AdaptHealth's Capitated Contract Margins Improve, RBC Says

11:42 AM EST, 11/04/2026 (MT Newswires) -- AdaptHealth (AHCO) delivered a solid Q3 beat-and-raise, supported by improving margins under its West Coast capitated contract as utilization normalized and labor costs declined, RBC Capital Markets said. The contract generated a margin of approximately 10% in Q3, compared with negative 4% in Q2, and exited September at about 14%. AdaptHealth also reduced its headcount by approximately 12% since the end of Q2. RBC said it was increasingly confident in the company's ability to reach its 20% contract margin target by the fourth quarter of Q4 2027. Additionally, AdaptHealth reached a rebate agreement with a manufacturer that allowed it to recover $8 million in Q3, partially offsetting a price increase that is expected to cost $30 million in the second half of 2026, the firm said in a Tuesday note. The investment firm considers AdaptHealth's exposure to the Medline recall manageable. Revenue from Medline beds accounts for a low-single-digit percentage of total revenue, while alternative suppliers are already lined up. RBC maintained its outperform rating and $8 price target on AdaptHealth. AdaptHealth shares were 7.9% higher in Wednesday trading. Price: 6.78, Change: +0.50, Percent Change: +7.88