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AeroCare maintains extensive relationships with leading national manufacturers and managed healthcare plans, and services patients in over 300 locations across 30 states. AeroCare is currently owned by private investors including Peloton Equity, SkyKnight Capital, SV Health Investors, and AeroCare management and employees. These forward-looking statements include, but are not limited to, statements regarding projections, estimates and forecasts of revenue and other financial and performance metrics and projections of market opportunity and expectations. These statements are based on various assumptions and on the current expectations of Company management and are not predictions of actual performance.
We have not and we will not talk about our gross margins on that business. But even if you assumed 50% of that dollar dropping down. OK. Which is a nice sort of bridge to the next question about guidance. You raised the midpoint of the guidance by $22.5 million, beat the quarter by $17.4 million, which implies the back half of the year should go by about $5 million.
Some commercial carriers have already followed suit, mirroring the CMS policy. Finally and very importantly, CMS published a proposed rule calling for relaxed qualification standards for oxygen, including possible elimination of the chronic stable state requirement and possible elimination of the CMN or certificate of medical necessity. The industry has supported this change for many years, and we’re pleased with the proposed changes.
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And so that will help you run the math on how we’re thinking about free cash flow currently and going forward. So as we stated in the prepared remarks, we are right in line with that number. If you try to run that math on Q1, I think we said last quarter, it’s going to be a little choppy just due to the transaction costs and the nature of Q1. Adapt had business in Texas in 2019 and in 2020, they acquired a very good business in Healthline. Almost immediately, the integration process started combining locations from legacy Adapt into Healthline and back and forth.
It’s just the standard ASC 805 definition of pro forma revenue, and that’s showing $632 million of Q2 against $572 million on the prior year. First was the extension of the public health emergency announced on July 20. The extension will provide continued reimbursement benefit for the next 90 days when the extension will be reevaluated. Our updated guidance includes the current PHE extension, but it does not include any future extensions. Additionally, CMS announced relaxed standards for CGM qualification, removing the four per day test trip requirement.