AdaptHealth Corp. (AHCO) Earnings Call Transcript & Summary

Everybody could again grab a seat and we'll get going. Welcome, everyone, to AdaptHealth's first Capital Markets Day. It's great to see everybody here live and in person. And of course, we welcome everyone joining us via the webcast. I'm Anton Hie, VP of Investor Relations. And as many of you guys here know, I spent over 20 years on the sell side. So I spent plenty of time in those seats right there. And hopefully, you think what we bring you today is going to be more compelling than some of the Analyst Days that I had to sit through. So we've got a got a great, I think, agenda lined up today. First, before we get to that, though, a quick bit of housekeeping. We'll be making forward-looking statements throughout the day and referencing non-GAAP financial measures, so be aware of the inherent risks with that. So a great agenda. Steve will kick us off -- Steve Griggs, our CEO, will kick us off with an overview of really the critical role that AdaptHealth plays in the health care continuum and the value that we add for all our patients or referring providers and our payers but especially our patients. Then you'll get to hear from several other leaders throughout the organization on how we add that value. And of course, where we see our long-term opportunities ahead of us. So before we get started, I would also note, we've got a lot of material to get through. There will be 2 Q&A breaks. So if everybody could just hold their questions for that, then we'll pass the mic around. And of course, everyone on the webcast can submit questions via the chat function. So before Steve takes the stage, I want to play a quick video for you. that tells a little bit about AdaptHealth, what we do and who we are. [Presentation]

We're pretty proud of that video. It shows a lot about AdaptHealth, but we're going to talk about a lot of those things that are in there today. So first, welcome, and thank you for coming. So like Anton said, we're going to talk about it for the important role we play in the health care continuum out there in the marketplace. In addition, we're going to tell you where we've been, where we're at today and where we're going to head. And in addition, we'll also put some goals out for 2025 and our commitment to those goals. And finally, you hopefully see from all of our team members here, how the connectivity between all these operations and these focuses things they do, how they interact with each other well and make each other better. So certainly, we want to be able to be part of the reducing the overall cost of care. But our commitment is to improving patient lives. And we do this by staying true to our mission, which is to empower patients to live their best lives. Now we interact with tens of thousands of patients a day. Some of those are very, very critical. For instance, a patient recently went on to hospice, we were called in. We bought various pieces of equipment, but in particular, a ventilator. We educated that patient. We encouraged that patient and that patient made a very unusual exit from hospice. They went off hospice and back to regular care. That doesn't happen much. Obviously, the patient was very excited about that. We were very excited about that. But I can assure you, those hospice providers were also very excited about that. We're a big company, $3 billion in revenue. Some important points are 90% of our revenue is recurring. So that allows us to do things and plan for things in the future, knowing that, that recurring revenue is there. We've grown very fast up 6x in revenue since 2019. So with that, of course, we added what we call a systems lag. So we spent an incredible amount of time over these past few months and last 1.5 years and getting the systems up to date, not just for a $3 billion company, but for a company that has the aspirations that we have. So we're right in the middle of this move to the home. And we're perfectly positioned as more and more stuff is heading to the home. But there's reason that people want to move the home is all on cost containment and trying to reduce the cost of care. One of the consequences of reduced cost is less in-phase, in-person patient encounters. So what does that mean? That means that the patient encounters that do happen become that much more important. So our 10,000, 36,000 of encounters that we do each day, we believe, becomes very critical and very valuable to people in the health care arena. So our 3.9 million patients that we serve that we coordinate the care through insurances, through their specialists, through the health care systems. And so that's our job is to coordinate this care with, again, our 36,000 daily home deliveries. We're a national company. Our company within our service area is 95% of the people within the continental United States. But Health Care is local. And we know it's local, so we have to be a local provider. And so we have to react and act and adapt to the local demands of each marketplace. But that being said, being a national provider does bring us benefits, benefits that can benefit their people, that's scale, that's systems and that's most importantly expertise. So we play in these 3 chronic diseases predominantly. And we're number -- top positions in all of them. Obstructive sleep apnea, that's diabetes, that's COPD, that's congestive heart failure. And we do it through these pieces of equipment that you see here, CPAPs, BiPAPs, CGMs, et cetera. Now one misconception about us is that we are a home care company. We are much, much more than that. Did you watch the U.S. Open? In the U.S. Open you saw players playing in the U.S. Open that had CGMs on their arms. I'm going to fly out of LaGuardia later tonight. And years ago, LaGuardia was the first airport that I saw in there through security to make sure that not only you took your laptop out, but you took your CPAP out. There's a 73-year-old pickle ball player who's legendary around the club that I'm at, and he wears his port POC as he placed pickle ball. My best friend, one of my best friends, known for 40 years, played golf with me. He's a snorer. I begged him, begged him to get a sleep study, he wouldn't do it. One day, he's just walking up the [indiscernible], and he is short of breath. Two days later, he's in the cardiologist office, 2 days after that, he had a stent. And shortly thereafter, with the doctors encouragement and mine, he got that sleep study. We did a home test on him. That home test showed he had obstructions. For now we watched a piece of equipment. He was severe. So with severe CPAP is continuous positive airway pressure, a BiPAP has it go both ways. And so for that patient that's severe needs that type of bi level. Well, as an insurance company doesn't want to approve that yet. So we worked with the insurance company. And finally, we got him on the BiPAP. So now he's on a BiPAP and he's a heart patient so we got to watch him. And he's doing better and better and better, but he's just not quite you're getting the results that we would like or as doctor would like. So we encourage this doctor encouraging to go get a full PSG in a sleep lab. And sure enough, in that play -- in that sleep lab, that identified not only do you have obstructive sleep apnea, but he had central apnea. His brain was making him stop breathing. So we had to move him up and do an advance to a piece of equipment ASV. Now this ASV put that on there and within a short period of time, he was able to sleep 7, 8, 9 hours. That's my buddy, I've been playing golf with him a long time. For the past 10 years, I've watched this handicap go from 8 to 12 to 14 to 16. So last year, because his handicap is so up and now he's crossed the 65 mark, he's able to pay the up-teens. So within a year now, his handicap is now a 10. It just went had -- this is right now to 11, went down as far as 10. Now when you look at a handicap system, just because you move up, it doesn't allow your handicap to drop. And the fact that he sent the ball 15 yards farther isn't because he moved up from the [ up-teens ]. So my rationale and my logical conclusion is his ASV did it. Now he would actually concur with that. So I'm surprised when I walk around and I have an AdaptHealth shirt of how many people come up to me and say, "Wow, I'm a patient of AdaptHealth or I come to these events and people take me off the side. Now I don't know why I'm surprised because 1 in 90 people in the United States are an AdaptHealth customer. Think about that. So if I go to a football game, it's a big football game, there's hundreds of potential of AdaptHealth customers. When you're out there and you're seeing patients, they're in wheelchairs, you're seeing patients that have the CGM on them, you're seeing patients that get portable oxygen. You're seeing that patient take his CPAP out as he gets on the through security, most like -- not most legit it's highly likely that's an adapt health patient. So I said that we shouldn't be considered as a home care company, I consider us more of a every day, any day and every time company, and anytime company because our patients are using this equipment and services across the day, whether they're at home or at work or at play. Chronic disease is a big, big cost, $4 trillion in health care spending a year. So we offer solutions to that. We are right in the middle again because we can monitor patients at home, we can treat patients at home and more importantly, we can keep patients at home. Now within health care, I've been in health care a long time, and there's always controversies about this and that. But one thing that is universally accepted is the 3 pillars of health, sleep, nutrition, exercise. And so we participate in those with our patients and try to get them to do better jobs in those 3 pillars of health. Some of it's quite obvious. Obviously, OSA and sleep for sleep. But COPD, we're giving that patient again that equipment to be able to keep them mobile and ambulatory and exercise. And certainly, a well-managed diabetes patient can get to the nutrition that they like. So as we move on, strategic accomplishments that we've had in the last 2 years. We've completed the integration of AdaptHealth and AeroCare. That was the biggest deal that AdaptHealth had ever done. I obviously came from the Adapt of AeroCare side, and now we've been able to merge these companies together. Now through that merger, yes, we picked up a lot of synergies. But those synergies were locations, personnel, and then some contracts. What we haven't been able to do because -- really because of the recall of Philips kind of derailed us is get the benefits of all the great things that we do and did at AeroCare and that we do it Adapt and they'll make it across the company yet. And so that's a big mission for us throughout 2023. Diabetes is now integrated through our whole business. It's not a stand-alone place for it so within our whole business. And the reason it is because every meeting we go to, every meeting with any kind of health care system or managed care, diabetes is top of mind. Why? Because it's so critical to all the things in there and a diabetes patient when they get sick with anything else just gets magnified to that matter. So we have to when those things have to have a solution for their diabetes patients. Integrated cloud-based work system. So 1.5 years ago, there was disjointed. There was things going on, they're doing okay, but they weren't talking to each other. They weren't communicating each other. So our CTO and Josh have worked tirelessly to try to bring all these systems together. And now they actually are communicating and all. So that same data. So we have incredible people. A lot of them are here today, and they're all now working on the same stuff, the same data and at line now in what we're trying to accomplish. There's no question. No question. that we've been pioneers of e-prescribe, e-ordering and e-delivery. So that brings efficiency to us, no question. But more importantly, more importantly, for that patient, it gets our equipment out to that patient sooner. So it's much, much better patient satisfaction, not just for us but also for the doctor and the health plan for that matter. Cross-selling. Everybody's talked about for years, everybody has failed for it with the years. And the reason they fail for it just much more than cross-selling, as it said. It has taken an expertise that's located in a part of your company and spread it around across the broad base of your whole company. And your ability to do that were pretty challenged until recently. Now we have the ability to move information across our company at incredible speeds. So referring a doctor's office, and we have a traditional HME rep talking to a GP about diabetes and they have a question, they can get on their cell phone, type that up quick and have an answer just like that from our team because of the way we have that communication. And then they can also send documents really quick and get that to the right person very fast and very efficiently. So we're able to do it. So we're very, very excited about that initiative, and it's really a defining moment for our company. We've been through a lot over these last few years, managing marketing headwinds with the PAP recall, COVID inflation. But particularly with COVID, we're very, very proud of the role that we were able to play during the pandemic and be able to supply oxygen to those patients in need during this pandemic. So over the years, we've made tremendous progress. We've -- both Adapt and AeroCare, had a strategy of geographic expansion. Why? Because the barriers to entry to open up a location in this business has become extremely big and extremely large. So that does a couple of things for us. One is it protects our locations now. But those barrier entries, now if you're in the state, you can open up one. But if you're going to a fresh state, I know as much about DME as anybody. And I wouldn't go to a fresh state and open up from scratch anymore. It's just not worth it, so you want to buy your way in there. So that's what we did. That's what Adapt did. Now we're in 47 of the continental United States. So we have the ability in those states to do pretty much anything we want. We're still not in Montana, maybe that will happen. Montana is a great state. So I would be pretty confident in saying it will be very, very difficult, if not impossible, for a company to start today and do what AeroCare and Adapt have done over the past 20 years. It just -- there's just not enough people out there. There's enough companies out there to be able to acquire it in there, and it's very, very difficult. So our franchise, if you will, 767 locations is somewhat protected. Now 2022, like I said, we started how can we optimize what we're doing. How can we get better at what we're doing, how do we integrate and get that and growing that. And that's all building to what we call AdaptHealth 2.0. What is AdaptHealth 2.0? That is moving from fee-for-service to value-based. All right. So value-based, we have the tools. We have the processes that payers and risk-taking organizations need. We can make sure that the right patient gets the right equipment at the right time through our e-prescribe technology. Our world-class patient engagement and patient satisfaction that we're able to do through our OTL system makes the patient encounter, not just good for us because of the time it gets them there. Again, it makes it good for the doctor in the plan. And so for MA plans, when we're talking a Medicare Advantage plans, they're very interested in that. Why? because today, they had there on the star ratings and those star ratings determine their reimbursement rates. And a big portion, 40% of that star rating is based on patient satisfaction. So when we talk about our OTL system, it's getting a lot of traction. Ben Chambless Head of Managed Care is here today. He can tell you that how that's become a big selling point in his calls. All right. So here we go. 2025, our goals are $4 billion in revenue, $1 billion in adjusted EBITDA and $300-plus million in cash flow. How do we get there? So as a CEO, what you likely have goals out there is, are they reasonable? And the answer to this one is yes. Are they obtainable? And the answer is this, yes, because there's multiple ways for us to get there. We don't have to hit on everything perfectly to get there. We have several ways, one of them being PAPS, the PAP come back. Certainly, that's a big one but then the rest of them are just doing the stuff that we've been doing for years. So non-acquired growth, continue to grow our business, operational excellence. Again, it's putting together and just doing the things that we already do well in parts of the company, doing it across the company and then strategic M&A that we'll do. And then all this is really at the same time we're doing this, which is that's just going to work in the execution. We're starting to build the pipes and put in the places -- processes for this AdaptHealth 2.0 and Value Care. Now that monies that we spend for that, I promise you, deliver -- will deliver what we were looking for in the future, but it delivers results today. You won't hear me get up here in to 2025 and say, "We didn't make it because of all the money we spend on value-based care." You might hear me say because the money we spent on value-based care, it was even easier to hit our goals. So everything that we're doing to be able to become competitive and be that provider of choice. All that money spent will get benefits today. All right. Pat, save you asking me the question, save some time in our Q&A. And so first, we bottomed out in our PAP census in February. And since then, we've had steady growth in our PAP census, which is PAPs on rental. Now remember, a PAP is rented for somewhere between 6 to 13 months. That's all we get for it that they just become a resupply patient, okay? So we're out of this thing. So where are we at with PAPs? Somebody already asked me over there as they were getting a bagel this morning. So I'm going to give you and let you decide where we're at, and I'll give you my opinion, too. There's a piece of information that's out there that's very, very important. ResMed has dramatically increased their supply of patients and production of equipment, dramatically increased. What does that tell you? It tells you several things. Now of those, about half are connected device AirSense 11, about half are AirSense 10 that are not connected to [ PAP ] cloud. So with those informations, we know what? ResMed can dramatically increase their production. They can -- I believe, at least double, if not more than double their existing -- they have the capability to do that. In addition, it tells you that because of that levels that they're building that, that the components, x chips, have -- they're getting more and more secure in that supply chain. Mick Farrell, CEO of ResMed has done a great job of expanding and going deeper and deeper into the supply chain that they need to get that security that they're going to be able to get those components. And then finally, it's chips. And so I see Deutsche Bank, Jefferies, all these various firms here. You all know more about chips than I do. And so you all should know what's going to happen with chips and where everything we're reading shows that the chip availability is getting better and better in the marketplace. So I suspect that more and more of those ResMed machines will become connected as we go through. So that's ResMed. In addition, other suppliers have stepped up and been able to vastly increase. They're 2, in particular, vastly increase their production of PAPS into this market. So as I sit here today, Respironics has been an incredible partner for me for 35 years. But if they don't come back to the market, it doesn't matter, 2023, where they come back or not. In 2023, we will have enough PAPs on there for current demand in 2023, and we will start getting enough PAPs to go into the backlog that's been created. If Philips does come, then the backlog, the working of the backlog, they did Philips does come back, will happen faster. But regardless, it's going to happen. My opinion. So non-acquired growth. Basically, we just need to keep doing the things that we're able to do. E-prescribe is a big one as we continue to expand e-prescribe, expand our care-based model, we're getting more and more attention from not just doctors but health systems on solutions that we can do for them. And deeper payer engagements, we're now being able to have these nice conversations with payers about how can -- how can we work better together. It's not all just about price. It's not all just about price. And our technology, our patient advocacy and how compliance and RCM work together, all that stuff produces a product for the marketplace that the doctors can and the referral sources can engage with and be committed that when they send a patient to us that we won't be back in there asking for more information as a lot of our competitors do. And so all this is leading to, as we get more patient engagement early on, more physician engagement and engaging them electronically becomes very, very important because patient engagement and provider engagement are critical to everybody as health care moves more away from the institutions and into the home. Industry tailwinds. So we're lucky because we have the boomers, if you will, moving in through Medicare. It's just a demographic trend that Medicare is one of our highest growing segments of our population. And those people [ adsorb ] and need and have a lot of chronic diseases. So a COPD patient today is living longer than they've ever lived before. Why? Well, it's because that technological and medical advances in cardiology and in pulmonary have just increased the life of that patient and in cancer treatments. So those things aren't debilitating the patient. And so now that COPD patient is living longer. Plus, we're all interjecting ourselves earlier into that COPD patient's life. So again, these product categories and are going to continue to grow. We've seen tremendous growth. And in addition to that, what's the patient want? Patient doesn't want to be in an institution. No way do they want to be in the nursing home. So they're going to do everything they possibly can to stay out of the nursing home. Margin improvement. And our goal, that indicates a 25% margin. How do we get there? Well, the CPAPs get us halfway there. All right? Our remaining organic growth and that organic growth comes with that incremental growth comes with incremental profitability that's significantly more than 25%. And so as those grow, we do better than that, that will drive that up. And these operating efficiencies that we know that we're going to get, all we have to do is do what we do in the Northeast and the Southeast, and the Southeast and the Northeast et cetera. What we do in RCM and do it all across our businesses and make people work within that. And all the projects that we have out there, we just got to do it across our organization. We will pick up margin share. So if you add those up, we go well in excess of 25%. But what backs us down there is the 2 boogiemans that are out there, inflation and labor pressures. So we know that, that's going to contract us a bit, but we are very, very confident that particularly PAPs and the organic growth will drive our margins up. So today, we are top 3 across the portfolio. We're a leader in electronic ordering, a leader in patient engagement. And the future, again, is this move to -- this move to value-based care. We have all the pieces and parts to do it. We have to assemble them and we have to get adoption. And so we have to work with our payers and work with our health systems to get more on e-prescribed, more on documentation flow. Again, with our e-prescribers, very crucial that for managed care that we can get the right patient on the right equipment at the right time by using that system. Finally -- or not finally, but close to it. ESG. It's very important -- the Securities and Exchange Commission will come out with more guidelines. But we are committed to as an organization for our employees, our customers, our shareholders, our stakeholders. We're all committed to it. We've already done some preliminary work or have some surprisingly good results and maybe not some surprising challenges that we have to work on. And so we'll be releasing our plan next year. And with that plan, it will show not just where we're at, but how we're going to continue to improve. Today, you'll meet more of the executive team, and they'll show you how they're working together to be able to accomplish these things and their commitment, not just to 2025, but beyond. And our Board members, many of them are here today. We want to thank them for their support and their expertise that they lend to us as we go through this mission at AdaptHealth. So in summary, we've transformed the business. We're capitalizing on what we got today, and we're putting together the stuff for value-based care in the future. Thank you. And next up, Josh and Albert.

Thank you, Steve. Thank you, everyone, for joining today. Nice to see a lot of familiar faces in the room. I want to give a little bit of kind of background of Adapt, a little bit speaking a little bit now and then going to focus more on Adapt 2.0, a little bit later this morning. But my story for those of you who are not familiar with it, I got into the HME business in 2005, with a $25,000 investment and an entrepreneurial vision, if we'll call it that, to compete in what was at the time a very antiquated and dated business model, built on heavy reimbursements and inefficient operations. When we founded Adapt in 2013, our vision was to create a scaled diverse product offering and best-in-class technology to not only create an efficient and profitable business with recurring revenue like Steve mentioned, but also mass relationships with millions of patients living and aging at home. I'd like to focus on today on the first part of my address on what we have done, what we've built and why we've built it. And later, when I address ADAPT 2.0 and give you guys a little bit more color about that, we'll go a little bit deeper on what that all means. And executing the vision that we've had over the last 9 years, Adapt has acquired -- Adapt and AeroCare with their combination have acquired hundreds of HME respiratory and supply businesses, push new technologies in home health care and more importantly, establish itself as a leader in home health, equipment and supplies with a broad and growing product portfolio in the categories of sleep, respiratory HME, supplies, diabetes, infusion and orthotics amongst others. Today, that spans over 750 locations in 47 states and continues to grow and evolve as a leader in the HME and supplies industry. Adapt continues to be an acquirer of choice in the HME respiratory and supply business. We are adding density in adjacent geographies and expanding into more categories and products to add scale. As we integrate, we continue to extract significant synergies in the areas of product cost, resupply operations, labor and technology. We are still seeing attractive opportunities in the marketplace and our targeted 4 to 7x synergized EBITDA range, and we'll continue to be disciplined buyers for the right opportunities in the right time. Shifting to more recent operations and the vision of the platform coming together is sort of why we've built it, our 2022 focus, which we previously communicated, has been putting a tremendous amount of effort around maturing as a public company. Albert and Jason are going to add some more color to the details and specifics of this. As well as integrating AeroCare and 23 other acquisitions in 2021 that were completed and continue to drive operational efficiencies as we go forward. One of the nice opportunities about our business is that, like Steve mentioned, in spite of broader inflationary pressures, we have been able to leverage our platform to drive significantly more revenue per employee as well as drive operational technology to create OpEx efficiencies. This effort has a lot more runway and involves a collaborative effort between our operational and technology teams. Our CTO, Albert Prast who comes from a large public company experience, has been an amazing partner to the operation in driving transformative technology change. And we're excited to tackle the opportunities to extract more of these in the months and years ahead. Albert is going to talk a little bit about some of the tools that we use, how we're thinking about our platform, what -- some more specifics around where we're going and without further ado, Albert, I'd like to call you up to say a few words.

I had a rep who sold us paper alone for the company. I'm not kidding about that. We had very little e-mail. We had no technology partners that we could purchase off-the-shelf tools for. So I would tell people we kind of had to make our own clothes. So most of the budget, most of what we did was really spent on just table stakes type of things. So we did that for a long time in the early 2000s. We went in different directions. I joined with a -- built another company that we sold to a payer and then I ran cloud computing for a large payer for a little bit. And then Steve called me and said, "Hey, I've got this DME company, again, you want to come back and join me and do it again?" And so I looked at all the people I was working with at the time, and we were doing digital health and digital therapeutics and all this cool stuff that was just software, and you didn't have to touch things, inventory things move things. And I said, Steve, yes, I'd like to come do it again and people thought it was a little nuts at first. And maybe I was, but we have such a growing demographic. It is an industry that has such great need and having done this before was kind of like the opportunity to go back to high school or college or the first company you did where you realized that technology was not at the point you wanted it to be and it is now. So you could do things that you never did before, but it also allows you to identify the things that maybe we had done in the past that we don't want to do again and other people might not know that if they're just getting into the industry for the first time. So that gave us, I think, a little bit of an advantage and some speed. So you fast forward to the focus. Our focus was that we need to move equipment, get equipment to patients, make sure that the patients are compliant, make sure that it works as expected. We get good patient satisfaction, and we wanted to do all of this without any paper. So when you go back to our original locations, we had, again, copiers, paper, file cabinets, they were all full. If you look at the version of today, very little, if any, paper. We try to do everything electronically from beginning to end. And I think we've done really well with that journey. What does that result in happier patients, better patient care. They know exactly where they are, we know where they are. We share the same artifacts. We have a better referral partner experience with not only the physicians who we work directly with but the health systems as well as providers and then we have a much better and easier method to be able to make decisions and build workflows and that's through data that I'll talk about in a little bit. So I came from the AeroCare side with Steve, as I mentioned, and I've been here for about 1.5 years. And so we had 2 fairly like-sized companies coming together that did not do things exactly the same way. So initially, my focus was to look at the team, to look at where we were from a technology standpoint and really build from the bottom up layers of the cake, if you look. So tactical and defense, table stakes. We have an awful lot of people working offshore. We need to be best of breed, ensure no data flows out of the country, security risk migration, big deal focused on that, have done it before not that hard to do, but you have to get procedure policy process in place to do it. Moving a little further up the stack is really around being proactive as opposed to reactive with network operation centers that we didn't have. I've put one in place that's actually I'm pretty proud of, and it's very sophisticated. So we monitor everything that we can monitor. We monitor weather, we monitor political events, we monitor all of our systems. We're monitoring response times. We're monitoring how current the data in our data layer is that we can empower the business. And it's kind of been -- it's been more than fun to watch really in the last 8 to 12 months, how we've educated people on this single data layer and being able to access data. And usually, if you're a technology person, you have a lot of -- the business always wants to find, well, I access this data and there's something wrong. We're not finding that anymore. We're getting the business accessing the data and say it's amazing. It's current, it's accurate, and it allows me to move forward. So it's really becoming dial-tone. And then moving up the stack and concurrently with what we did, I've really focused on building a best-of-breed R&D team. And that team is really taking the data, our processes, our policy and both our head lists, and I'll get to that in a minute as well as application based and developing solutions to help different personas, constituencies, people that we work with within the business. And I'm really proud of what we've done and how we've done it. And let me tell you how we've done it, which I think is interesting. I had a lot of relationships in this industry from a prior life and then this life. So I hired some really, really great people who I've worked with for a long time who know the industry exceptionally well but maybe they weren't as current in some of the emerging technologies that you find the younger people just getting out of school are current in. So I hired a bunch of them as well and have mixed them together in 2 locations, one in Winter Park, Florida and 1 in Tampa technology center that we've spun up. And they're working exceptionally well together, and we're taking the old method and the old processes around our industry with people who have done it and understand it, and we've really merged that well with some of the latest cloud technologies and things that you could do with moving data very, very quickly. And the result is it's noticeable now. So I'm not going to go into each one of our tools in detail, but I wanted to talk to you about a few of the things that we're doing and the tools that are top of mind to me right now. This isn't an exhaustive list. But if we look at this sort of like a clock, if we start at 11:00, our OTL, which is our online tracking tool, is the most mature tool that we've built. We built that at AeroCare. Steve and I did that beginning in 2015, and OTL stands for online tracking log. That should mean to all of you is that my team is really good at building software. We're not so good at naming things. But what the objective of OTL is really to be able to track pretty much everything. I want to track where the driver is, I want to track where the equipment is, I want to track where the patient lives. We want to notify the patient at what time we're showing up, and we want to make sure that we get feedback from the patient when we leave the home. I'm going to talk about OTL a little bit more on the next slide. My app, which is my Adapt patient portal, again, I love the name, but it's better than OTL is our -- we started this with our diabetes group. But really what it is, is it's a mobile app today. It will also be a web portal as we expand it. But we took the focus that I took with all of our employees with security and socks and all these things going on, we enable single sign-on that many of you probably have, people need to access from 5 to 20 systems. I don't want them to remember passwords and log in to 5 to 20 systems. I want them to have a single relationship where they log in once and they know what to do. So we have a unique capability in our company where we drive to the home and we see people when we deliver equipment, I can have those drivers with a QR code, have all the information around the patient and say, we're going to put this on your phone. So we have a direct dialogue with you. We onboard them very, very quickly and can get them running with an app that has proactive notifications allows them to see where their orders are in the process, when they're eligible to order, which is a big deal primarily for the diabetes patients and then know when it's coming and be able to reorder. So the key with this app is we're releasing it for diabetes. But if I'm here next year, talking to you, there'll be circles behind this with all the other areas of the business at the same application, slightly different or enhanced workflow will be in there, which means you have one single sign-on to the company and you can work with the diabetes group, you could work with supplies group, you could work with the oxygen group, the sleep group, whatever you want to do. And I think that, that's impactful and going to have value. If you want to play devil's advocate and say, well, everybody doesn't want to have an app or downloaded on the phone, okay, they don't have to. We have head list technology that will work with SMS, if that's your channel of choice. And we're also releasing an Adapt switchboard that I haven't really seen anywhere else and to define it at a very high level, one of the areas you can go to, whether it's on the web here or in the app is you could select what department you want to contact. And your preferred method of communication, I want you to text me, I want to set up an appointment, I want you to call me, I want to be able to chat with you. And we record the mechanism that the patient or the physician whoever is interacting with us chooses and we're identifying that channel of choice and storing it in that data layer. So over time, we're going to get smarter and better. And the read here is that when somebody tells you this is how I want to communicate and when they may not be telling you when they want to communicate and how, but they don't know that. So we have to use the data to derive those insights, and we're beginning to do that. We have a partner order tracking tool that seems very simple, but it really has made a big difference. And I never thought that it would be as well received as it was. And what this is, it's just another instantiation, just another way of assembling how on behalf of a large payer that may have a cohort of patients with specific need, they may hand you x number of patients, 5, 100, 1,000, 10,000, and those patients have similar need but they want to see what's going on with them in near real time. So we basically gave them a view into our system with an app, with messaging around it where we can message between our payer partners and the company around a patient or around a specific order for the patient. The uptake was beyond anything I've seen and Ben Chambless, who's here can talk a little bit more later. We're getting really good feedback from the market for this application as well as OTL working together. E-commerce, I'm going to talk about in a few minutes. We have a dual path for both traditional e-commerce as well as serving our patient base, and I have a slide on that, that I'll go over in a minute and then Adapt referral management. Think of this as our internally built CRM system for our reps who work specifically with referral sources, gives them visibility into everything that they need to do that day within a specific referral source and their patient base as well as being able to take notes, identify preferred times to visit names some people in the office, et cetera. And then the last thing, which we didn't build, but we have several partners as e-prescribe where this begins the paperless journey. And we have many people, and we encourage all of our referral sources to use e-prescribe. So we do things electronically the way lots of other folks do it today. Lot in that slide, and let's move on a little bit deeper into OTL. So again, this -- we started -- Steve and I weren't down this path from the AeroCare days, but we've rolled it out in the last 5 years working with Adapt very, very quickly. We have almost 700 locations, up and running today and about 7,500 users. It's really battle tested. It works exceptionally well. It's easy to use for the driver to understand we built the technology and load this on your large iPhone, form factor iPhone, which we give them and follow the truck. And so it lets them know where they need to be, when they need to be. It provides reconciliation from a revenue cycle standpoint and for working with the back office as well as let our patients know with an e-mail or a text, "Hey, your driver's on the way. This is their photograph. This is what they look like." And think about it with an aging population, people who are older at home right now, they may be alone. You don't just want random people showing up knocking on the door without knowing who they are. We're using advanced technologies like BIMI to make sure that we have non-repudiation on those e-mails, so they can be confident that you know who's coming and when they're coming in that the e-mail message is actually sent by us, that may be a little bit over clubbing what we need right now. But we're thinking about these things and building towards the future. All of this is in a very compliant, HIPAA and SOX sort of tooling. It's really made a big difference for our business. And this is one of the things, I think, that we're proudest of because this -- this is a result of bringing that technology and then asking questions in a way that we never asked before working with our patients. So just like when you get out of an Uber or most of what you do in other areas of life right now, when we leave, we ask the patient through an e-mail, how do we do? What do you think? And it's not necessarily to say, what did we do right or what did we do wrong? But what are we doing that you are really elated about or what are we doing that you really think maybe we should do different? So we continue to tweak and adjust with the data that we feedback, we've had -- this year alone, we've had 2 million deliveries on our OTL system. We're getting 20% response from these activities that we're sending out from people. So they do want to tell us what their thoughts are. And our Google rating has gone up to a 4.8. Needless to say, it was a lot less than that. So I think we're pretty proud of where we are, and it's working. And we continue to use this feedback loop, and we'll continue to operate that going forward. Part of what OTL and our feedback loop taught us is that patients sometimes said, I love working with you all, your trusted partner and brand. I'd like to do more or have more. And some of them said, I'm even willing to pay for it with a credit card, cash pay approach. So the company has taken a two-pronged approach to this. The AdaptHealth marketplace, which is new and branded to our website, it will be launching on the 14th of October. And I want to caveat that with -- we had this at AeroCare as well, but we just did different branding and have modified the store. This is a marketplace for our current patients to come in and engage with the company. So we don't spend a lot of money on acquiring patients in this marketplace. So we can use e-mail, flyers, package inserts, talking to patients via OTL, we could put it in the e-mail. So we already know the patient. We already know there's a need. And this is just giving people a store where they could come and buy some of the products. In addition, we have several properties in the CPAP space, the oxygen space, breast pumps, things of that nature that are traditional e-commerce, where we have Google ad words, we do spend for organic, inorganic search and we look for patients that are not currently engaged with the company. And this is exciting, and it's part of what my group does and we're making it seamless into some of the apps that I mentioned that we're building before. I could spend an hour on this slide, and I have about a minute. So data is really what has made all of this available. So when you look at when I said we've got to go up the stack and after we solve security and risk and compliance, the next thing was taking all of the silo data that we have in typical health care companies and get it into one place. And I think what has really helped is one of the areas of focus was with our communication channels that we have with patients. So you know what it's like to dial into a call center system where you're bounced around, you may leave a message that never gets returned, nobody knows that you called, when you finally get to somebody, they don't have accurate information in front of you. We did a really focused approach of integrating our location-based PBXs, which are phone systems that you typically would find in an office where you walk in, where people have work to do, that includes answering the phone, but is not exclusively answering the phone. And then our call centers where we have people who are specifically focused on answering the phone, responding to chats. And then within that technology, we have dialers and IVR, interactive voice response units that may call out directly to patients. For example, that's how we do reorders in our CPAP resupply business. About 47% of them are now touchless, that it's time for you to reorder, a phone call comes to you a very nice sounding piece of technology speaks to you and says, "Would you like to reorder Press 1 for yes, 2 for no, that sort of thing. So at any rate, we've built this data layer that's available in near real time for pretty much all of the data in the company. We're still adding a few things that are smaller pieces. But the vast majority of our data is there. It's accurate. It's up to date. And it really is allowing us to change the way we interact with patients, with our payers and our providers and processes. And this is what's really important because when you look at the process piece, when you look at the internal piece, analyst type people in our business, the business analysts say, "I want to get in front of computer, and I want to look at data, and I want to find a needle in a haystack. That's great. My group looks at the data and says, we're going to let machines identify patterns, and we're going to let machines identify workflows that we're then going to take the raw data, throw it up into our micro services layer and let that do things with our phone system with e-mail, with chat, with other ways of reaching out to our patients and our payers on their own. And in addition, the same layer powers all of those applications that I mentioned before. So it sounds great. We have 5, 6, 10 different applications that we're providing for people but it's all riding off of the same core. It's all using the same set of services, but they're assembled differently based on who's using it. I think that's important. To summarize, we've focused at really being efficient at leveraging scale and technology. And when I mentioned before the things that we know to do and the things that we know not to do as an acquisitions company, one of the more difficult things and something that's usually not a point of focus is eliminating technical debt, eliminating old contracts, eliminating things that you don't need, making sure you're communicating with the people in the field. We're not going to be doing this that way anymore. We've got a standard process. We have best-of-breed technology, and we can scale off of this. So a hyper focus on getting things to operate in the same way has been a real focus, and it's made a difference. And that has allowed us to really get deeper into our patients, our providers, our payers better health outcomes with happier patients. And that's proven not only by Google, but Leila is going to talk a little bit about that as well. Our providers are happier and we're easier to work with, that results in more referrals, of course. Our payers are talking to us about things that they never were able to speak with us about before because we didn't have the acuity, we didn't have the flexibility, the capability to be able to move quickly and assemble things the way that would meet their needs and in many cases, deliver it in a white label solution, which we're doing. And then the great news is I've got a management team and a board that understands that technology is what is driving the future. So the company is committed to investing in technology. We're doing that in an appropriate and a cadence speed. You can go as fast as you can, but you cannot go any faster. And we're not taking the approach of just throw money at something. Let's go acquire something that doesn't fit into our architecture, and we'll drop it in and we'll get to it later. As many of you know, that never happens. So we continue to move. We accelerated this year. We fixed a lot of the things that were required with a deep integration of 2 companies and expect just more and to go faster and faster and continue to drive with these technologies. So with that, I am going to hand over to our Chief Compliance Officer; Wendy Russalesi. And she's got some great stuff to talk to us about.

Thanks, Albert. Good morning, everyone. My name is Wendy Russalesi. I'm the Chief Compliance Officer for AdaptHealth. Today, I'm going to give you an overview of our compliance program and share some insight into how we approach compliance at AdaptHealth. We'll start off talking about why health care compliance is important. We'll provide details as to how we've designed and implemented our compliance program, and we'll talk a little bit about how we monitor the industry for our priorities going forward. So there's a variety of reasons why a health care organization would implement a compliance program, but a key reason is to deliver quality patient care. And we believe that our foundation is strong. Our program has a strong foundation in ethics and integrity, raises a consistent awareness of compliance throughout the business and prevents misconduct, which allows us to achieve our goal of delivering the best patient care while minimizing the business risk. Years ago, when we started talking about branching out our program into an enterprise program, our compliance officer team felt it was important that we have a compliance mission statement. We had all come from organizations where compliance was viewed as burdensome or the adversary. And we were determined to do it different. We wanted to have a positive relationship with the business, and we wanted to deliver a supportive program that adds value to the company. This chart right here shows you some of the key milestones of the program evolution. Back in 2017, we started the process of retiring the individual subsidiary compliance programs and we transition to the enterprise corporate compliance program. That gave us one code of ethics and business conduct. It implemented policies to support that. We created a comprehensive education program, and we also developed a very rigorous internal monitoring program, which gives us pretty much real-time visibility into the business practices and helps us identify any types of trends that need immediate correction. And then lastly, we launched an annual enterprise risk assessment program, and this is a process that all of the management team participates in. And it's very helpful for us because our team is small in comparison to such a large organization. It really helps us understand what's going on out in the operation, what people are thinking what they're feeling we need to take a look at. And we use that data that we collect from that process, and we help to identify risks in the organization and also mitigate risk for the business. In 2020, we expanded the scope of our program to incorporate new lines of business and at the same time, had a slight distraction of supporting the business through a public health emergency, and that took up a lot of our time that year. And then in 2021 and continuing to date, we scaled the program to integrate the largest acquisition the company has done so far. And then we also participated in an independent assessment of our compliance program, and we'll talk more about that in the future slides. So through the enterprise program, we have a consistent framework that helps us influence the compliance-first culture, empower the business success and focus on technology not only within our program, but also within the business. Our program incorporates all of the required elements from the Office of the Inspector General guidance as well as factors from the Department of Justice's evaluation of corporate compliance programs. Our team is led by professionals that are certified in health care compliance, HIPAA privacy and security and also billing and coding practices. So our compliance-first culture starts at the top, and we benefit significantly from a strong support from our Board of Directors and our executive leadership team. The compliance program is independent, but yet it incorporates reporting lines into the Board Compliance Committee as well as the company's Chief Executive Officer. The Board and the executive leadership team, they're active and they're engaged in monthly and quarterly meetings. They're making the appropriate inquiries as to if our program is adequate, and they're always ensuring that we have the appropriate resources. Our enterprise compliance team collaborates pretty much daily with all of the business partners such as sales, operation, IT and our revenue center team. This daily collaboration is important because it really helps the business deliver a clear and more effective message to referral sources, which results in us delivering a safe and effective patient onboarding experience. We empower the business's success through education, policies, best practices, recommendations. And while annual compliance training is a requirement in most compliance programs, we also provide monthly live sessions to the business. And we feel that this is a benefit because it helps equip our people with the knowledge they need to know to navigate the current risk environment. Our team also plays a very active role in the due diligence process for any of our merger and acquisition activity. Through this process, we're focused on identifying any red flags that exists within the organization and then developing a plan of how we're going to mitigate that risk as it transitions into AdaptHealth. Typically, all acquired organizations start to transition into the AdaptHealth enterprise compliance program within the first 30 days of ownership. Focusing on the use of technology within our own program. Back in May of 2016, we launched a proprietary compliance workflow that we refer to as audit share. We saw a need for this as the company was growing. We were receiving a significant amount of billing audit requests from governmental and nongovernmental payers, which is typical. But we really need a way to manage that activity for our centralized audit teams. So we launched this proprietary workflow, and it gives us real-time visibility into what's happening with our audits. We can see our audit outcomes. We understand what are the trends and what are the emerging risks that are coming out of this audit activity. And from all of that information, we're able to present that monthly to the business, and that helps improve our audit outcomes overall. So in 2021, the Board of Directors commissioned an independent assessment of the compliance program. They really wanted to understand that our program, again, was adequate to support the scale of the organization and also to support the company's growth strategy moving forward. We contracted with an independent auditing firm who has a very strong background in fraud and compliance. And ultimately, through this 5-month process where they reviewed policies, education and attendance of that education and compliance matters and discipline, they've concluded that our program is well designed. It does work and that is well above DME standards. So how we set our future priorities for the program is really just staying in touch with what's happening in the health care industry and also enforcement trends. We routinely monitored the OIG work plan. There's new items that are added by the government to that work plan every month. It's been especially active in COVID. So we are really focused on using that as a key resource. We also evaluate our enterprise risk assessment data. And we're looking at our hotline disclosures to see what are people thinking about, what do they think might be of concern? Or type of questions that they have. So we need -- we understand how do we tailor future education, how do we set new policies for the business. And then also, like I said, we're also monitoring the enforcement trends that are coming out in the industry. It gives us an interesting perspective of how we think we understand something, but then in actuality, how the government has looked at that practice in another organization. Monitoring all of these items helps us set our priorities to move the program forward and to achieve our goals to drive better patient care to mitigate emerging fraud and abuse risk and again, to support the company growth strategy. So with that, I'll turn the program over to Leila Vargas.

Good morning. I'm Leila Vargas, and I lead our sales and marketing teams at AdaptHealth. I have been in the HME industry for 15 years. So you've seen the facts and figures and statistics, everything that shows where AdaptHealth is today. I'm going to talk to you about where we're going and how we're going to get there and it all starts with the heart of our organization, our patients. We can easily get wrapped up in the numbers. But we have to remember those numbers are patients. And those patients are people. They're our friends and neighbors, our parents, our grandparents, our kids, and we can change their lives with the products and services we provide. So this is what we've defined as our brand promise. This is the contract we make with our referral partners, our patients and their families. We're always reminding our employees that this is our noble purpose. This is why we do what we do. We take care of patients with health care issues that are creating challenges, the patients we take care of have progressive, irreversible diseases that may not have a cure, but it's our ultimate goal to take those patients from just existing with those conditions to living their lives. And that's why the phrase living versus existing has become so important to us, and that's what we're doing every day. These are the high-quality products and services that we've become the experts on so a lot of our patients have multiple conditions that require treatment with a combination of these products. What we see often in health care today is that it's managed in silos. So you've got 1 doctor managing the patient's diabetes, another doctor managing the patient's respiratory disease and then another doctor managing their incontinence issues. We are in the best position to facilitate coordination of care across multiple platforms and across the country. And with 3.9 million patients already on service, we have an incredible opportunity to start with them and be part of that solution for connected care. To accomplish this, we have the absolute best team out there representing us every day. We've got over 1,000 clinicians in patient homes. We have over 650 sales reps in the field in doctors' offices and in hospitals. And what makes this team different is our salespeople are not just salespeople. We've trained them to be educators and facilitators. So the ordering process can be very complex. And doctors are really frustrated with this. They know what the patient needs. They just don't know how to get it for them. That's where we step in. We've trained our reps to help the doctors every step of the way in the process to get our patients what they need. In the hospital, we have liaisons there, helping transition the patient's home safely. So we've made our reps and our liaisons valuable resources to our health care partners. And we see the impact this team is making through our market-leading positions. Our goal is to be #1 in every one of these categories, and we can achieve that if we continue to gain market share and continue to do a great job for our patients. So our approach is all about being patient advocates, and we are teaching every employee in our company to identify patients that are struggling who we can help. We're also really big on physician education, specifically with our primary care physicians. So we spend a lot of time educating them on identifying the patient early in the disease process because we know if they get on our services earlier, we can help them stay healthier longer. Health care has become really disconnected. And unfortunately, patients can easily slip through the cracks, especially when they're coming out of the hospital. So in the hospital setting, we've got -- you've got case managers, social workers in a lot of cases, what they call COPD navigators, all working to discharge that patient as quickly as possible because reality is they need that bed for the next patient. We see it as our job to get the patient everything they need to keep them out of the hospital and keep them where they want to be, in their home. So this wheel up here is what we call our circle of hope. So this is how our specialized centralized teams are all working together to do just that, to keep the patient at home and to deliver on that brand promise. So we've got multiple layers of clinical oversight here with the local respiratory therapists that are actually in the patient's homes. We have sleep coaches. We have a respiratory pharmacy that delivers nebulizer medications directly to the patient's home. But the real differentiator here and something we're really proud of that we know no one else has is our care coordinators. So think of them as case managers for the patient in the home. So the goal of our care coordinators is to identify struggling patients as early as possible so we can intervene and prevent a hospital readmission. And they're working a lot with our noninvasive ventilator patients. Breathe a Little Easier is our program for noninvasive ventilation and really our biggest opportunity in respiratory. Of everything we do of all the products and services we provide, nothing changes a patient's life like a noninvasive ventilator. And we focus on COPD because it's the third leading cause of death. We're tracking our outcome data because we want to be able to say we're not just talking the talk, we really are changing patients' lives. So these are our numbers today, and they're good, and they're well above the industry averages, but we're committed to getting them higher and higher. And so this 84% compliance rate, we really want that to be 90% or above. And we want to use the tools and technology that Albert's team has created to be able to feed that information directly to our sales reps so that they can take these statistics on their patients and patient success stories and go to their doctors and go to our hospitals and show them that we're making a difference. It's not that the patients using the machine 90% of the time. It's that because he's using the machine 90% of the time and feeling better and we got involved earlier, he's not just sitting at home in his recliner all day. He's getting out of his house. He's going to pick up his grandkids from school, taking them to get ice cream, going to their soccer games. That is living versus existing, and that's what we're doing here. Every time we bring on a new patient to our company for noninvasive ventilation, we ask them their goal. This is an important part of our process, not necessarily their health care goal, their personal goal, what do they want to be able to do when they feel better? And a lot of times, it's something really simple. Maybe they just want to be able to get themselves dressed on their own, make their own breakfast, be able to check their own mail, things that we take for granted maybe they -- maybe it's something bigger, maybe they have this big dream trip that they're hoping one day they feel well enough to go on or maybe like the patient I'm about to share with you, they just want to be able to walk their dog again. So we're going to play a video for you. [Presentation]

So stories like that are what keep us all going because this is what we're doing here. So now we're going to talk about technology. We provide our reps with tools no one else has. And we know this because when reps come to us from other companies or through acquisitions, they're shocked. They've never had access to patient information the way that they do at Adapt and the OTL has really been our secret recipe for many years for this, and it really gives our salespeople a competitive advantage. So when I'm out writing with reps, spending time in the field and talking to doctors all the time, I can tell you, no one has access to real-time patient information like our salespeople do. And it's very impressive to our accounts, and they use it to be very helpful to them and to be a resource. And the OTL ties in really closely with our digital ordering and e-prescribed goals. So -- the #1 problem that our doctors have is documentation as it varies from payer to payer, and digital ordering solves that problem. It's good for everybody. It's good for us because we get accurate information in our system faster. We can process the order faster, get the patient set up quicker, our ultimate goal. And it's good for our doctors and our health systems because they have visibility. They know where the order is every step of the way. They see that we've processed the order and the patient has gotten the equipment and they can see how quickly that happened. It's best for the patient because the patient gets set up quickly, and then they can start using their therapies and benefiting from them. One feature that I want to share about the OTL that's my personal favorite, and really impresses our referral sources, but also the start of our patient satisfaction success is the on the way delivery feature. So Albert mentioned this briefly, but picture your grandmother, she's at home alone, and she just found out from her doctor that she's going to be getting oxygen. So she's at home, anxiously waiting the delivery of that oxygen. With us, she knows exactly what to expect. She receives a text, letting her know the estimated time of arrival of our service tech and that it's going to be Dave and Dave's picture. It's like Uber for oxygen. She knows exactly when he's coming, who's going to be at her door, and immediately puts her at ease and that's the elevated service that we're providing. And that's what we're teaching our reps to go out and share that message. We'll also talk about ARM. So AdaptHealth Referral Manager. So I was a rep in this industry for many years. And I know personally how challenging it is to keep up with everything. All the patients, all the orders, all the documentation for all the accounts. So I used to jokingly say that I dreamed of a day whereas a rep at our company, I could open up my phone, see that today is Friday, and that I have 18 accounts I need to visit, every single patient that I need to follow up on every order, every documentation, anything that I need to do to be more efficient. And thankfully, Albert and his team have created that for us in ARM. So we needed this because we needed to be more productive, we needed our reps to be more organized and we need them to move faster through the day. when our reps can move very quickly through the day, they can cover more area, they can touch more referral sources, help more patients and make a bigger impact. We highlight the importance of our training program because we know we're different in the way we train our employees. We invest a lot in our training program because it works. We bring people together from all over the country to one place, so they can see the big picture of what we're trying to accomplish here. And every time they leave feeling proud to be part of AdaptHealth. And that's the commitment that we need from our reps to go back to their local markets that they know better than anybody, so that they can now make a bigger difference there. So we have a few strategies to continue to grow. And first one's driving new referrals. So today, we get business from about 70,000 primary care physicians and 70,000 specialists, and there's a little over 1,000 health systems that we can partner with. So we feel like we still have a tremendous opportunity to further penetrate the market with the products that we already provide today and as we continue to add more high-quality products to our services. And then again, continued education of our physicians, mainly our primary care physicians. This has always been a big focus for us. It will continue to be a big focus for us because we know if we get the patients on our services earlier, we can keep them healthier longer. And there's still so much more we can do for our 3.9 million patients that are on service today. Many of them, again, having multiple conditions and needing multiple of the products that we provide. So we want to extend more of our services to our existing patients and our existing referral sources. And next up, of course, is cross-selling. So cross-selling has always been a challenge. It's one we're certainly up for, and we're going after because we recognize the opportunity with our HME reps already having relationships with 70,000 primary care physicians. We know that's the place to start. We've already started this. I've been part of a lot of these conversations with our doctors, and they're just thrilled to hear that we're going to be adding more products and additional products that we can provide for their patients. There's a lot we're going to be able to do with this. Everything we do is in an effort to change more patients' lives. We realize the better job we do taking care of our patients. And the easier we make it for our doctors and our hospitals to refer to us, the better we do as a company. So that makes us more and more committed to our patient-first approach. We've invested a lot of time and effort and money into the people and the processes and the tools and technology that have gotten us to where we are today, and it served us very well to date. And now we're in the best possible position to continue to perfect what we already do and continue to expand, but most importantly, to continue to take more and more patients every day from just existing to living their best lives in the one place they want to be their home. Thank you. Next up, I'm going to invite Shaw.

Thank you, Leila. My name is Shaw Rietkerk, and I lead central operations for AdaptHealth. You've heard a lot of great information this morning on multiple components, which drive Adapt and make us the company that we are today. What I want to do is actually take you through a journey of our tech-enabled intake process and revenue cycle workflows that drive the better outcomes for the patient, let us expand our resupply revenue and fuel growth for the organization. Let's start at the beginning of the process, which is the referral. So e-prescription is definitely the top way to get an order today, not just for AdaptHealth and HME, but health care in general. It's a higher quality order. It requires less touch points back to the physician and allows you to expedite delivery of that service. Adapt was a pioneer in delivering and implementing e-referral or a prescription into the HME space, and we continue to be the leader in driving that across the industry. EMR integrations, faxes, yes, today, there are still faxes that come in, also are part of the process, and we have custom-built technologies around those as well to drive the same high-quality level of that order and move it quickly into the process. As we move into the process, eligibility becomes the next big part of the workflow. It is critical in the beginning part of the process to understand do we have the right payer, the right plan? And do we understand reimbursement for that service. Part of that reimbursement is what is the patient's responsibility. We need to engage that patient early in the process, let them know their -- understand their responsibility and complete that process prior to delivery. You want delivery of that service to be all about the patient, not about the billing, not about what your payer is and trying to get this after the fact, you need that delivery to be patient-centric and drive into that service. We've heard a lot about OTL today because OTL honestly, is a game changer for us, and it's a game changer in this industry. When you look at the delivery from a perspective of the patient, we have that predelivery communication to the patient so they know who's coming, they know when they're coming and what to expect. But once the driver is there, the technician is there, it also drives that patient engagement experience. It ensures that they're getting the proper education, the proper support on the therapy that's been provided. It ensures that we have compliant documentation to bill for the services provided. And it also drives the communication methodologies moving forward past that visit. So as that technician leaves the patient's home, they know how to communicate with AdaptHealth. Once the technician leaves, then it also allows that patient to provide feedback on the services. Good or bad, we take all the feedback to heart. That is what drives the improvement and as we go through the process. Once the order has been delivered, we look at claims submission. So we have custom-built technology that looks at every claim prior to being submitted to the clearing house. This monitors payer rules. It monitors rules by product, by patient type, by service orientation. So through that whole process, this engine lets us know that we are delivering a clean claim to the clearing house. AdaptHealth has less than a 1% rejection rate on our claims. So we're very quick to get the claims out and we're very fast to get paid for those claims. However, just like any other organization in health care, Adapt is not immune to payer denials, slow paying payers, missing payers that claim just happened to disappear. So through that process, we have a custom-built workflow for the back end with our revenue cycle management team. That workflow assigns the right claim to the right person based on their skill set and how quickly they've been able to resolve claims and efficiently they've be able to resolve claims in the past. Through that process, we're able to efficiently resolve that claim and get it through adjudication. While adjudication may be the end of the journey for that order, it is not the end of the journey for the patient. It's just the beginning. Using our smart logic, we then move the patient into the Adapt ecosystem. That ecosystem could be PAP adherence for a PAP patient, maybe clinical follow-up for vent patients, maintenance support for other respiratory patients to ensure their device is always working properly or it moves them into the ecosystem for resupply. Resupply is a big part of the Adapt organization. And through that logic, it drives those patients into the resupply for contact at the appropriate time to follow up. So looking in general, the tech-driven workflow that we have today are patient-centric processes that are built around that workflow. And then our RCM expertise has driven us for the success that we have moving forward, both in driving patient outcomes, growing resupply revenue and fueling growth for the future. With that, I'm going to turn it over to Anton for us to start our first Q&A session.

Thanks, Shaw. Great job. So I guess Steve, Leila, Josh, Wendy, if you could join us up here, Albert, you too. And so we'll take -- we've probably got, call it, 20 minutes. We'll leave a little time for a break. But of course, if you could hold your -- of course, financial questions to the second period, that would be great.

Yes, Dave, go ahead.

Dave MacDonald from Truist. Two quick questions for you. First, just on the value-based conversations that you're having with payers, are there any additional disease states or services that they're kind of consistently asking for where we may see some expansion? And then the second question is given everything that's happened in the last 2 years and some of the market pressures that clearly lean on the smaller guys more, has there been any nuance change in terms of how you think about that $300 million of free cash over time? And competitively leaning on folks as opposed to deploying capital to do acquisitions.

Yes, sure. So I'll address the value-based question, and then we'll turn it over to Steve. So a lot of our conversations with payers today, there's a lot of buzz around value-based care in the marketplace. And I personally think, and from what we're seeing, it's relatively early innings in terms of where this is going to go. I think most of that's driven by technology evolving. We're seeing a lot of activity on M&A and companies trying to position themselves to get into the home more effectively. And I'll cover that a little bit more about why we feel we're positioned well a little bit later. But I think the reality is the disease states that are obviously immediate focus for a lot of payers are the ones that are driving the most overall cost of care, particularly diabetes, CHF, obesity, COPD, sleep apnea, We'll call these patients to frequent flyers of health care dollars and they're consuming 80-plus percent of the health care dollars that gets spent in this country. So payers are really zoned in and a lot of them have programs -- case management programs and other things that they're dabbling into to try to drive down costs in those disease states. But what we feel is missing is really that patient touch point and relationship and connected technology within the home that really can transform the home into a much more efficient cost of care and also patient preferred, but also really keeping folks as technology continues to evolve out of the hospital in the home. So we're really having conversations around our core disease states, and we'll talk a little bit more about those that we cover and the relative census and large amount of patients that we have. But that's kind of what we're seeing now. Steve, do you want to...

Yes, Dave, thank you. So yes, we expect cash flow to increase pretty dramatically in '23 and then even more in '24 then more in '25. And our plan today is to use that cash flow for acquisitions exactly to do that because as earnings go up, our leverage will come down significantly. So if we keep in this process of targets, our leverage will get down in the low 2s to EBITDA and whether we can use that cash for acquisitions.

Brian Tanquilut from Jefferies. I guess my question is for Leila since Anton will keep the financial questions for later, right?

There we go.

So as we think about the growth of your sales force, I mean, what are the plans that you have in place in terms of sales force growth? And then maybe tying it to Josh's comments earlier about productivity per employee, what does that look like? And what are the challenges that you're seeing now in terms of hiring and the kinds of salespeople that you're looking for, how hard or how easy has that been for you guys?

So thank you. So the team we have today, we've got about 650 reps. We have great -- we have a mix of really experienced reps who've grown up in this industry like I have, and then a lot of the open positions we have we're filling with new college graduates. So those experienced reps serve as mentors for these new graduates that are young and hungry and want to get into health care. We really haven't had any challenges hiring for sales. We have very few open sales positions at any given time. They're filled very quickly. And the real goal is for our reps that we already have to be able to do more. That's why we want to use ARM and some of these other technologies that we've built for our reps, they can cover more area. So we want our reps to be able to expand with the reps that we already have.

Yes. Let me add to that because I've been around for a lot longer than Leila. Historically, every company would try to hire an experienced rep. And that's all they look for. They already got relationships, they got [ set ] -- they get their going fantastically. So that's how I would always try to do it. Leila, several years ago, started hiring these young, inexperienced, didn't know squat about our business and trained them and went out there. And last year, in our sales awards presentations, the vast majority of the award winners were young reps with less than 2 years' experience. It's incredible. So the world has changed and the interactions of what the doctors' office is looking for has changed dramatically over these past 3 or 4 years.

They're looking for reps that are very helpful, whoever can help solve the problem faster, not necessarily who's been around the longest.

It's Pito Chickering, Deutsche Bank. So one of the competitive advantages for Adapt for -- since I've known you guys, has been using technology to create better patient satisfaction as well as better margins by using the technology. And obviously, when you acquired AeroCare, you sort of have gone deeper within that technology. It's been pretty effective. I guess the question is a lot of the technology is first used what came off the shelf. And are you seeing your competitors begin to react to what you guys are doing? And does it narrow your competitive advantage?

Well, certainly, on the e-prescribe front, Adapt and AeroCare by far, the leaders of those. And so as we get those doctors to be able to use e-prescribe, they can pony ride our back our competitors on any of those doctors, they can do that. So it certainly is benefiting them. But we're so far ahead of them with all the rest of our referral sources that I think they'll be constantly behind. On the other technologies, let's take the OTL. They're all trying to do stuff, but most of them have legacy systems, AS 400 systems. So at best, they're putting this pony technology on top of old technology. And so they just got a long ways to go, and we just think that we just got to keep innovating and keep progressing. We can't stand still and we won't stand still. And as long as we don't, we should be able to continue that technology advance.

So I mean your large competitor is roughly -- sorry. I mean your large competitors have historically been very sort of behind where you guys have been at DOS based systems. Have you seen them invest a lot in technology as they watch your success at this point?

Yes, no question, they're trying. No question. No question.

Albert, it sounds like one you might not be afraid to take to?

Yes. I mean it's nuanced a little bit. When you look at the technologies, and I think you started your initial question with some off-the-shelf sort of thing. So that's tying back to when I was talking about the typical silos. So there's some tools out there that maybe not be perfectly built for our domain, but that you can buy and use off-the-shelf and say, "Oh, we have this great new technology, it's going to change things. And then they talk about things like APIs and you can have access to the data and data liberation and data liquidity. You have to think of an API effectively that most of these providers, most of the software providers will offer. That's like drinking through a straw, okay? What we've done with the data layer that we've built is we have a firehouse. So when I talked about the concurrency of data, the accuracy of data, it being available when and where you need it. I'm able to get that to one place, usually within a 2- to 3-minute delay of the business. You try to do this through an API. It becomes very, very labor-intensive to keep everything identically in sync. Now APIs are great. We use them for an awful lot of things that we do. But just think of that using a straw versus a firehose. So -- and then building off of a legacy platform, and again, going back to why did I come back here after being in a different industry and looking before. I had a whiteboard to do this. So the technical debt piece, when I mentioned that, that is the difficult piece, technologists typically and businesspeople across industries hand-wave that. Well, we have this old stuff, we're going to keep it around for a while. That's the worst thing you can do because the hardest thing about being a technologist is identifying the things that you need to shut down and shut them down today and not be afraid of that people are going to scream at you because they are. We need this. We can't do it. No, we don't, and it's going today. So turning things down is really fun. You go to the store, and you're buying new stuff and I got a new puppy and I'm bringing it home. That's a lot of fun. And that's what people like to do and it's easy to sell. When you have to deal with the difficult decisions in life, end of life, whether it be a computer, a system, a process, the end-of-life process is not fun. And it's really important. And I think we have done a good job of that.

I think [ Will's ] got one.

Steve, just back to the merger of AeroCare and Adapt. You sort of referenced early in your introductory comments that you've extracted the synergies, but given the challenges with the supply chain, et cetera, that you haven't had the opportunity to really smash together best practices. Can you maybe elaborate a little bit more on where you are in some of those initiatives, what you're doing any way to perhaps quantify the success that you're seeing at this point?

Yes. So there -- a lot of them is in the RCM function. And so that's spreading that RCM, the process that AdaptHealth did across all of the locations. So RCM is really starts in the branch. And so now these AeroCare branches are now part of this RCM system, they now understand it better. So our DSOs are dropping. Our [indiscernible] are dropping. We're collecting cash faster than ever before. our collection rates are improving. So that process is just in the beginning stages of that. Within that, too, so we were very good about AutoPAY, getting patients on AutoPAY where they would pay their -- the co-pays will be paid automatically through a credit card on file. And so that process now is being out into the Adapt locations, and that's picking up. And then with PAP compliance, we had a difference in PAP compliance. Ours was better. But now we're starting to merge those processes together. And within this issues that we had with Philips, kind of derail that, but now we're getting over that. Now we can put out there and get those patients on set. That's 3. There's probably a half a dozen more that we could talk about that we're going to try to get to. And we -- when you look at that, we see that as 10s, 20s and 30s of millions of dollars each one of those things that I just described.

I think Matt had 1 in the front row and Joanna?

Matt Blackman from Stifel. You mentioned the cross-selling opportunities, but you also called out challenges that need to be overcome. Can you maybe just give us a sense of what some of the biggest challenges are? Are they structural? Is it technology? I don't know if Steve or Josh wants to chime in as well. Any thoughts there would be helpful.

I'll be happy to take it because I've been frustrated forever. So it starts with the rep. If you go into a doctor and so the HME rep has a relationship with a PCP doc. And Rodney's team over here wants to sell in diabetes to it. So that HME rep goes to that doctor. Well, they're not in control of everything that can go in there. So am I going to go try to sell something into this account that's going to disturb my account and my honey hole, if you will, and my relationships coming out of there. And so they're very hesitant to do that. But what's been able to make them less hesitant is to build connectivity that we have and how they can get instant looks of how -- what's happening on the diabetes team. They don't have to understand everything that is required for a diabetes order. And that's what we had to do in the past with cross-sell. Today, they just have to be able to introduce diabetes to that PCP. Now that PCP is going to make 1 or 2 decisions on the patients, assuming that they're fond of it. One is, okay, I want to get CGM on my patients, which patients qualify, help me get to that. and then we can put the team in place to it. Or they might say, I really don't want to do this. But you know what, the CGM is important, let me refer it to the endocrinologist that endocrinologist has a relationship with Rodney's team. Almost every endocrinologist has some relationship with our diabetes team. And so that's the secret now. And so with cross-sell, you don't want to have to force your people become experts in everything, you want to be them to be introduced and let it take over.

I think Joanna had it in the front row here.

This is Joanna Gajuk with Bank of America. So it's a question coming back to value-based care in 2 parts, very quickly. So one, do you need additional investments or anything that would allow you to grow it faster. And second, are actually payers pushing forward? Or is it actually you actively going out and pursuing these opportunities with payers?

Sure. Yes. Thanks, Joanna. I'll cover some of that a little bit more depth a little bit later this morning, but the short answer is a lot of the value-based care evolution is going to happen through technology, mainly as kind of an ability to take out administrative costs for the payer, be able to give them better data and insight into where their order is. And overall, just provide a much more seamless connection to the payer, which will allow us to drive more volume and growth within the wallet share of specific payers. So that's kind of short answer to your first part. Second part is it's both. Like we're having conversations with payers that don't want to deal with a fragmented HME marketplace. They're not so fond of some of the intermediaries that sit between HME providers and them as kind of TPAs or 'network aggregators' in that middle level between the HME provider and the payer. And I think a lot of that is going to get more traction. Again, a lot of what we're doing on our existing technology investments is going to be focused and is focused around this kind of payer connection. So we're going to see more of this. We have the scale, we have the patience, we have the broad product portfolio. We have the visibility and the technology now what payers aren't realizing as well, we didn't realize you guys were so big. We didn't know you had this technology. We didn't realize you could address these pain points for us. That's step one. Step 2 is then saying, okay, as our data collectively gets better, and a lot of payers talk about data, but the reality is that for data to be better and for all of us to understand, okay, how is the patient doing? What's -- how is their disease state progression? How many touch points do we have with the patient over the last few days and weeks and months? Where are they at? What's their blood sugar level like? Are they sleeping? How is their COPD being managed? We actually have visibility into that today. This is not something we need to do. This is not a moon shot. This is really just about us taking that, packaging it for a payer for a payer to be able to say, Wow, I can do so much more with a lot less complication, a lot less admin costs and overall lower the cost of care because at the end of the day, in a recessionary environment, inflationary environment, that is going to get some real traction, we believe, over the next 12, 18, 24 months in terms of being able to bring down the overall cost of care.

I think we had 1 more from Pito here. And then I think Brian's got one back there.

Sorry. This is actually a compliance question for Wendy. So this sector historically has had a lot of issues with compliances. We've seen the OIG reports over my lifetime around issues about compliance. Obviously, you've never seen any issues with you guys. So can you sort of refresh us on how many audits you guys sort of face here? What's the success rate of these audits, the process you have to go through these audits? Have you guys ever had a whistleblower complaint? And then what keeps you up at night as it plans...

Okay. So what was your second to last question?

Have you had like any whistleblowers?

Okay. So -- our audit environment shifted significantly because of the pandemic. What we saw was a pause in governmental audits from Medicare and all of their contractors. They paused everything for about a period of 6 months or so. When they resumed our audit activity, it is not yet back up to what the normal levels were prepandemic. There are some product lines that they are staying away from, and I believe that's because -- the public health emergency is still ongoing. So for example, respiratory, oxygen, CPAP, they're looking at it from a program integrity standpoint, but as far as routine widespread audit activity, we're not experiencing that right now. They're looking at other lines that they typically didn't look at before. So to talk about sort of how our audit activity has grown, it's difficult right now. I think that the PHE will probably see an end to that soon. And then my expectation is, they're really going to ramp up afterward. And then probably 2023 will have more visibility on what our new normal looks like from an audit activity standpoint with the AeroCare and the AdaptHealth organizations merge together. Prepandemic, our success rate was about 72% to 74%. I don't know that there is anything that keeps me up at night. There's a lot that we have to have fall under our scope of responsibility. There's a lot that we need to be ahead of -- but I'm confident that over the years, we've assembled a team. We have great resources. We have a great partnership with the business. I mean all of us working together, we sort of navigate that curve really well that -- let me get a few hours every night.

And then 1 more from Brian...

Well, you asked about whistleblowers. And so we disclose our inquiries by the government. Chris Joyce, I don't know whether they are a whistleblower or not, but we get inquiries from the government all the time in their disclosure in our 10-K.

Yes. I'm sorry. I forgot to address that for you. But what I want to add on to that is our hotline is an independently managed hotline. And we promote that throughout the company. There's company-wide postings. It's in all of our compliance communication, all of our training basically, we're telling the business if you see something, say something. We do conduct on occasion, compliance exit interviews, just randomly, just making sure that the individuals haven't seen something in their time at AdaptHealth that has them concerned and that they're leaving with and also making sure that they know how to get in touch with us after they leave it, they do think of something. So I think we really have established a very open line of communication with the business. And I think that helps sort of drive down that potential for people feeling like we're not doing something right, and we're not correcting it and going to talk to someone else about it rather.

So next question is for Shaw. So as we think about the potential for a recession coming up. I mean, how are you thinking about patient pay? And what are the trends that you're seeing there? And how are you preparing for that?

So just in general, in health care, you're seeing a trend of more patient responsibility from a copay deductible perspective. And we've seen that inch up year-over-year, and I would expect we would continue to see that. What we've done specifically to that just become more proactive in that process, more proactive to require that payment upfront versus billing after the fact. And I think we see that shift in health care all over. You can go to the doctor today without paying your co-pay before seeing doctor. That shift in taking that ownership front, ownership upfront has really helped us to increase those collection rates in patient pay and let us stay ahead of that curve.

Yes. So Brian, I don't think we'll see a decline in our patient pay collection percentages. But what we will see a decline in is refusal of taking the service and then the equipment. And that's really where we see it affecting us probably the greatest as recession comes along.

Thanks, guys. So we'll take a short break now, running a little behind, but we can catch up if everybody keeps it tight, and we'll get back in here at 11. Thanks. [Break]

So what happens when you get everybody together again? So still got a few stragglers outside, but I think we can probably get going if we need to -- if there's anything we need to get the webcast, I guess, it's still going. So yes, I'll admit that 11 was probably ambitious, but we do have a tight schedule and lot of material, so we'll get through it though, and we'll make up for it. So moving on to the second section here. The good news is you already know this guy, so we don't really need to do any introduction, but we'll move on to some of the more business line or category sort of discussions with Shaw Rietkerk.

Right. So excited to come up and talk again about sleep and respiratory. So 2 critical areas for us, 2 of the biggest areas for us in a company from a revenue perspective, and it's how we service the patients in those areas that really count. So let's jump into sleep. So what do we do? We actually positively change thousands of patients' lives, new patients every day by enabling them to have a good night sleep, thousands of patients. We do it through our strategic partnerships. So through our vendor partnerships, our manufacturing partnerships so that we're able to deliver on the needs of those patients. We do it through an extensive payer network, so over 2,600 payers that we work with at AdaptHealth today to ensure we can provide those services to the broad patient base. And we do it through delivering better outcomes. So delivering those better outcomes, those higher adherence rates drive that better experience for that patient. So AdaptHealth is #1. We are #1 in sleep. We are the largest sleep provider in the country with $1 billion in net revenue and 280,000 patients in our rental census today for PAP, 1.2 million patients into our resupply program. We are, by far, larger than any other competitor in the market. How do we do it? How do we change the lives? It starts with technology. When we look at PAP, specifically, in technology, it starts with that patient being set up. It starts with registering that device at the beginning of that setup to not only communicate with the patient, so the patient sleeps that first night and sees really how well they did, it also goes to the provider. So that provider who referred that patient to us, that patient's clinician also gets that information so they can see how their patient is doing on therapy. And it also goes to our sleep coaches so that we can start that process of 90 days of adherence monitoring to drive them to success in that therapy. Patients today and COVID drove a lot of this, gets set up in different ways. If you go back 3 or 4 years ago, everybody came into the office, you sat down face-to-face, and that's just how you set up a machine. That's how you got on to therapy. COVID changed that a lot, made it virtual. While a lot of that shifted back into the office and back into the group setting, again, we still have to be able to service the patients in whatever way they need to be to be set up. With that, we utilize technology now that actually fits the mask to the patient's face by completely looking at the camera, taking a picture, it identifies the mask with very high accuracy so that they have success the first time, the first night sleep. It also moves the patients into our adherence monitoring program so that our sleep coaches can start what they do best, which is drive success in the PAP adherence process. We have over 200 sleep coaches today at AdaptHealth. Those sleep coaches live and breathe making the patient compliant to their therapy of PAP adherence for CPAP. With the technology that we have in place today, it helps them do that by telling them which modality the patient wants to be used for communication. How are they doing? Are they answering the phone? Are they responsive to text? Is the preference to be e-mail? It allows us to work and communicate with the patient in a way that works best for that patient. It also looks at their utilization. It looks at their behaviors. And through an algorithm, lets us know which patient we may need to call every single day versus a patient that may need to be called once a week or once a month because you can see how their therapy is aligned. By using that, it allows us to touch the harder patients, the patients that need the most help first and get them compliant while a lot of patients can get to that compliance on their own because they know how to use or do well with the therapy itself. As a result of that, our PAP adherence is 350 basis points above the national average. When you're talking about thousands of setups a month, that's a significant number of patients becoming adherent into the process. It improves the quality of life. It lowers the cost for the payers. And it also pushes more patients or drives our resupply revenue in that growth into resupply. Let's talk about respiratory. So what do we do in respiratory. We optimize the patient's quality of life. We do that because we take a personalized approach to that patient. We look at their lifestyle individually to understand what type of therapy they need. A person may be on oxygen, but oxygen has multiple types of therapy, whether it's a POC, whether it's tanks, whether it's a patient who wants tanks, but likes to do with themselves and fill them at home, or whether it's a patient that just uses oxygen at night and needs that stationary unit. There's a difference in every patient in how they utilize the therapy for their activities in life. So with that, that's the first thing we look at from a patient's perspective. We're also a full-service provider. So that respiratory patient is not only getting oxygen or maybe ventilation, nebulizer from AdaptHealth, we have the ability to also provide them with the medications that support the devices that they need through our pharmacies. We also have the mobility devices that they need because a lot of them have mobility issues. Diabetes, they can move into diabetes; sleep, PAP, the adherence in our resupply program. Because of being a full-service provider, that respiratory patient now is part of the Adapt ecosystem, and we can be that one-stop serve that home care need of that patient. We also have predictability. So predictability in when the patient is going to get their product. We cover OTL a lot throughout the day because it is so critical to the process of this patient. So that patient knows my tanks are running low. I call in, I'm going to have more tanks there tomorrow afternoon at 6:00 and Johnny is bringing them to me. It's critical. It's part of their life every day, living with the disease and the therapy around it, we help drive that predictability. We also use tech to drive patients to the right therapy. So the right therapy may be nocturnal oxygen. So we use overnight pulse ox testing in today's market, so we can do the testing with the patient at home, get the results and then work with the provider to put them on the right oxygen therapy. We're being proactive in that process that helps us to drive that. That's also done with disease progression. As we're monitoring the patients and the results throughout that process, that patient may need to move on to a different level of therapy. Through our technology and monitoring in our clinical programs, we can identify that and proactively work with the provider to make those decisions with the patient. We become that patient's connection to that provider from the home care. We're #2 in respiratory as an organization. So we are the second largest from a market share perspective. We do approximately $547 million a year in revenue in respiratory, and we service 290,000 patients in oxygen and ventilation on our census today. It's an enormous responsibility. And a responsibility that we take very seriously to service those patients. So when we look at the difference, the difference comes from the beginning. It comes from monitoring that adherence. It's a company that takes the clinical portion of this very seriously in driving that adherence to utilization throughout that process. It's intervening. So we have, as Leila spoke earlier, a very large clinical team that monitors our patients that delivers into the home. And we take that intervention, get them compliant on therapy to move them to the appropriate therapy if they're not on it today and to work with their physician to help make that happen. We monitor on outcomes, right? Outcomes being hospitalizations very critical to reduce hospitalizations and that's what this therapy allows in drives for the patient. In ambulation. So ambulation is so critical when you're a respiratory patient. Steve talked about it earlier with somebody being able to go and play pickle ball at 73 because they can carry their POC with them. The battery beeps, they know they go get another one, plug it in and they can continue to do that. Your quality of life doesn't have to change because you're on respiratory therapies. It's driving to the right therapy that [ works ] for your life or aligns to your lifestyle and what you need to do. So let's talk about some of the priorities to support the growth. So we need to continue to grow PAP, continuing to grow PAP helps us to continue to grow PAP resupply. We need to capitalize on our referral sources for oxygen, which I'll cover in a moment as well, and we need to continue to utilize our clinical expertise to drive back growth. When you look at PAP new setups, there's a backlog today. So getting those set up and driving to there, it's not a hard task. It's continuing to have those partnerships, continuing to drive into the referral sources that we are the provider of choice. And we do that from providing better outcomes for their patients. When they see better outcomes for their patients, that drives them to continue to refer those patients or their new patients to AdaptHealth. It's through our increased adherence rates. As part of that, it's also continuing to look at our M&A and our strategic M&A in these areas. We've seen a lot of growth over the past few years because of this M&A, and it's a continued focus as we grow in these areas. Same with PAP resupply. So PAP new starts drive more PAP resupply, of course, but more than that, it's moving into more of an electronic environment for PAP resupply ordering. Today, 47% of our orders are ordered electronically by the patient, meaning we didn't call the patient, the patient reached out, went online, completed the order and they completed their themselves. What we see with electronic ordering is the order is generally larger, meaning they've selected more items because they can see what's available to them and they know what they need. And it also happens more often. So a patient may not answer the phone the first time you call and you call again a week later, when they go on an online order, it's instant. Everybody is used to the instant Amazon environment, and this is kind of going online and ordering your resupply so you can have them tomorrow. And in this same area of acquiring growth as well. So looking at our M&A strategies, from a PAP perspective and PAP resupply. Oxygen is a little bit different. So if we go back to the beginning of COVID, Adapt was a big player at the beginning of COVID to help our referral sources delivered to their patients. Not only because we were able to take their patients and service them on oxygen and ventilators, when a lot of other providers were not, we were able to actually service those providers and provide them with oxygen equipment them with ventilation equipment so they could service their -- the patients in the hospital. So we became the vendor to them, we became the provider in a different way and built those relationships. It's that type of partnership between the health system and Adapt that drove -- that drives and continues to drive our increased referral growth and how people look at Adapt as an organization. Again, we need to continue in the early intervention, identifying the patients that should be on oxygen therapy, providing them with that overnight testing and then working with their providers to move that forward in the process. We do that across every region of the organization today, and it will be a continued focus of ours as we continue to move forward. And then lastly, with vents, vents is a clinical sale. We have a national clinical sales team for vents dedicated this process for us to continue to grow in vents, we need this clinical expertise. It's a tough subject for the patient. It's a hard process. We have also taken the approach of ambulation with vents. So there is portable vents available today and working with our vents patients so they actually can have a portable vent and have an ambulation as well and movement outside. And then the disease state progression. So continuing to look at those patients that are on oxygen therapy today that should be on vent for therapy and working with their provider. So to close out, we have a lot of growth ahead from an organization. We have the technology that drives up from an intake process. We have the patient-centric processes that help to drive it from patient care. We have the revenue cycle processes that help to drive it from an organizational and a revenue perspective to be well positioned as we continue to grow. With that, I'm going to turn it over to Rodney, Head of our Diabetes division.

Thank you, Shaw. Good morning. Thank you for coming. My name is Rodney Carson. I am responsible for the AdaptHealth diabetes division. I appreciate the opportunity today to speak about our business, and I think we have a very exciting story to tell. When I think of our business, 3 points come to mind. One, I think we all realize that diabetes is a costly disease that is rapidly growing. Secondly, the AdaptHealth Diabetes division, our business has attained scale, and we're ready to grow and drive organic growth in less than 2 years. We've become the #3 player in the market. And rest assured, we're not content with being #3. Finally, our continued focus on process improvement and technology investment will preserve and enhance our relative market share going forward. This slide speaks to the enormity of the diabetes market. 37 million Americans have diabetes. That number has tripled since the year 2000. Diabetes and disease complications of diabetes represent 14% of U.S. health care dollars in an aggregate about $327 billion of annual medical cost. So many diabetics have one or more co-morbid conditions, many of them are listed on this graphic. They include urology, ostomy, oxygen, sleep apnea, wound care and incontinence. I think it's important to note that our core HME business and are very considerable supplies business, which does report to me, can address all these needs. So this clearly creates a number of attractive cross-selling opportunities. So what's driving the growth of the diabetes market? Aging population, clearly, a huge driver. And I think folks have spoken to the increased number of Medicare beneficiaries in previous presentations, the increased prevalence of obesity in the United States, the increased coverage of type 2 diabetics and the increased pace of technological innovation. These are all important drivers of the growth in the diabetes market. AdaptHealth is scaled and ready to drive nonacquired organic growth. This is where we're at today. $665 million of diabetes only revenue based on Q2 2022 annualized. Approximately 250,000 patients on census. We have 93 dedicated diabetes sales reps in the marketplace. This is the largest in the industry. Our product mix, 76% of our current product mix is attributed to continuous glucose monitors, 24% all other diabetic products. And I would add that this 24% is heavily dominated by insulin pump and related disposables. We have a nicely diversified revenue mix. As you can see, 49%, governmental; 45%, commercial; and 6%, pharmacy. What will help us drive growth? First and foremost, we have very deep relationships with each of the leading diabetes manufacturers. We have weekly calls with each one of them and quarterly business reviews. We have a broad product offering, offering all diabetes products in all product categories. And I will mention that unlike many of our smaller competitors, we have direct contracts with each of the manufacturers. We do not have to rely on wholesalers. And as I mentioned earlier, through our core HME business and supply business, we have access to products to address the needs of polychronic patients that have other comorbid conditions. We now have a customer success video that we'd like to play. [Presentation]

Nice patient testimonial, one of our patients from Nebraska. Okay. Let's talk about how we drive growth and benefit from operational efficiencies. So what's the avenue for future growth, drive non-acquired growth and operational efficiency through standardization of processes and technology, what does that really mean? That means putting all of our acquired entities on the same operating system, the same telephony platform and the same multi-modality outreach program. This is absolutely critical to creating operating leverage and synergies amongst all the acquired entities. And I must say we're not 100% there, but we've made tremendous progress, and we've noted considerable operating efficiencies from the accomplishment of this objective. Bolt-on M&A, we bought and integrated 7 diabetes-specific companies in less than 2 years. I think that's a fairly impressive feat; three, leverage diabetes is a gateway for outpatient monitoring. I'm not going to steal any of Josh Parnes' thunder, Josh, our President, will be speaking to this in a few minutes. So key initiatives to drive organic growth. As we mentioned, we have multiple cross-selling opportunities within our universe of 3.9 million patients. I think this is a -- well, Steve mentioned, it's not going to be fall out of bed easy to execute. I think it is a huge opportunity that we're poised to really make tremendous progress on. Sales force expansion. We had the opportunity, and we'll talk a little bit later about our HME reps that have been trained to market diabetes products and are actively marketing diabetes products, but we also have the opportunity to add diabetes-specific reps in territories that are current white space where we have little or no presence between the combined HME and diabetic sales force. We also have the opportunity to grow our Medicare share. Quite frankly, Medicare has not been a high focus for our combined platform. But certainly, with the aging of America, the demographic wave that is here, we see that as an attractive avenue for future growth. We've talked about how do we leverage technology, Albert spoke at length about the number of apps. He talked about myAPP or patient app. The gateway to driving patient engagement through technology is really two-dimensional. One, drive e-prescription. If you were to ask any manufacturer and even our competitors, they would admit that AdaptHealth was the pioneer in diabetes for electronic prescription adoption. It frankly exceeded my expectations. And I think we have a number of people in this room, including Josh, Steve Feldman that were really pioneers in the design and adoption strategy for us. The other point that I think, frankly, differentiates us from other companies in our space is our multichannel outreach campaigns. We don't rely simply on the telephone. We don't rely on text messages. We have a multi-modality capability and that basically, the key is understanding what modality each patient prefers and then sticking to that mode of contact, and we found that that's had a huge positive impact on things like reorder rates. Operational efficiency. It's not just getting people on the same platform, it's getting people to adopt a similar and, frankly, identical workflow. As you might imagine, buying 7 companies in less than 2 years, not only were those companies not on the same operating platform, but many of that were on the same operating platform had different workflows. For example, 1 company might have 72 WIP states, another might have 56. So the workflow has been organized differently. The other thing that we're doing with, I think, a fair degree of success is we're regionalizing the front-end intake process and centralizing the back-end reorder and RCM platforms. If I had more time, I could go into the rationale there, but there is a fairly compelling value proposition in doing each of these. Okay. What's our strategy for maximizing lifetime patient value. Quite simply, how do we get more patients, how do we get more orders per patient, how do we get more dollars per order while simultaneously improving health outcomes and driving patient satisfaction. The key drivers here. Expand our referral base, deeper penetration of our existing referral base, let's get more from the same referral sources. Refill optimization, I think we do a particularly good job on refill optimization, but I still think there are opportunities for improvement on this front. We need to do a better job, and we have opportunities for improvement to better cross-sell BGM, CGM and pump patients. Every pump patient we have should have an attendant CGM. Everybody on BGM that qualifies for CGM on a medical necessity basis should be getting that product from us. And of course, we continue to expand our payer contracting network, absolutely critical to move up to #2 or #1. Okay. We've talked about -- we bought 7 separate diabetes-specific companies in the last 2 years, we need to leverage this track record of success. We've added $450 million of LTM revenue via acquisition. I think it's important to understand some of the criteria selection, some of the attributes we look for when we evaluate a potential target. These would include things like payer mix, complementary contract coverage via contracts in a certain geography that we don't have, geographic density, basically, what kind of moat do they have relative to competitors in that marketplace. These 2 are huge. Product cost synergies, most of the companies we have bought do not have direct manufacture contracts. So there's a cost of goods arbitrage attendant with those acquisitions. Most don't have the technology we have. Many are doing manual outbound dialing, they have no multi-modality outreach capabilities whatsoever. Very, very compelling. And of course, as you might imagine, there is a compliance component to this. Wendy and her organization does an exhaustive review of charts and chart notes to make sure there are no regulatory compliance issues. And we also do require a third-party QoE to evaluate the quality of our earnings. So I think we've got that down pretty good. And again, tying this all together, integration of workflow, operating systems, outbound patient outreach, absolutely critical to our ongoing success. So in conclusion, we compete in a large addressable market that is growing rapidly. I think we all realize that. We have the largest sales force with respect to a diabetes-specific sales force, we also can leverage [indiscernible] organization of 600-plus HME reps that are in complementary markets. Again, all have been trained in diabetes and all are actively selling diabetes-related products. And finally, through increased process standardization and ongoing investment in technology, all the things that Albert spoke about at length, we think, differentiate our diabetes capabilities relative to competition. Thank you for your time. Josh?

Thanks, Rodney. All right. There's a lot here, and I know the hour is late, I wanted to introduce what it is that we're doing on Adapt 2.0, what does it mean? And this is really going to be something that we're going to be talking about not just today but on a go-forward basis. So I want to just really get everybody up to speed about the pillars and how we're thinking about it and where we think it goes from here. So what is Adapt 2.0? We spent a little time talking about what we've built, right? The platform, the large census and many disease states, clinical infrastructure, a 1,000-plus professionals and clinical professionals that we have working for us, everything from respiratory therapists to PAP technicians to nurses. Scale in products, payers, disease states, geographies, 2,500 payers that we contract with [indiscernible]. And then we spent a fair amount of time today talking about a lot of the technology that we've built and are continuing to invest in. So how do we move from best-in-class technology to really change the model and transform the home with technology into really a place of outcomes, healing and most of all patient preference and comfort. Health care, as we all know, is moving into the home very quickly. Technology into the home is also evolving rapidly. The home we all know is, it's well documented, is a solution to temper rising cost of hospital and institutional care. I mentioned before about inflation and recessionary environment. Cost is going to be more and more of a conversation, a topic, a goal that health care in general in the United States, the continuum of care, what place a service is more efficient? Where do patients want to be? And really, the answer is going to be an innovative home care models to really drive aging in place, dealing with the baby boomer population as they get older in a much more cost-effective and patient-preferred manner. So how are we at Adapt positioning ourselves? And what do we currently do today and what are we going to do in the future to drive a better model. There are a lot of ideas. And obviously, the foundation is important, and we spoke about that. But there's a lot of models out there that position themselves as potential breakthroughs in home health and home health technology. And many of them don't really go anywhere. And when I look through -- I mean, I'm sure we all think about why some things are successful in the home, some of the things that are going to be the next best thing, never really make it. I think of 3 common denominators of why they don't work. To me, and I'm sure there's more -- a lot of them are not cost-effective, right? They need huge investments in patient acquisition costs and technology, they need -- how do we get to so many millions of patients living in disparate locations in houses and settings and how do we effectuate and drive change in a lot of those customers' homes. I'd say that's one issue. Second issue is a lot of these things are not scalable. There's only a certain amount of people in this country, and we're already seeing this challenge of limited amount of nurses, caregivers that are able, trained, willing to be able to take care of us and seniors as we age in our homes. So that's not a scalable solution. Clearly, technology has to be part of the solution. And to me, the biggest, I would say, shortfall of some of the current models that are out there is that they don't have an existing and trusted patient relationship with the patient in the home. And you could have the best technology in the world, you could have the best solution, but there's a bridge to gap between how do you get it into that patient's home, how do you get the patient willing to try it, how do you get them used to the change that's going to be involved in adopting something new? And how do you ultimately drive a better outcome without having a patient relationship? Our foundation that we spoke about broadly today really addresses these 3 concerns: cost-effective, scalable technology, and establishes a well-established, trusted patient relationship that we have with our patients. And I'll talk a little bit about more what that exactly means. Before we discuss the 3 pillars, a lot of what we are doing today and have already done is really about broadening and deepening what we feel super important as our pipes in the home and our relationships to the patients, almost 4 million patients today and growing. Physician relationships, payer relationships. And when we enhance our relationships with all these stakeholders, we sit at a very unique crossroads between the payer, the patient and the physician to be able to bring them together without this costing a tremendous amount of money. It's really about leveraging pipes that exist in a little bit of a different fashion. So how do we do this? How do we leverage these pipes into the home? And how do we feel that what we're going to do is going to be something that over the short, medium and long term is going to make a tremendous difference. So really, we think about this in 3 pillars. And I'm going to go over each of these in more specific color. I'll be happy to answer any questions in M&A after, but we're going to see this evolve over the next couple of months and years. First one is connected care, spend a little time talking about what that means for AdaptHealth and how we're thinking about that. How that feeds into chronic disease management of patients in the home in different disease states and ultimately, about payer technology connections and how we're working with payers closer from a technology perspective, to both drive out costs and ultimately drive better outcomes. So on the connected care front, Adapt today, and I think a lot of folks, maybe even before today, for getting educated about what exactly we do, has significant experience over many, many years dealing with millions of patients and managing a fleet of over 1 million connected medical devices in patients' homes. This obviously consists of connected CPAP, BiPAP, ventilators, CGM and others. There are existing and evolving pay models around now taking care of patients in the home in connected care, particularly remote patient monitoring, RTM, which is remote therapeutic monitoring. As these revenue models evolve, there's more opportunity to put more devices in patients' homes, more connected devices in patients' homes and help monitor their progress. These devices, such as what we have today, obviously, in CGMs, connected paths, connected vents, connected oxygen scales, blood pressure cuffs, pulse oximeters are going to be the health gauges or the thermometers in the patient's homes that for not much more cost than what we're doing our business today, give the physician, the payer, the patient and us a much clear picture of how these patients are doing and how they're managing their chronic diseases at home. That feeds into our chronic disease management strategy. Remote patient monitoring, like I said, is the measuring sticks, really the touch points to understand changing condition in the patient from a clinical perspective. And then what can we do as Adapt to really help drive better outcomes and help patients manage their chronic diseases at home. So by gathering those clinical data points that I mentioned with all those devices, blood pressure cuffs, scales, CGMs, connected oxygen concentrators, connected vents, CPAPs. We're going to get vital chronic disease stats, combined with these emerging revenue models of RPM and RTM. Adapt can really layer on a clinical and technology component to leverage the data coming from connected devices to drive better adherence like we were talking about, the adherence focus of a lot of our products, to driving the patient closer to their clinical plan that was outlined by the physician and the medical team and really connect the health system, the payer, the physician, the patient and the suppliers to a more collaborative, better outcome and a lower cost of care. And that drives and feeds into how we're thinking about this from a payer perspective. In today's model, of a relationship between a payer and a provider. I know Joanna, you asked a question earlier about that. There exist a lot of multiple pain points and inefficiencies currently. A lot of what a payer spends money on today, and there's a lot of talk in the managed care world about prior authorization, admin costs, just overhead of running a payer, auditing, putting a QA process to make sure that they're spending money and utilization management. A lot of the current technology that Albert outlined and some of the things that we're working on, and we'll talk about one in a minute, particularly that comes to mind as we address this. There is ample opportunity that we have already started down the path on, and we feel that has a lot more legs to drive what we have now with physicians is really a digital ordering capability and ability to do prior authorizations electronically and ability with our OTL and evolving technology for the payer to actually see when they call in and say, hey, who do I call to get an oxygen concentrator, who can I call for a CGM? The preferred networks for health plans are going to be driven about cost, efficiency and customer satisfaction and, over time, are going to shift to more outcomes-based models. And all the technology that we have to run internally and are dealing with physicians and our sales teams is adopting now to address the needs and the pain points of the payers. And we feel this is very, very exciting. There's a lot, a lot of runway here. payers right now. DME is not -- HME, DME, respiratory, not a huge part of their spend. But when we couch it in, it's not the product, we're focusing on the disease states, disease states of diabetes, COPD, CHF. Yes, we provide products for these patients, but we also have relationships. We have pipes into the home. We have connections with the doctor, we can put the technology in the home, we can put these connected devices in the home that can measure. And then we can also layer on a clinical follow-up program like we do in a lot of other product categories that we currently do. And we can evolve that and expand that to more disease states to ultimately give a better picture. And then I think some of the points that Albert was making was our data layer that we've invested in over the last 1.5 years is going to be super important and critical to be able to ultimately gather that data and make meaningful decisions and help payers, physicians, health systems make meaningful health care decisions about patients in specific disease states. And really help drive home care at a lower cost using our existing pipes into the home. So to that effort and to achieve this, we built out a direct payer technology that's in its early stages, but has a lot of room to go and it's been getting a lot of traction in payers that we've rolled this out in and in payers that we're continuing to have conversations in. This really allows us to leverage our relationship, like I said before, with our 2,500-plus managed care organizations and payers across the country to reduce admin cost, avoid delays in discharge, keep patients at home and out of the hospital in more expensive settings and really able to -- and especially for M&A plans, patient satisfaction, HEDIS scores, a lot of those measures are around, did the patient have a good experience, is the transparency around where their product is and how they're doing. Can they get in touch with their supplier relatively easily? Is a doctor aware of what's going on? Are we addressing gaps in care. This is where Adapt 2.0 has started down the path, and this is where we're going. And over the longer term, some of these things are in the early innings, some of these things are a little bit more advanced. But really, the health care system that we see and that we deal with in terms of physicians, payers, we're in a very, very unique position that I don't think a lot of people understand with the amount of patients that we serve and the velocity of patients that come to us every day through all the different product categories that we service. So we're -- now like a home care agency that's only seeing a limited number of people because like I said, people and the people business is not necessarily scalable. When you're dealing with multiple products that you could quickly leverage on technology to CGM diabetes, sleep apnea, oxygen, respiratory, nebulizers. A lot of the products we have touched, a lot of the critical disease states that are driving 80-plus percent of the spend in this country. It's not just about dropping off products and saying, I have a nice day. We spend a lot of time talking, and this has been a focus of ours for a number of years. We're not just a distributor. We take care of patients at home. We're clinical. We can follow up with them. We're installing technology, not just at the physician and the payer level and the hospital level, but in the payer's home, in the patient's homes and teaching them and educating them about how technology is going to help make their care at home and help them stay healthier, longer at home and out of the institution. So I'd like to just close by saying that some of these efforts, like I said, are early stages. We don't expect to get rewarded by folks in the marketplace until these things are done, but we fully expect to hold ourselves accountable to get these things done to make these patients' lives better at a lower cost. And really help change the landscape of what home health care and technology looks like as we move forward in the months and years ahead. I want to thank everybody for their time today. I want to turn it over to Jason Clemens, our CFO, is going to give an overview on the financial aspects. Thank you.

All right. Thanks, Josh. Can you all hear me okay? All right. Great. So many of you, I think, probably all of you I know here in the room, and I'm sure many here dialing in with telecast. We've had the chance to speak over the last several years as I've been part of AdaptHealth. So our sincerest thank you for being here with us today. This is a huge milestone for the company. Frankly, just a couple of years ago, we were still privately held. In 2019, as you know, we went public, came into the public markets in the public eye. Just 2 years later, in 2021, we surpassed emerging growth company status. And today, we're a multibillion-dollar public company. And this is part of what big public companies do. So we're glad to take our first crack at Capital Markets Day, and I appreciate you hanging with us. I know it's been a long day. So we're almost at the end. So we're getting there. So as we started planning Capital Markets Day, I really had 2 expectations. The first was a chance to introduce this talented management team that I get to be part of for you to see the people that are actually operating the company, the folks that make this place go. You haven't seen them before. You see Steve and Josh and Jason and Anton. Part of that expectation was also giving you more data about the unit economics of these business lines, which I think we've accomplished, I think that will be helpful in our discussions going forward together. I had an expectation that, frankly, our operators and our leaders, we're going to manage the day. And so my second expectation was, this is great. I finally get a chance to like relax, I don't need to present today. So Anton has got a big job. He's going to manage me. And so he said, wait, wait, wait. CFO moved from the agenda, might not work. And by the way, I know you hate slides, but you've got to bring slides. So here I am. I got some slides. We'll get to that in a few minutes. So in thinking about the message for today, again, probably fewer numbers, we'll talk numbers in a minute. But if I'm in your shoes, I want to know what the CFO really thinks about this company and this investment. And I want to know what the CFO really believes about this company and this investment. So that's what we're going to talk about before the slides. So I think it's a tremendous company. I think we put this management team up against anybody in the industry. There's only 1 person on the senior team that has less than 15 years in the home medical equipment industry, and you're looking at him. So I'm proud to be the weak link of this group of folks that you met today. I think that -- I think we've got a bright future ahead. And that's really fueled by deep beliefs that I've got about AdaptHealth and about the mission that we serve. So to help you understand my beliefs, my feel that way, I'm going to rewind a little bit. So we're going to go back to March of 2020. Crazy time, especially for folks here in New York City. COVID was running rampant, obviously, businesses were shutting down. The economy and the stock market was on the verge of collapse. And that was the first time I heard about AdaptHealth, because I got a call from a recruiter, and said, hey, we'd like to introduce you to Josh Parnes and the management team at Adapt, you should really take this call. And so reflecting on that, I know for sure, for certain -- it was the absolute worst time in my lifetime to possibly consider starting an interview process with the company on the other side of the country. But my wife nudged me, she said, come on, come on, meet Josh, it's 30 minutes. What do you have to lose? So we had that call, and I remember -- I don't know if Josh knows I'm going to go here, but I remember that call very, very vividly. I was in Miami at the time, working in health care. Getting the call, I'm kind of staring out the window a little bit, not taking it that seriously. And the first thing we talked about were our families. The second thing we talked about were our hobbies and what we hope to get out of life, it wasn't a typical interview. Next, we talked about investments, our philosophy on that. We talked about our management philosophy and how we run companies, how we run businesses. And Josh told me about that $25,000 investment that you heard about earlier. Well, there's a little more to that story. That was a $25,000 loan. And I learned that at a young age, Josh took a huge risk, huge bet. He got a lot of kids at the time, probably a few more now. But he put his family's livelihood on the time for a bet that he believed in. And well, I'll tell you, I got off that 2-hour call that was scheduled for 30 minutes. I looked at my wife and said, I'll tell you what, this place has culture right. And we'll talk about that here in a couple more minutes. But that -- I really left thinking that. And the most important discussion we had on that call was about partnership. And I knew Josh had a partner already in the CEO. But I told them, we didn't know each other, and I pushed him and said, look, if you're not ready for a third leg of that stool for another partner to come into this, I'm [indiscernible]. You need a different CFO. And without hesitation, that's what they were looking for. And I'll tell you, same discussion I had with Steve Griggs when I met them. And how do we end every call. And we talk 3x a day on the days we are not together. And so I'll try to do my Griggs impression, says, All right, partner. We'll talk to you later. And I believed that. I feel that partnership from Steve. I feel it from every person here on the senior leadership team, I feel partnership. So the next questions I really answered about Adapt and I am going to take this giant risk from my family is, what's the purpose of this company? Why does the company exist? What's this thing going to look like in 5 years? Am I going to add value every day and be part of that contribution and about getting this company to that place in 5 years. And so coming from health care, I stepped back and looked at the Triple Aim. So the Institute of Health, a Triple Aim, I think any company in health care, you are one of 4 types of companies. You either don't know about the Triple Aim or don't care about the Triple Aim. I promise you those health care companies exist. There are health care companies that will tell you that they're delivering every day on the Triple Aim. And that fourth type of company are the companies that every single day are contributing to the Triple Aim of the Institute of Health. And for those journalists or non-health care folks in the room or on the call, those -- that Triple Aim is really about improving the health of our populations. It's improving the patient experience that includes outcomes and satisfaction, and that includes doing it all at a lower cost of care. I challenge anybody that was here today listening to our discussion to tell us how we are not part of delivering the Triple Aim every single day. And I saw that back when I learned about AdaptHealth, and I said, it's kind of a place that I could really be part of. Then finally, I heard about the job, I met Terry Connors, our Audit Committee Chairman, on a video call. I met Richard Barasch, our Board Chairman, on a video call. And basically, the job that I understood they needed a CFO. But the job that needed to get done was to recruit the kind of talent you need to run public company operations, to install an ERP, we needed one desperately to support the growth goals that the company had at the time. And we needed to create a control environment that was ready to support the acquisition engine that we were continuing and growing upon and [indiscernible] once we exited emerging growth company stats. The last thing I kind of caught up on in the interview was we also have some challenges of accounts payable. We'll talk about it here in a minute. But that was the job that I understood. And so all of that is what compelled me to take the biggest risk of my life. I packed at my family in July of 2020, a month before I had bought a house site unseen in Philadelphia. I had enrolled my only child, I enrolled my son in a school site unseen. And I joined a company that I had only met a couple of folks on video, some on phone calls, I never stepped foot in any AdaptHealth facility. And I took that job site unseen. So that's the bet that I took a couple of years ago. I'm glad I took it. And now we can get into some of the CFO stuff. We can talk about some of the levers of growth and profitability that we've been talking about all day. So -- when I got here in 2020, the company was already doing what they said to me that they were going to do. We wanted to grow our TAM, our total achievable marketplace. And we wanted to within those total achievable marketplaces, expand our wallet. Well, how do you do that? You get bigger. And so that's what we were focused on. We were focused on getting big. We are a regional provider -- over the course of 2020, we made important acquisitions in the Carolinas as well as Texas. So that density was growing within HME, certainly with AeroCare acquisition in early '21, I mean, I showed up at Adapt and realized we were getting in the middle of an LOI with AeroCare. So wow, this is going to be big. And then secondly, on the product categories. We acquired the PCS division from McKesson in earlier -- in early 2020, that brought us into our supplies to the home categories. We bolted on active style in July of 2020. So those companies operate together today. You'll see that in our financials under supplies to the home. And then very importantly, we acquired diabetes. Rodney Carson joined our team that year. And as Rodney said, we then bolted on 7 more diabetes acquisitions to create essentially every product in the catalog for home medical equipment. So we accomplished that goal. Revenue went up 6x over that time frame. And so okay, well, we've got now the sales force that we need, the sales leader that we need. I'd add. We've got pushing 1,000 sales reps on to the country in all product categories. We're starting to cross-sell and we're a national footprint. So we've achieved what we set out to achieve back in 2020, which was to get dense, get all of the products and bring scale, which certainly helps on purchasing. So then after the AeroCare acquisition, then we're in '22 later, that same year I'd add, we were really focused on the technology that you heard about today from Albert. At the time, in 2019, 2020, we were awfully fragmented. I mean our rev cycle was working pretty well. So all have been here for a long time, leading that effort. It wasn't nearly as integrated or I think simplified maybe as it is today. It's a testament to Shaw and Albert and many, many other people. We had no ERP. We were running an old premise-based general ledger. We know human capital management platform. We were getting people paid on time, but that was really all we had. We didn't have HCM. We had no CRM. There was no real customer relationship management to speak of. Now I've been in locations. I know there were posted notes around, and I know people that have reminders to call people back. And that's essentially what this industry was when the team joined, but that was where we were. And today, very different story. We got Oracle Fusion as our ERP, I think we got a best-in-class ERP. We've got what we think is a best-in-class HCM that's hardwired into Oracle. We built our own CRM. You heard about that with the OTL and with ARM and everything that Leila said, that vision she had of being able for a sales rep to understand what was their workflow for the day? Who do they need to go see, where do we need to sell? What problems do we need to fix with the patient, who do we need to upgrade? Who do we need to evaluate. That all lives today in a cloud-based platform. And then finally, rev cycle, also a cloud-based platform. And all these systems are hardwired into Oracle, right? I mean that's a huge deal for us. I mean, so some of that control environment, we talked about earlier, I wouldn't say we're done, done, all right? This will be a journey, but that was a huge deal for us to get there. And then on the early innings of the e-prescribe. We talked about Rodney and Steve Feldman leading that effort. I mean, in November of 2020, we had acquired 3 diabetes businesses at that point, and we had zero orders coming through e-prescribe. Today, that's over 50%. And they went so fast I didn't know that they were going to make it there, but they went so fast that today, we're the leading e-prescribed operator in the company as it relates to home medical equipment. You've heard about e-order and you've heard about e-delivery. And so that's who we are as an organization, and that's where we're going. All of those investments and all that work translates into what you're seeing on revenue per employee and what you're seeing on people and infrastructure. So people in infrastructure is salary wage and benefit, rent and occupancy. It's SG&A, of course, and those dollars are continuing to drive down as a percent of revenue. So we're getting leverage. We're getting that operating leverage. As Steve said, 25% adjusted EBITDA margin is our goal by 2025. Half of it, we expect will come from PAP repair, PAP equipment and the repair that comes with that. The other half is coming from operating leverage and organic growth that comes in at a higher margin that we'll talk about and Steve referenced earlier. But this is the engine that's driving the efficiencies within our company. And then finally, how do we accelerate value? How do we drive more cash into this business? That's really what we're focused on today. We had 600,000 patients on resupply census back in 2019. Now 1.4 million today on resupply census. The reason resupply census is so important, why you should really keep an eye on our sales versus rental revenue every quarter is that there's literally no capital [indiscernible] with a purchase. So as that patient gets on rental and comes off rental and as part of that resupply census, right? You're not deploying CapEx to support that, right? So those dollars are flowing after gross margin and your variable cost, that's when we cash. And so that's that cash flywheel that we've been talking about over the course of the day. That's a very important part of the business to understand. DSOs have come down. Again, we talked about that. Shaw and his team should be credited for that. I think I challenge anyone that would say a health care acquisitive company, that is simultaneously driving DSOs down, right, is not -- I won't use the R word. But that company is acquiring intelligently and they're integrating well. And I think that's what we've done. Now days pay outstanding, it was what was described to me in that interview process. We were over 100 days of DPO. So some of the analysts in the room say, Well, okay, dum-dum, your DPO goes down, that's a bad thing for cash, right, CFO? Well, yes. But look, the company was in a state that we needed to tighten up and pay suppliers on time per our contract. We're doing that now. That's what we've demonstrated over the last 12 months. We're avoiding late fees and penalties that come with that. And we're taking advantage of [indiscernible] discounts, we've hardwired into our agreements. And so what you're seeing now is a more normal spread between DSOs and DPOs. And we'll continue reporting this. You're going to see it as we drive working capital and as we drive cash flow into this business. The final thing I'd add here is the other thing that RP is doing is it's allowing us to start leveraging the visibility on fixed assets and inventory, right, to squeeze dollars out of inventory turns as well. So working capital is obviously a critical lifeblood to any business, and we've got an extreme focus on that. I'm sorry, I missed an important part here. The free cash flow chart that I'm showing here, so there's a lot of adjustments on here, kind of like Josh said in the last -- in his last presentation, we're not a management team that's asking for credit for this. I wouldn't look at it that way. What we're saying here is that we've got a deep belief in producing 6% to 7% of our revenue as free cash flow in 2023 because of this data. And we believe that, that will extend to 8% in 2025 to hit our $300 million-plus free cash flow target. And so these are one-time events. I think you all know about the CARES Act. We are at about the final stages of paying back the $50 million that the company took on in 2020 as part of the COVID-19 relief package. And then additionally, is the AP tightening that we talked about following the Oracle conversion. So you're looking about $50 million spent through the end of Q2 on that. Again, once your DPO and your DSO is in line, mean AP starts becoming a source of cash, again, a very moderate source of cash, but if you're managing things properly, that's the way things should work, and that's what we expect to happen now that we've done this work. So $77 million [indiscernible] billion of revenue in the first half. You're looking low 5% as a percent of revenue for free cash -- of course, as you know, first half, things are a little tighter due to deductible resets and patient responsibility and things like that. But again, we've got every confidence every degree of confidence that we're going to hit the numbers that we're putting up here we get into 2023. So where are those investments going to go? I'm not going to spend a lot of time here because we've talked about this all day long. I mean, our highest and best use is and we believe will continue to be M&A. We acquired accretively on every deal. We're going to stay disciplined on that M&A approach. We are an acquisition company, taking a breath at the moment, as you've seen, but this will continue. Technology investments. I think you heard a lot about that today. We think we've got the right team to deliver them and continuous improvement investments that will continue to drive operating leverage through the business. Finally, intelligent return to shareholders. Right now, we've got an authorized share buyback program. We will continue to buy opportunistically when it makes sense and return that capital to the investor. And so a little bit on balance sheet. I'm not going to read anything on this slide. The one thing I'll say, which is very, very important, is the goals that Steve set out here for us for 2025. We believe we can do that without borrowing $1 of debt or raising $1 of equity. That's a huge deal, right? So we believe that we will get to the targets that we're implying organic work. I mean we'll do M&A but that's going to come from cash flow, and we think we can self-fund. So finally, revenue. I won't drain this glad to do more bridging during Q&A or in the coming weeks as we meet one-on-one. But as you're exiting the year at a little over $3 billion, I mean, 8% organic growth, which is what we believe, forget the PAP prepare for a second. Let's say it's repaired. Well, 8% is what we believe. And so for the next 3 years, that should drive $800 million of revenue into the business, getting us to about 3.8. That leaves 200 left. I think we've demonstrated, if we needed 200 M&A to hit the goal of the CEO setting out, I think we demonstrated that we can accomplish that. So that's on the top line. When you get to adjusted EBITDA. Steve talked about this and the 2 points of repair roughly of PAP coming back online. Well, we've talked about $65 million of impact of headwind, EBITDA and within 2022. That's in our guidance. The guy that we got on the street right now. That was contemplated and included there. So you take our 645 midpoint, you add 65 at 710. That $800 million of organic growth that will come in, in revenue, let's say it comes in at 30% adjusted EBITDA margin. Greg's will say, "No, we can we weigh harder than that? Let's save that, right? So that's $240 million. I mean, that leaves us about $50 million to make up the difference. And M&A could get there. I haven't even talked about operating efficiencies yet. And I've been a record for -- since I took this job, we will drive 30 bps a year of margin improvement through the technology that we're installing and through the programs that we're running. So I didn't do formal bridges here because we talked about free cash flow. I didn't do formal bridges here because -- to Steve's point, there are so many avenues to achieve the goals that we've set out that I can put a scenario modeling table up here in front of you all, but you all can do that, too. And I think the -- just basic math gets us there very comfortably. And again, I think you're looking at a management team that's going to get it done. So with that, so that's enough out of me. Maybe we move on to some Q&A.

Great. Thanks, Jason. So I guess we get -- yes, [indiscernible] come on back up in more time. Same thing with Josh and Ravi. And we probably can go until -- we'll see how we do [ 20 ], 30 minutes. So I think -- yes, I think Dave's got us again we'll get wait over here.

So I guess a couple of questions. First, Josh, just on coming back to value-based care again. When you look at connected care, patient monitoring. Is anyone else competitively kind of doing this in a meaningful way? And then you've laid out a lot of 2025 targets. Can you give us a sense of what percentage of your revenue right now is in some type of value-based arrangement, where do we think that's going to be in 2025? And then I just got one other follow-up.

Yes. So thanks for the question. So I would say in the HME industry in general, we're not aware of anybody that's doing this. I think what you do see is that there are remote patient monitoring come. So we're talking separately, there are chronic disease management entities separately. I don't see them really integrated into a typical home care or medical equipment infrastructure. It's typically has evolved as a separate business model. I just think that there's a lot of compelling reasons to put those business models together and really leverage I guess what's missing in some of those business models is the relationship with the payer, the scale, the relationship with the patients and kind of the existing infrastructure that doesn't have to be rebuilt from scratch. So a lot of the new technologies that are out there. I mean, I think you see it a little bit with Amedisys and a hospital at home program starting to come together, you're starting more of that shift. And this is kind of -- everybody has got their own take on it, and we're not really that pie in the sky kind of management team. We're very practical like what could we do incrementally? How do we help -- how is what we're going to do, not cost an arm and a leg, but also be able to drive meaningful organic growth and make a difference in the lives of the patient. That's kind of how we're thinking about it. Currently, I think we have a little bit less than about $100 million in revenue.

Call it 3% currently. I mean I think conservatively 5% to 10% of revenue would be on these alternative arrangements that we're talking about in 2025 could go faster. But I think for conservative estimate, it's probably a decent one.

And then just a quick follow-up. In terms of CapEx, if we take a look at past a lot of the technology spend, you've talked about resupply growth. Should we think about that CapEx as a percentage of revenue number starting to leak lower in the out years? It will, but here's the nuance. As Pat prepares, we would expect to put up much more capital to acquire equipment and to get it out on patients. I think what we demonstrated today with getting patients on the rental census and ultimately, under that resupply census, which is where that real cash return comes from. I think you'd all say, yes, go get as many patches you can get. And I promise you that's what these guys are doing right now. But ex that, Dave, yes. I mean, we expect to get a couple of points out of CapEx as a percent of revenue. Some of that is, frankly, just the profile of the business on the change and that resupply continuing to grow.

I [indiscernible], and then we'll go over to Brian.

Maybe just to start on the cash flow conversion, Jason. The ballpark, let's just assume $300 million CapEx in that $25 million number. Obviously, you have to get to $600 million of EBITDA. That's an improvement in the cash flow conversion. What are the single largest drivers that you see from today to then that gets you -- enhances your confidence in that $600 million?

Sure. So I'd say the adjustment slide that you saw up there. I mean, let's say that's behind us. We've tightened up we pay back all the corresponds and we've tightened up DPOs to more of a normalized level. Well, I'd say, first and foremost, is the swelling of our resupply census. Again, no CapEx requirement there. as that gets bigger and bigger, I mean, we went from 600,000 patients in 2019 to 1.4 million on that census today. I assume that same trajectory, and that's going to bring tremendous cash into the business and increase that cash conversion That, by far, is the biggest part of this. Secondly is working capital. We think there's a couple of days to go in DSOs. What do you think, Shaw? In DPOs. I'm sorry. I'm sorry, right here. So I'm right here. So a couple of days ago in DSO, arguably a couple of days ago on DPO as we continue to use our purchasing power to drive better terms, not just price, but terms with our suppliers, we're confident that we'll drive that. And finally, is within just tighter inventory management and everything that -- we're in the early innings of this, but everything that Oracle is giving us the scale to do we're confident that we'll drive more cash out of that. And the guys on either side of me are definitely pushing me to drive more and drive faster.

Yes. The second question I had is just as it relates to the public health emergency and when this sunsets at some point, we would expect to see additional prior authorization kick back in. There's been a lot of relaxation in a lot of other areas. But any other any other things that you're paying attention to things that are tied to the public health emergency that we should be aware of? And then if you could also just maybe comment briefly just on health plans, claim edits, anything that they're doing today that they weren't doing 6 to 12 months ago?

Well, when the health emergency does sunset or stop. We were getting some benefits in increased reimbursement. Those will go away. We believe the ones in the rural areas will stay as that got put in prior to the health PHE and just kind of extended derate. But the ones that are in the nonrural non-bid areas, we expect those to go away. But that will be -- and then, of course, the quester goes has gone away too. So those are the 2 big revenue reductions, but we expect a pretty healthy increase on CPI. And if you kind of measure those up, it should be a net plus to us when you put those 2 together. And then your question on...

Any claim edits or anything else that -- any change in that environment, I guess, is yes, prior also.

We didn't see a significant reduction in prior authorization requirements. We saw more leniency and documentation requirements for the process. However, we still maintain our same level of requests working with the physicians, I think we've prepared ourselves with the fact that the press are going to come back in. electronic ordering has helped us with that as well. So we're able to maintain that. But I don't see a significant impact from authorization. I think Brian had one and then we've got [indiscernible].

Jason, just as I think about the organic growth guidance that you gave, obviously, there's a recovery that we're going to see in PAP next year. So -- how are you seeing -- how are you thinking about the cadence of growth? And then maybe margins as well as we see that big recovery happen next year? And one follow-up.

Sure. So I'll be careful on this to not kind of trip formal guide or anything like that. But I'd say 2 things. Firstly, 8% is a good way to think about our average. Now as PAP is repairing and we've got this huge amount of patients on backlog, you could expect -- you should expect outsized growth over that typical 8% as we fulfill that backlog. And then as we come back to normal, which is that 8%. So it's reasonable to assume that 8% is very achievable because you're going to have this big kick from the fulfilling the backlog. And then same thing on margin. I mean we think 2 points on revenue will repair as part of PAP come back. Some of that is the nuance of the rental. Dollar rental revenue really drops almost 100% to EBITDA. And as that rental revenue repairs, it's going to be margins up significantly.

And then for Rodney. So as I think about CGM obviously, we've seen some deceleration in growth even from [indiscernible] site. So it's not just you guys, right? So how are you thinking about the outlook for CGM going forward as a as a product category? And yes, I mean, I guess if you can answer that question, just a pharmacy benefit discussion as well.

I think that's a great question. I think -- there are a number of dimensions to the answer to that question, many of which we don't know. I would start with what is the terminal penetration rate for intensively managed diabetes is 65% is at 80%. So certainly, I would start there. I'm confident in the guidance that we've given that we'll be able to grow at or beyond the rate of market growth for CGM. I think the key to hyper growth is the expanded coverage for type 2 diabetics, frankly. I think we all would probably acknowledge that.

Philip Chickering, Deutsche Bank. So if up to Brian's question, but more on the margin side, with CPI coming back in 2023, you talked about $65 million, you talk about half of the margin coming from CPAP. Is it fair to think that the 2023 -- or the margin improvement over the next couple of years would be more front-end loaded in 2023 because of the CPAP?

Yes.

Okay. So half of that 300 basis points will probably be in 2023. Okay. And then a question on the diabetes side. A couple of questions here. So I'll hit you on. What happens in CGM if [indiscernible] begins to take market share away from Dexcom or has it impacted your growth? And then what is your exposure to Medtronic? If 780G gets approval, what impact do you think that could have on your outlook to diabetes?

Well, we have great relationships with both Dexcom and Abbott, so I really don't want to speak to anything other than we would make more money if.

Because of the lower price point, wouldn't your gross profit dollars shift sort of more negatively if you go from DexCom into [indiscernible]?

No. No, our gross margin would expand dramatically. Our revenue dollars would go down.

Okay. And then for Medtronic, do you guys sell from Medtronic in the 780G's approval and go get share in the U.S., how that impacts your sort of multiyear view of diabetes growth?

Well, the 780G, as you know, has been accepted very well in Europe and outside the United States. Certainly, we have an emerging relationship with Medtronic. Today, we have a larger relationship with Tandem. I think that there is ample opportunity for us to grow our Medtronic market share. And certainly, we're working on that as we speak.

Okay. And then last 1 on non-based event. Can you just refresh us what percent of revenues non-based today? And what's your views around competing [indiscernible]?

Yes. I can start on numbers and I think Steve Josh will have some on competitive bid and likelihood for [indiscernible]. so respiratory is about 20% of our top line you can think as events is about 1/4 of that. So 5% roughly of top line revenue. We've disclosed that publicly. And as a reminder, right around 5%.

As far as competitive bidding, I think we're getting too late in the year for it possibly to happen in 2024. So now talking about maybe 2025. You're going to have to be well out of the pandemic, and you're going to have to be well into supply being available, right? Right now, you legally couldn't bid on a competitive bid because you don't have the [indiscernible]. So that has obviously for Pat, but also we have some ventilation issues with Philips physicians with ventilation. So those have to be all the kind of cleaned up that you have to have fly then quite possibly, competitive bidding could come in 2025. Competitive bid has been very good to AeroCare, very good to Adapt. And our policy for credibility is pretty simple. We're supportive of competitive edge as long as there's one thing in there that's currently not in there. If prices go up, we get them. And as long as that's in there, we're very supportive of competitive bid, and we think we could sell that to the legislators.

Michael Murray, RBC. So you noted half of your EBITDA margin targets will be CPAPs coming back to the market. When Philips comes back online, there will be more industry supply than previously, which could put pressure on CPAP prices. So was that contemplated in the margin expansion target?

No, it was not.

Could you give us a sense of potential.

I mean, like logically, You might stop and say, well, there's more units, there's more suppliers, prices will come down. But the dynamics of these negotiations are very complex and very neat. I mean we buy a lot of different types of products. It's not like a single CPAP and it's got a price point and because you've got multiple vendors that naturally, it will come down. I mean we're buying CPAP, bypass, ASVs, the soft goods and everything that comes with it. Vents, concentrators, I mean these manufacturers, we buy so much from them. And it's -- again, it's just complex and nuanced. So yes, logically, that makes sense, but we haven't baked in upside there for those reasons.

Okay. But we would look forward to that negotiation.

And then just a quick follow-on. Given current inflation and the slowing could you discuss impacts on your business specifically in diabetes?

Well, certainly, there is economic sensitivity to therapy, depending on the payer, the therapy can be extremely expensive. So we have seen a bit of that in Q2. Certainly, pump therapy can be very expensive. I've probably seen from some of the public filings that pump placements have slowed somewhat in Q2. So certainly, there is economic sensitivity to therapy.

Got another one from Matt here.

Mathew Blackman, Stifel. Rodney, you mentioned intensively managed patients and the driver of diabetes growth dependent on what we think penetration is. But we made there on the cusp of seeing coverage for basal-only patients. So not fleet management is orders of magnitude larger opportunities. Does that contemplate at all as you think about some of the diabetes business and the market in the next [indiscernible]?

It's a great question. We're cautiously optimistic. We're seeing a few Medicaid-oriented payers being very inquisitive on type 2 coverage. But I would say today, we are not seeing what I would call widespread consideration across commercial payers for type 2 coverage.

But if we saw Medicare come down with a positive decide in the next 12 to 18 months, we should think that would reflect positively on the outlook for your business as well right?

Yes. Absolutely.

Joanna, one in the front row, [indiscernible].

Joanna Gajuk, Bank of America. So a couple of questions. So first, a follow-up on the inflation question. So the question was asked about the impact to volumes. But on the flip side, can you talk about how you managed to pass it through to your payers, the traction you're getting? And maybe any way to quantify the increases versus historical and also what you assume in your targeted growth going forward?

Yes. Sure. So as a refresher, we'd start with the [indiscernible] post fee schedule that's published by on or about December of each year. The way that fee schedule works is it anchors into the rolling 12 CPIU from the previous June. So last year, that was what, I guess, 6 points in change. Then they apply a labor productivity factor that I won't pretend to be able to explain. I don't know that we've got any one that can explain the labor productivity, but it was a deduction from that, call it, 6% down to 5.1%. So about $30 million for our business. Now I would say majority of that does pass through to manufacturers. Some of that's inflation, product refreshes. I mean, the new products typically cost a little more. They've got more product. They've got more technology, things like that. Our guide assumes from a rate perspective, steady rate. I said guide is the wrong word. Our goals. Our current guide likely our next year guide and certainly our '25 goals, it assumes a steady rate. And so if you look at the CPIU through June of '22, last thing I saw, I think that was 8 points and change. Look, there will be a labor productivity factor applied against that. That will result in the demi post fee schedule increase for 2023. And same dynamic. We would expect to pass through much of that downstream to manufacturers. So I wouldn't say we're absorbing everything. Every dollar of inflation, labor is running fuel. I mean -- but through that mechanism. But I think through our operating leverage, we are absorbing the rest.

So I was thinking about the payer relationships and whether the years are recommending whether you're seeing acceleration or expect acceleration in pricing going forward?

So far, we haven't had great success with our payers increasing the rate. You've mentioned Ben [indiscernible] a few times, micas again over there in his quest to get that done. So payers have been very cooperative on methodology and how they work with us, but they're all slow to increase. But we are having those conversations and what it amounts to in 2023 is yet to be seen

And I'll just add something there, is that there's a blend of having a discussion with a payer about an increase in rates or sit down and how do we collectively -- because payers aren't just looking to say, "Oh, inflation, we're going to pay out more, right? They're going to look to leverage their provider relationships into cost efficiencies for them so that our scale, our technology, our ability to take cost out of the model can result in a cost sharing doesn't have to be straight value based. It could be fee for value. We're having a number of those conversations. I think particularly because of the inflationary environment, those conversations are getting a lot more traction because the reality is the barrier to entry, and I think Steve mentioned this initially in his remarks was the barrier to entry and competitive bidding and rate reduction environment favors a larger, more scaled company that can adapt to that part in the pun. But our ability to drive technology, OpEx efficiencies, connect with the payers directly, allows us to really collectively take cost out of the model in a collaborative way with a payer. So it's not just [indiscernible] pay me that it's a much more nuanced discussion about how do we work competitive together and how do we drive more of the wallet share from that payer to a larger, more scaled company like us.

And the last question, I guess, or it's 2 parts. So one is -- so the comments about the PAP and how you expect this to grow -- to drive the growing margins and whatnot. So should I read into this as in terms of the implications for this year in terms of your guidance? Because I didn't see any explicit comments about the guidance reaffirming or changing it today.

Yes, we feel fine about the guidance we reiterated just a couple of weeks ago, I guess. So yes, there's no change. Today, it was really about big picture where we're heading and where we think we'll get in the next 3 years. So no change there.

We have time for one more from Andrea here.

Thanks for squeezing in. So I guess my first question was, I guess, embedded with 8% organic growth guidance, you sort of mentioned in passing on the PAP side, an assumption around share gains. I guess, how much of that organic growth is predicated on those share gains? And do you think you could get it from some of your bigger competitors? And where are those share gains achievable?

Sure. I think Steve and Josh can talk about with the competitive dynamic. But in terms of the math, we're just assuming PAP is running at the 7% to 10% that Steve presented earlier this morning. And so at the end of the day, it's a weighted average. So this year is 4%, assuming a negative 5% to negative 6% [indiscernible], as we said in Q2. I think we'll do better than that. Maybe some other product lines we won't do as well as we had originally put up in guide. But today, we think collectively, we'll deliver the [ 4 ]. So all this is saying is the negative 5% to negative 6% repairs to 7 to 10 again, that's likely to be outsized as the backlog comes on, and so that would bring the 8% up. Timing is -- it's unclear. -- as months go by, we'll provide more clarity on that for you all. But -- in terms of the competition and winning share, guys, what do you want to add?

Well, I think winning share comes from a couple of different perspectives. One is we have been very open to taking other manufactures product and support those and working with our referral sources to be able to allow us to use those. Some people have not done that. Some people have avoided the card-to-cloud strategy because it causes more expense to do that. We haven't done that. So when you look at those 2 things, and we had a natural larger share of ResMed going into this than the industry did. So if you look at somebody that's been able to supply their historical backlog at -- I'm just going to pick out numbers, please don't hold these to me at 30% versus some of this 70%, that person has been supplying at 70% of their historical and some of versus some that's been planned they're going to be able to get to when PAP are ample through their backlog faster. And so when they get to their backlog test, they're going to have opportunities to move market share.

And then just a separate question, Jason. You discussed the -- some of the IT investments sort of being ongoing? And I guess maybe I'm just curious about sort of the way we think about that stacking against your LRP through 2025, mid-teens EBITDA CAGR. I guess when does that magnitude of the investments start to dissipate there's more of a discernible margin benefit with [indiscernible]?

Yes, great question. I'd probably peg that at 18 months. somewhere between 12 and 18, but 18 feels fine. On the last call, we talked about the hardening of the Oracle environment, including just essentially every SOX control we had prior to Oracle, it's different now. It's much better, but it's got to be re-documented, retested, there's significant cost that comes with that. And we have pegged that at about $10 million in the year for 2022. So Oracle hardening and SOX hardening, we will lap we're getting in the final stages of that even here as we speak. Now some of the additional investment that Albert talked about, there will be additional dollars spent on driving the working capital improvements that we spoke about. There will be cash investments that go into this. We think G&A as a percent of revenue, we will hold steady for the next 12 to 18 months. And I think as you start in '24, we'll start seeing the leverage within G&A as well.

Great. Thanks. So we probably have -- Steve, do you want to -- we may have some closing comments from Steve here, if everybody wants to just hang. I know we've gone over time a little bit, but there is lunch out there to the extent anyone can hang out with us and we'll get you fit.

Yes. I think we've laid out what we've been able to accomplish to assemble our opportunity. And that opportunity has been assembled, and so it's there for us to execute on. And so some of that execution in 2022 is more is putting the systems and the processes around it. So now we're going to execute on that opportunity. And as we execute on the opportunity, we're going to move into this, what we think is the significant opportunity for the company is this transition from fee-for-service to value-based care. So for us, it's about execution. It's all there. Our people got to go to work. They got to do their job. And if we do their job, we should be very successful. And with that, thanks for everybody. Thanks for the time. and we really, really appreciate the questions, the interest and your support.