AHCO
Adapthealth Corp
Price:  
9.22 
USD
Volume:  
1,027,920
United States | Health Care Providers & Services

AHCO WACC - Weighted Average Cost of Capital

The WACC of Adapthealth Corp (AHCO) is 6.7%.

The Cost of Equity of Adapthealth Corp (AHCO) is 8.55%.
The Cost of Debt of Adapthealth Corp (AHCO) is 6.65%.

RangeSelected
Cost of equity6.8% - 10.3%8.55%
Tax rate13.0% - 20.4%16.7%
Cost of debt6.3% - 7.0%6.65%
WACC6.0% - 7.4%6.7%
WACC

AHCO WACC calculation

CategoryLowHigh
Long-term bond rate3.9%4.4%
Equity market risk premium4.6%5.6%
Adjusted beta0.650.96
Additional risk adjustments0.0%0.5%
Cost of equity6.8%10.3%
Tax rate13.0%20.4%
Debt/Equity ratio
1.621.62
Cost of debt6.3%7.0%
After-tax WACC6.0%7.4%
Selected WACC6.7%

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.