowings under its credit agreements and other debt arrangements, and proceeds
from equity issuances. AdaptHealth has used these funds to meet its capital
requirements, which primarily consist of salaries, labor, benefits and other
employee-related costs, product and supply costs, third-party customer service,
billing and collections and logistics costs, capital expenditures including
patient equipment, acquisitions and debt service. AdaptHealth's future capital
expenditure requirements will depend on many factors, including its patient
volume and revenue growth rates.

AdaptHealth's capital expenditures are made in advance of patients beginning
service. Certain operating costs are incurred at the beginning of the equipment
service period and during initial patient set up.

AdaptHealth believes that its expected operating cash flows, together with its
existing cash, cash equivalents, and amounts available under its existing credit
agreement, will continue to be sufficient to fund its operations and growth
strategies for at least the next twelve months.

As of June 30, 2021, AdaptHealth had approximately $178.2 million of cash and
cash equivalents. To supplement its cash liquidity, in April 2020, AdaptHealth
received recoupable advance payments of $45.8 million which were made available
by CMS under the CARES Act. In addition, in connection with an acquisition
completed in July 2020, AdaptHealth assumed a liability of $3.7 million relating
to funds received by the acquired company prior to the date of acquisition for
CMS recoupable advance payments. The recoupment of the advance payments by CMS
has begun in April 2021 and is being applied to services provided and revenue
recognized during the period in which the recoupment occurs, and will impact the
Company's cash receipts for services provided until such time all amounts have
been recouped. During the three months ended June 30, 2021, CMS has recouped a
total of $15.9 million. At June 30, 2021, the Company has deferred a total of
$33.6 million related to CMS recoupable advance payments, which is

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included in other current liabilities in the consolidated balance sheet as of
June 30, 2021. In addition, in April 2020, AdaptHealth received distributions of
the CARES Act provider relief funds of $17.2 million which are targeted to
offset lost revenue and expenditures incurred in connection with the COVID-19
pandemic. The provider relief funds are subject to certain restrictions and are
subject to recoupment if not used for designated purposes. As a condition to
receiving distributions, providers must agree to certain terms and conditions,
including, among other things, that the funds are being used for lost revenues
and unreimbursed COVID-19 related expenses as defined by HHS. During the year
ended December 31, 2020, AdaptHealth recognized grant income of $14.3 million
related to the provider relief fund payments received. As of June 30, 2021,
AdaptHealth has deferred $2.9 million of the PRF payments received in April
2020. In addition, in connection with certain acquisitions completed prior to
June 30, 2021, AdaptHealth assumed liabilities of $7.7 million relating to CARES
Act provider relief fund payments received by the acquired companies prior to
the dates of acquisition. At June 30, 2021, AdaptHealth has deferred a total of
$10.6 million related to CARES Act provider relief funds, which is included in
other current liabilities in the consolidated balance sheet as of June 30, 2021.
HHS has indicated that the CARES Act PRF are subject to ongoing reporting and
changes to the terms and conditions, and there have been several updates to such
reporting requirements and terms and conditions since they were issued by HHS.
Such updates have related to changes to the guidance regarding utilization of
the funds granted from the PRF and updates to the reporting requirements of such
funds, among other updates. As a result of any future updated guidance from HHS,
AdaptHealth could be required to reverse the recognition of the grant income
recorded and return a portion of the funds recognized, which could be material
to AdaptHealth. AdaptHealth is continuing to monitor the reporting requirements
issued by HHS. To the extent that reporting requirements and terms and
conditions are modified in the future, it may affect AdaptHealth's ability to
comply and may require the return of funds. Furthermore, HHS has indicated that
it will be closely monitoring and, along with the Office of Inspector General
(United States) (OIG), auditing providers to ensure that recipients comply with
the terms and conditions of relief programs and to prevent fraud and abuse. All
providers will be subject to civil and criminal penalties for any deliberate
omissions, misrepresentations or falsifications of any information given to HHS.
Also, as permitted under the CARES Act, AdaptHealth has elected to defer certain
portions of employer-paid FICA taxes otherwise payable from March 27, 2020 to
January 1, 2021, which will be paid in two equal installments on December 31,
2021 and December 31, 2022. AdaptHealth has deferred a total of $8.6 million
pursuant to this provision, of which $4.3 million is included in other current
liabilities and $4.3 million is included in other long-term liabilities in the
consolidated balance sheet as of June 30, 2021.

At June 30, 2021, AdaptHealth had $975.0 million outstanding under its existing
credit facility. In January 2021, AdaptHealth refinanced its debt borrowings and
entered into a new credit agreement, which was subsequently amended in April
2021 (the "2021 Credit Agreement"). The 2021 Credit Agreement consists of a $800
million term loan (the "2021 Term Loan") and $450 million in commitments for
revolving credit loans with a $55 million letter of credit sublimit (the "2021
Revolver"), both with maturities in January 2026. The borrowing under the 2021
Term Loan requires quarterly principal repayments of $5.0 million beginning June
30, 2021 through March 31, 2023, increasing to $10.0 million beginning June 30,
2023 through December 31, 2025, and the unpaid principal balance is due at
maturity in January 2026. Borrowings under the 2021 Revolver may be used for
working capital and other general corporate purposes, including for capital
expenditures and acquisitions permitted under the 2021 Credit Agreement. As of
the date of this filing, $215.0 million was outstanding under the 2021 Revolver.
Amounts borrowed under the 2021 Credit Agreement bear interest quarterly at
variable rates based upon the sum of (a) the Adjusted LIBOR Rate (subject to a
floor) equal to the LIBOR (as defined) for the applicable interest period
multiplied by the statutory reserve rate, plus (b) an applicable margin (as
defined) ranging from 1.50% to 3.25% per annum based on the Consolidated Senior
Secured Leverage Ratio (as defined). The 2021 Revolver carries a commitment fee
during the term of the 2021 Credit Agreement ranging from 0.25% to 0.50% per
annum of the actual daily undrawn portion of the 2021 Revolver based on the
Consolidated Senior Secured Leverage Ratio.

Under the 2021 Credit Agreement, AdaptHealth is subject to a number of
restrictive covenants that, among other things, impose operating and financial
restrictions on AdaptHealth. Financial covenants include a Consolidated Total
Leverage Ratio and a Consolidated Interest Coverage Ratio, both as defined in
the 2021 Credit Agreement. The 2021 Credit Agreement also contains certain
customary events of default, including, among other things, failure to make
payments when due thereunder, failure to observe or perform certain covenants,
cross-defaults, bankruptcy and insolvency-related events, and non-compliance
with healthcare laws. Any borrowing under the 2021 Credit Agreement may be
repaid, in whole or in part, at any time and from time to time without premium
or penalty, other than customary breakage costs, and any amounts repaid under
the 2021 Revolver may be reborrowed. Mandatory prepayments are

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required under the 2021 Revolver when borrowings and letter of credit usage
exceed the total commitments for revolving credit loans. Mandatory prepayments
are also required in connection with the disposition of assets to the extent not
reinvested, unpermitted debt transactions, and excess cash flow, as defined, if
certain leverage tests are not met. AdaptHealth was in compliance with all debt
covenants as of June 30, 2021.

In January 2021, AdaptHealth LLC issued $500.0 million aggregate principal
amount of 4.625% senior unsecured notes due 2029 (the "4.625% Senior Notes").
The 4.625% Senior Notes will mature on August 1, 2029. Interest on the 4.625%
Senior Notes is payable on February 1st and August 1st of each year, beginning
on August 1, 2021. The 4.625% Senior Notes will be redeemable at AdaptHealth's
option, in whole or in part, at any time on or after February 1, 2024, and the
redemption price for the 4.625% Senior Notes if redeemed during the 12 months
beginning (i) February 1, 2024 is 102.313%, (ii) February 1, 2025 is 101.156%,
and (iii) February 1, 2026 and thereafter is 100.000%, in each case together
with accrued and unpaid interest. AdaptHealth LLC may also redeem some or all of
the 4.625% Senior Notes before February 1, 2024 at a redemption price of 100% of
the principal amount of the 4.625% Senior Notes, plus a "make-whole" premium,
together with accrued and unpaid interest. In addition, AdaptHealth LLC may
redeem up to 40% of the original aggregate principal amount of the 4.625% Senior
Notes before February 1, 2024 with the proceeds from certain equity offerings at
a redemption price equal to 104.625% of the principal amount of the 4.625%
Senior Notes, together with accrued and unpaid interest. Furthermore,
AdaptHealth LLC may be required to make an offer to purchase the 4.625% Senior
Notes upon the sale of certain assets or upon specific kinds of changes of
control.

In July 2020, AdaptHealth LLC issued $350.0 million aggregate principal amount
of 6.125% senior unsecured notes due 2028 (the "6.125% Senior Notes"). The
6.125% Senior Notes will mature on August 1, 2028. Interest on the 6.125% Senior
Notes is payable on February 1st and August 1st of each year, beginning on
February 1, 2021. The 6.125% Senior Notes will be redeemable at AdaptHealth
LLC's option, in whole or in part, at any time on or after August 1, 2023, and
the redemption price for the 6.125% Senior Notes if redeemed during the 12
months beginning (i) August 1, 2023 is 103.063%, (ii) August 1, 2024 is
102.042%, (iii) August 1, 2025 is 101.021% and (iv) August 1, 2026 and
thereafter is 100.000%, in each case together with accrued and unpaid interest.
AdaptHealth LLC may also redeem some or all of the 6.125% Senior Notes before
August 1, 2023 at a redemption price of 100% of the principal amount of the
6.125% Senior Notes, plus a "make-whole" premium, together with accrued and
unpaid interest. In addition, AdaptHealth LLC may redeem up to 40% of the
original aggregate principal amount of the 6.125% Senior Notes before August 1,
2023 with the proceeds from certain equity offerings at a redemption price equal
to 106.125% of the principal amount of the 6.125% Senior Notes , together with
accrued and unpaid interest. Furthermore, AdaptHealth LLC may be required to
make an offer to purchase the 6.125% Senior Notes upon the sale of certain
assets or upon specific kinds of changes of control.

In March 2019, AdaptHealth signed a Note and Unit Purchase Agreement with an
investor. Pursuant to the agreement, AdaptHealth issued a promissory note with a
principal amount of $100 million (the Promissory Note). In connection with the
transactions completed as part of the Business Combination, the Promissory Note
was replaced with a new amended and restated promissory note with a principal
amount of $100 million, and the investor converted certain of its members'
interests to a $43.5 million promissory note. The new $100 million promissory
note, together with the $43.5 million promissory note, are collectively referred
to herein as the New Promissory Note. In June 2021, AdaptHealth agreed with the
holders of the New Promissory Note to repay $71.8 million of the outstanding
principal amount under the New Promissory Note. Further, the Company has agreed
to repay the remaining principal balance of $71.8 million plus accrued interest
by September 30, 2021. The Company will also pay a debt prepayment penalty of
$7.2 million in connection with that prepayment. The Company expects to repay
the remaining outstanding principal by September 30, 2021 using cash on hand and
borrowings under the 2021 Revolver, and therefore such amount is included in
current portion of long-term debt in the accompanying consolidated balance
sheets as of June 30, 2021. The outstanding principal balance under the New
Promissory Note currently bears interest at 12% and is required to be paid in
cash. The Company agreed that if the remaining outstanding principal is not
repaid by October 31, 2021, the New Promissory Note will be amended to provide
that the outstanding principal amount will bear interest at the greater of (i)
15% per annum or (ii) the twelve-month LIBOR plus 12% per annum and will have a
maturity date of November 8, 2029.

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As of June 30, 2021 and December 31, 2020, AdaptHealth had a working capital
deficit of $15.0 million and $55.8 million, respectively. A significant portion
of AdaptHealth's assets consists of accounts receivable from third-party payors
that are responsible for payment for the equipment and the services that
AdaptHealth provides.

Cash Flow. The following table presents selected data from AdaptHealth's
consolidated statements of cash flows for the six months ended June 30, 2021 and
2020:




                                                     Six Months Ended June 30,
(in thousands)                                           2021            2020

                                                            (unaudited)

Net cash flow generated by operating activities $ 147,624 $ 111,008
Net cash used in investing activities

                   (1,372,027)     

(117,332)

Net cash provided by financing activities                 1,302,630       

40,033

Net increase in cash and cash equivalents                    78,227       

33,709

Cash and cash equivalents at beginning of period             99,962       

76 878

Cash and cash equivalents at the end of the period $ 178,189 $ 110,587

Net cash provided by operating activities for the six months ended June 30, 2021
was $147.6 million compared to $111.0 million for the six months ended June 30,
2020, an increase of $36.6 million. The increase was the result of (1) a $118.0
million improvement in net income, (2) a net decrease of $12.6 million in
non-cash charges, primarily from a non-cash charge or gain relating to the
change in the estimated fair value of contingent consideration common shares, a
non-cash charge or gain relating to the change in the estimated fair value of
the warrant liability, amortization, equity-based compensation expense,
write-off of deferred financing costs, loss on extinguishment of debt, and
changes in fair value of contingent consideration, (3) an $8.2 million change in
deferred income taxes, (4) a net $15.0 million decrease in cash resulting from
the change in operating assets and liabilities, primarily from the change in
accounts receivable, inventory and accounts payable and accrued expenses
(excluding the impact of cash received in the 2020 period in connection with the
CARES Act discussed below), (5) the payment of $1.0 million in the 2020 period
relating to contingent consideration for an acquisition, which was offset by (6)
the receipt of $45.8 million of recoupable advanced payments from CMS and the
receipt of $17.2 million of provider relief funds in connection with the CARES
Act in the 2020 period.

Net cash used in investing activities for the six months ended June 30, 2021 was
$1,372.0 million compared to $117.3 million for the six months ended June 30,
2020. The use of funds in the six months ended June 30, 2021 consisted of
$1,292.6 million for business acquisitions, primarily from the AeroCare
acquisition, and $79.4 million for equipment and other fixed asset purchases.
The use of funds in the six months ended June 30, 2020 consisted of $107.4
million for business acquisitions, primarily from the Advanced and Healthline
acquisitions, $10.9 million for equipment and other fixed asset purchases,
payments of $1.0 million for investments in cost method investments, offset by
$2.0 million of cash proceeds from the sale of an investment.

Net cash provided by financing activities for the six months ended June 30, 2021
was $1,302.6 million compared to net cash provided by financing activities of
$40.0 million for the six months ended June 30, 2020. Net cash provided by
financing activities for the six months ended June 30, 2021 consisted of
proceeds of $1,070.0 million from borrowings on long-term debt and lines of
credit, proceeds of $500.0 million from the issuance of senior unsecured notes,
proceeds of $278.9 million from the issuance of shares of Common Stock in
connection with a public underwritten offering, proceeds of $2.3 million from
the exercise of options, and proceeds of $0.3 million in connection with the
employee stock purchase plan, offset by total repayments of $490.3 million on
long-term debt and capital lease obligations, payments of $13.8 million for
equity issuance costs, payments of $18.1 million for debt issuance costs,
payments of $13.4 million for contingent consideration related to acquisitions,
payments of $2.9 million for deferred purchase price in connection with
acquisitions, payments of $8.5 million for debt prepayment penalties, payments
of 1.1 million for distributions to noncontrolling interests, and payments of
$0.8 million relating to tax withholdings associated with equity-based
compensation activity. Net cash provided by financing activities for the six
months ended June 30, 2020 consisted of proceeds of $70.0 million from
borrowings on long-term debt and lines of credit, and proceeds of $11.8 million
from the exercise of warrants, offset by total repayments of $41.0 million on
long-term debt and capital lease obligations and a payment of $0.8 million for
distributions to non-controlling interests.

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Critical accounting policies and significant estimates

The discussion and analysis of the Company's financial condition and results of
operations is based upon the Company's consolidated financial statements, which
have been prepared in accordance with U.S. GAAP. The preparation of the
Company's consolidated financial statements requires its management to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenue and expenses and related disclosures of contingent assets and
liabilities. The Company's management bases its estimates, assumptions and
judgments on historical experience and various other factors that are believed
to be reasonable under the circumstances, the results of which form the basis
for making judgments about the carrying values of assets and liabilities that
are not readily apparent from other sources. Different assumptions and judgments
would change the estimates used in the preparation of the Company's consolidated
financial statements which, in turn, could change the results from those
reported. In addition, actual results may differ from these estimates and such
differences could be material to the Company's financial position and results of
operations.

Critical accounting policies and significant estimates are those that the
Company's management considers the most important to the portrayal of the
Company's financial condition and results of operations because they require
management's most difficult, subjective or complex judgments, often as a result
of the need to make estimates about the effect of matters that are inherently
uncertain. The Company's critical accounting policies and significant estimates
in relation to its consolidated financial statements include those related to
revenue recognition, accounts receivable, business combinations, and valuation
of goodwill and long-lived assets. There have been no material changes in the
Company's critical accounting policies as compared to the critical accounting
policies described in the Company's Annual Report on Form 10-K/A for the year
ended December 31, 2020.

Recent accounting positions

Recently issued accounting pronouncements that may be relevant to the Company's
operations but have not yet been adopted are outlined in Note 1 (h), Recently
Issued Accounting Pronouncements, to its consolidated interim financial
statements included elsewhere in this report.

Off-balance sheet provisions

From June 30, 2021, the Company had no off-balance sheet arrangements, as defined in Section 303 (a) (4) (ii) of Regulation SK.

Commitments and contingencies

In the normal course of business, the Company is subject to loss contingencies,
such as legal proceedings and claims arising out of its business that cover a
wide range of matters. In accordance with the Financial Accounting Standards
Board Accounting Standards Codification Topic 450, Accounting for Contingencies,
the Company records accruals for such loss contingencies when it is probable
that a liability has been incurred and the amount of loss can be reasonably
estimated. While there can be no assurance, based on the Company's evaluation of
information currently available, the Company's management believes any liability
that may ultimately result from resolution of such loss contingencies will not
have a material adverse effect on the Company's financial conditions or results
of operations. However, the Company's assessment may be affected by limited
information. Accordingly, the Company's assessment may change in the future
based upon availability of new information and further developments in the
proceedings of such matters. The results of legal proceedings are inherently
uncertain, and material adverse outcomes are possible.

Other contingencies arising in the normal course of business relate to acquisitions and contingent purchase prices and related deferred payments.

On July 29, 2021, Robert Charles Faille Jr., an alleged shareholder of the Company, filed an alleged class action complaint against the Company and certain of its officers in the United States District Court for the Eastern District of Pennsylvania (the complaint). The complaint is said to be made on behalf of a class of people who bought the shares of the company between
November 11, 2019 and July 16, 2021. The complaint generally alleges that

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the Company and certain of its officers have violated federal securities laws by making allegedly false and misleading statements and / or by failing to disclose material information regarding the Company’s organic growth trajectory. The complaint is for unspecified damages. The Company intends to vigorously defend itself against the allegations contained in the complaint, but there can be no assurance that the defense will be successful.

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