AHCO WACC - Weighted Average Cost of Capital
The WACC of Adapthealth Corp (AHCO) is 6.7%.
| Range | Selected | |
| Cost of equity | 6.8% - 10.3% | 8.55% |
| Tax rate | 13.0% - 20.4% | 16.7% |
| Cost of debt | 6.3% - 7.0% | 6.65% |
| WACC | 6.0% - 7.4% | 6.7% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.65 | 0.96 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 6.8% | 10.3% |
| Tax rate | 13.0% | 20.4% |
| Debt/Equity ratio | 1.62 | 1.62 |
| Cost of debt | 6.3% | 7.0% |
| After-tax WACC | 6.0% | 7.4% |
| Selected WACC | 6.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| AHCO | Adapthealth Corp | 1.62 | 0.37 | 0.16 |
| CNBI | China BCT Pharmacy Group Inc | 0.1 | 0 | 0 |
| CSTL | Castle Biosciences Inc | 0.02 | 0.53 | 0.52 |
| FLGT | Fulgent Genetics Inc | 0.01 | 0.38 | 0.38 |
| HLS.TO | HLS Therapeutics Inc | 0.59 | 1.33 | 0.89 |
| MDRM | Modern Mobility Aids Inc | 0.9 | -0.72 | -0.42 |
| PETQ | PetIQ Inc | 0.48 | 0.61 | 0.44 |
| PROG | Progenity Inc | 0.78 | 1.02 | 0.62 |
| FAGR.BR | Fagron NV | 0.24 | 0.28 | 0.23 |
| Low | High | |
| Unlevered beta | 0.26 | 0.43 |
| Relevered beta | 0.48 | 0.94 |
| Adjusted relevered beta | 0.65 | 0.96 |
AHCO's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for AHCO:
cost_of_equity (8.55%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.65) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.