AdaptHealth Corp.
CIK: XXXXXXXXXXSEC EDGAR Link: Inline XBRL Filings (sec.gov)
Company’s Website: Home – AdaptHealth https:
adapthealth.com
About the Company:
Adapt Health Corp. is a medical equipment manufacturing company. The equipment includes afflovest, bath safety,
east pumps, hospital bed and accessories, nebulizers, non-invasive and invasive vents, etc. The company supply medical equipment in 47 states of the US. AdaptHealth Corp. has planned to acquire AeroCare for c. $2 billion of which $1.1 billion will be paid in cash to the shareholders of AeroCare and 31 million common shares amounting to $926 million will be given. The purchase price represents a multiple of 2021E EBITDA of 8.8x and 2021E EBITDA less Patient CapEx of 17.6x (7.2x and 12.3x respectively, including synergies).
Regarding the revenue, the company had an annual revenue growth of 33% CAGR from 2016 to Q3 of FY2020. Further, 47% of the revenue of the company comes from sleep equipment and 31% from respiratory equipment. In FY2021, the company had a net profit of $158,153 as compared to a loss of c. $194,086 in FY2020 and loss of c. $22,601 in FY2019.
References:
Investor Presentation. adapthealth.com XXXXXXXXXXhttps:
www.adapthealth.com/wp-content/uploads/2020/11/AHCO-Investor-Presentation_12.1.2020_vF.pdf
Inline XBRL Filings. U.S. Securities and Exchange Commissions. (2017).
https:
www.sec.gov/structureddata/osd-inline-x
l.html
HCM 400 Milestone Three Guidelines and Ru
ic
HCM 400 Milestone Three Guidelines and Ru
ic
Submit a draft proposal for Section I, parts C and D (see below). Using the approved healthcare organization and the information you have gathered, identify the
capital budget item or items that will be used as the basis for the written capital budget proposal. You should include how the proposal recommendations reflect
the big-picture view of healthcare.
Specifically the following critical elements must be addressed:
I. Introduction
C. Opportunities: Based on your analysis of the major forces, impacts, and opportunities provided, consider the specific organization that you
selected. What opportunities exist for this organization, and how do these opportunities relate to the big-picture view of healthcare?
D. Proposal: What is your proposal for addressing identified issues or improvements within your organization? In other words, what changes are
you trying to incorporate in your selected organization?
Guidelines for Submission: Your paper must be submitted as a Microsoft Word document and should be a minimum of one page in length with double spacing,
12-point Times New Roman font, one-inch margins, and at least two sources cited in APA format.
Critical Elements Proficient (100%) Needs Improvement (85%) Not Evident (0%) Value
Opportunities Translates the big-picture view of
healthcare to the selected
organization to identify areas of
opportunity
Identifies areas of opportunity
within the selected organization,
ut without the connective detail
to the big-picture view of
healthcare
Does not identify areas of
opportunity within the selected
organization
45
Proposal Conceptualizes reasonable
change(s) for proposal within the
organization based on the
identification of opportunities
Conceptualizes change(s) for
proposal within the organization,
ut changes are not reasonable
or not based on the identification
of opportunities
Does not conceptualize
changes for proposal within the
organization
45
Articulation of Response Submission has no major e
ors
elated to citations, grammar,
spelling, syntax, or organization
Submission has major e
ors
elated to citations, grammar,
spelling, syntax, or organization
that negatively impact readability
and articulation of main ideas
Submission has critical e
ors
elated to citations, grammar,
spelling, syntax, or organization
that prevent understanding of
ideas
10
Earned Total 100%
HCM 400 Milestone Three Guidelines and Ru
ic
Note on �������
���Budgeting in Health Care
As long as there are scarce resources and alternative uses, an organization will face financial
constraints. Most deal with this by means of an annual budgeting activity. In contrast with pro-
gramming, which looks ahead several years, budgeting generally is for a single year. Ordinarily, it
uses the new programs or product lines that emerged from the programming phase, along with ex-
isting programs and product lines, and attempts to determine the revenues, expenses, and, some-
times, the non-financial (or programmatic) outcomes associated with each.
In some organizations, programs fall neatly into responsibility centers, so each responsibility
center manager prepares a budget for each of his or her programs. Alternatively, it also is possible
that each program is a separate responsibility center, most likely a profit center. When neither of
these a
angements is possible, a more complex, matrix-like structure may be needed,.
It is important for the budgeting phase to fit with the organization's responsibility center struc-
ture and strategy. To accomplish the latter, line managers must budget for non-financial as well as
financial goals and objectives. Senior management then can link each responsibility center's activi-
ties to the organization's overall strategic direction.
Most organizations have two budgets. The operating budget, discussed in this note, focuses on
evenues and expenses on an accrual basis, and is used to measure the financial performance of line
managers. The cash budget forecasts the cash inflows and outflows associated with both ongoing
operations and financing; it is used by the controller or treasurer to help manage the organization's
cash.
ORGANIZATION OF THE NOTE
The note looks at operational budgeting through several lenses. The discussion begins with the
nature of the operating budget, and the
oad context in which budgeting takes place, distinguishing
etween budgeting's behavioral and mechanical aspects. It then looks at the components of the op-
erating budget, and the steps involved in formulating a budget. An appendix to the note discusses
some budgeting misfits, or areas where the budgeting phase may be poorly aligned with other or-
ganizational activities.
GENERAL NATURE OF THE OPERATING BUDGET
It is during the budgeting phase of the management control process that an organization sets
out its plans for the upcoming year, and attaches monetary amounts to its various activities and pro-
grams. Additionally, in many organizations, the budget is used as a central aspect of measuring
managerial performance, which means that the budgeting phase has behavioral as well as mechani-
cal aspects.
Relationship Between Programming and Budgeting
In concept, operational budgeting follows programming but is separate from it. Ideally, the
udget is a “fine tuning” of an organization's programs for a given year, incorporating the final
decisions on the amounts to be spent for each program, and specifies the organizational units that
are responsible for ca
ying out each program. In most organizations, however, there is no clean
separation between programming and budgeting. Even organizations that have a well-developed
programming phase occasionally discover circumstances during the budgeting phase that require
evision of programming decisions. In organizations that do not have a clearly defined program-
ming phase, program decisions are made as part of the budgeting phase.
HBSP Product Number TCG321
TTHE CRIMSON PRESS CURRICULUM CENTER
THE CRIMSON GROUP, INC.
_____________________________________________________________________________________________
This background note was prepared by Professor David W. Young. It is intended to assist with case analyses, and not
to illustrate either effective or ineffective handling of administrative situations.
Copyright © 2012 by The Crimson Group, Inc. To order copies or request permission to reproduce this document,
contact Harvard Business Publications (http:
hbsp.harvard.edu/). Under provisions of United States and interna-
tional copyright laws, no part of this document may be reproduced, stored, or transmitted in any form or by any
means without written permission from The Crimson Group (www.thecrimsongroup.org)
This document is authorized for use only by Princess Bazzell in HCM-400-X4260 Healthcare Finance 22EW4 at Southern New Hampshire University, 2022.
Despite this overlap, these two activities have different characteristics, and it therefore is useful
to think about them separately. Programming decisions usually have multiyear consequences, and
occasionally include rough estimates of the associated revenues and expenses. Budgeting, by con-
trast, requires careful estimates of revenues and expenses, and usually is formulated within a ceiling
of estimated available resources.
Since a budget is a plan against which actual performance is compared, senior management
must be certain that it co
esponds to individual responsibility centers. As such, it provides a basis
for measuring the performance of responsibility center managers. If a program is to be used as the
asis for performance measurement, senior management generally must designate it as a responsi-
ility center. Otherwise, responsibility for many of a program's elements may be too diffused
throughout the organization to permit the measurement of any given manager's performance.
EXAMPLE
A hospital may have a teenage substance abuse program. To be successful, the program may need contribu-
tions from the departments of pediatrics, psychiatry, obstetrics, emergency medicine, and social work. If the
program is not set up as a responsibility center, each department likely will do its best to provide the serv-
ices within its capabilities, but those services may not be well coordinated. As a result, it will be difficult
to measure the performance of the program's manager.
Contrast with For-Profit Companies
Budgeting is perhaps more important in a healthcare organization than in a for-profit company,
due largely to a contrasting cost structure. In a for-profit company, especially a manufacturer, many
costs are engineered. The amount of labor and the quantity of material required to make a product
are determined within close limits by design and engineering specifications. By contrast, in most
healthcare organizations many costs are discretionary—the amount to be spent can vary widely de-
pending on decisions by program managers, physicians, and other professionals. Many of these
decisions are made during the budget formulation phase of the management control process.
EXAMPLE
Many hospitals have developed “clinical pathways” for patients with different diagnoses or diagnosis-related
groups (DRGs)