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Segment Information
 12 Months Ended
Dec. 31, 2024
Segment Reporting [Abstract]  
Segment Information Segment Information
As discussed in Note 1, Nature of Business, effective October 1, 2024, the Company realigned its reportable segments as a result of organizational changes and to reflect the way the Company’s CODM assesses performance and allocates resources. Under the current structure, the Company operates its business through four reportable segments that align to the Company’s product categories: Sleep Health, Respiratory Health, Diabetes Health, and Wellness at Home. All segment information is reflective of this current structure and prior period information has been recast to conform to the
current period presentation. A description of the products and services provided within each of the Company’s four reportable segments is provided below.

Sleep Health

The Sleep Health segment provides sleep therapy equipment, supplies and related services (including CPAP and BiLevel services) to individuals for the treatment of obstructive sleep apnea.

Respiratory Health

The Respiratory Health segment provides oxygen and home mechanical ventilation equipment and supplies and related chronic therapy services to individuals for the treatment of respiratory diseases, such as chronic obstructive pulmonary disease and chronic respiratory failure.

Diabetes Health

The Diabetes Health segment provides medical devices, including continuous glucose monitors and insulin pumps, and related services to patients for the treatment of diabetes.

Wellness at Home

The Wellness at Home segment provides home medical equipment and services to patients in their homes including those who have been discharged from acute care and other facilities. The segment tailors a service model to patients who are adjusting to new lifestyles or navigating complex disease states by providing essential medical supplies and durable medical equipment.

The CODM evaluates performance of the reportable segments based on Adjusted EBITDA, which is the primary measure of segment profitability. The CODM uses Adjusted EBITDA to evaluate segment operating performance, generate future operating plans, and to assist with the evaluation of strategic business decisions, including potential acquisitions or divestitures, and whether to invest in certain products or services. Adjusted EBITDA excludes interest expense, net, income tax expense (benefit), depreciation and amortization, including patient equipment depreciation, equity-based compensation expense, change in fair value of the warrant liability, goodwill impairment, loss on extinguishment of debt, litigation settlement expense, and certain other non-recurring items of expense or income that the Company does not consider part of its reportable segments’ core operating results. Adjusted EBITDA includes certain centrally incurred corporate and shared function costs, which are allocated to the reportable segments based on methodologies designed to correlate with each segment’s consumption of the related cost. Segment assets are not regularly provided to the CODM and therefore have not been disclosed.
The following tables present segment net revenue, significant segment expenses, and other segment items that are included in the Company’s reported measure of segment profit or loss for the years ended December 31, 2024, 2023, and 2022 (in thousands):
Year Ended December 31, 2024
Sleep HealthRespiratory HealthDiabetes HealthWellness at HomeTotal
Net revenue$1,349,213 $651,150 $614,410 $646,202 $3,260,975 
Less:
Cost of product and supplies (a)424,388 119,865 434,808 309,101 1,288,162 
Labor cost (a) (b)321,194 210,701 50,776 144,335 727,006 
Other operating expenses (a) (c)126,761 54,300 9,588 47,767 238,416 
Other segment items (d)128,126 66,172 58,713 65,723 318,734 
Adjusted EBITDA$348,744 $200,112 $60,525 $79,276 $688,657 
Year Ended December 31, 2023
Sleep HealthRespiratory HealthDiabetes HealthWellness at HomeTotal
Net revenue$1,291,714 $614,563 $660,039 $633,861 $3,200,177 
Less:
Cost of product and supplies (a)391,206 132,013 467,566 319,428 1,310,213 
Labor cost (a) (b)320,370 198,476 48,908 143,976 711,730 
Other operating expenses (a) (c)120,021 49,560 7,126 45,397 222,104 
Other segment items (d)111,414 57,481 56,823 59,617 285,335 
Adjusted EBITDA$348,703 $177,033 $79,616 $65,443 $670,795 
Year Ended December 31, 2022
Sleep HealthRespiratory HealthDiabetes HealthWellness at HomeTotal
Net revenue$1,103,776 $554,141 $687,090 $625,588 $2,970,595 
Less:
Cost of product and supplies (a)320,095 102,008 481,551 299,241 1,202,895 
Labor cost (a) (b)298,019 188,408 64,052 143,437 693,916 
Other operating expenses (a) (c)111,488 43,901 6,377 34,648 196,414 
Other segment items (d)101,932 58,419 61,729 61,520 283,600 
Adjusted EBITDA$272,242 $161,405 $73,381 $86,742 $593,770 
(a)These expense categories align with the segment-level information that is regularly provided to the CODM and are considered significant to the segment in accordance with ASC Topic 280. The expense categories included in the tables above exclude amounts for patient equipment depreciation since these amounts are not reflected in the segment measure of profit or loss. Refer to the section below, titled Patient Equipment Depreciation, for discussion of such amounts.
(b)Excludes salaries, labor and benefits for corporate employees. Salaries, labor and benefits for corporate employees are included within Other segment items.
(c)Other operating expenses primarily include costs relating to rent and occupancy, facilities, fleet, and other operating costs.
(d)Other segment items include allocated costs related to various general and administrative functions, including revenue cycle management, customer service, technology and communications, sales and marketing, billings and collections, accounting and finance, executive administration, human resources, information technology and legal and compliance.
The following table presents a reconciliation of total Adjusted EBITDA to consolidated income (loss) before income taxes (in thousands):
Year Ended December 31,
202420232022
Total Adjusted EBITDA$688,657 $670,795 $593,770 
Interest expense, net(126,668)(130,299)(109,414)
Depreciation and amortization, including patient equipment depreciation(365,334)(382,783)(351,178)
Equity-based compensation expense (a)(14,880)(22,468)(22,397)
Change in fair value of warrant liability (b)4,021 34,482 17,158 
Goodwill impairment (c)(13,078)(830,787)— 
Loss on extinguishment of debt (d)(2,273)— — 
Litigation settlement expense (e)(3,338)(25,140)— 
Other non-recurring expenses, net (f)(31,088)(37,584)(30,037)
Income (loss) before income taxes$136,019 $(723,784)$97,902 
(a)Represents equity-based compensation expense for awards granted to employees and non-employee directors.
(b)Represents non-cash gains for the changes in the estimated fair value of the warrant liability. See Note 13, Stockholders' Equity – Warrants for additional discussion of such non-cash gains. These warrants expired on November 8, 2024.
(c)The 2024 period includes non-cash goodwill impairment charges relating to the disposition of certain immaterial custom rehab technology assets. The 2023 period includes non-cash goodwill impairment charges as a result of the fair value of the Company’s reporting unit at that time being less than its carrying value. See Note 7, Goodwill and Identifiable Intangible Assets, for additional discussion of such impairment charges.
(d)Represents lender fees and the write-off of unamortized deferred financing costs in connection with the refinancing of the Company's credit agreement. See Note 12, Debt, for additional discussion of the refinancing.
(e)The expense in 2024 includes a $2.4 million charge for the change in fair value of shares of Common Stock of the Company that were issued in July 2024 following final court approval of a previously disclosed Securities Settlement, as well as an expense of $0.9 million to settle a shareholder derivative complaint. The expense in 2023 includes a charge relating to the Securities Settlement, net of expected contributions from the Company’s insurers. See Note 18, Commitments and Contingencies, for additional discussion of the Securities Settlement.
(f)The 2024 period consists of $13.9 million of consulting expenses associated with systems implementation activities, $4.5 million of consulting expenses associated with asset dispositions, $4.2 million of expenses associated with litigation, $3.9 million of severance charges (primarily related to the separation of the Company's former President), $2.7 million write-down of assets, and $1.9 million of other non-recurring expenses. The 2023 period consists of $13.9 million of expenses associated with litigation, $7.1 million of severance charges (of which $2.9 million relates to the separation of the Company's former CEO), $5.6 million of consulting expenses associated with systems implementation activities, $5.2 million of consulting expenses associated with cost savings initiatives, $4.8 million of lease termination costs associated with a cost management program, $0.9 million of net impairments of operating lease right-of-use assets as a result of vacating the leased facilities, and $1.6 million of other non-recurring expenses, offset by income of $2.5 million related to changes in the Company's estimated TRA liability. The 2022 period consists of $11.7 million of consulting expenses associated with systems implementation activities and post-implementation support services, $10.5 million of expenses associated with litigation, a $0.8 million loss related to the write-off of an investment, and $3.9 million of net
other non-recurring expenses, offset by income of $2.9 million related to changes in the Company’s estimated TRA liability.
Patient Equipment Depreciation
The following table presents the amounts of patient equipment depreciation by reportable segment (in thousands):
Year Ended December 31,
202420232022
Patient equipment depreciation:
Sleep Health$161,911 $175,975 $153,591 
Respiratory Health95,546 71,002 65,750 
Diabetes Health8,185 10,182 10,166 
Wellness at Home54,647 68,537 56,781 
Total patient equipment depreciation (1)$320,289 $325,696 $286,288 
(1)Patient equipment depreciation is included in Cost of net revenue in the accompanying consolidated statements of operations. Patient equipment depreciation is not reflected in the segment measure of profit or loss but the CODM regularly reviews this information by reportable segment. Refer to Note 2, Summary of Significant Accounting Policies, for a breakout of Cost of net revenue by category.