Addus HomeCare Corporation Q2 FY2025 earnings call

Management Statement and Operational Highlights:

• Total revenue for Q2 2025 was $349.4 million, a 21.8% increase compared to Q2 2024. Adjusted earnings per share were $1.49, up 10.4% y-o-y, and adjusted EBITDA was $43.9 million, a 24.5% increase y-o-y.
• Strong hiring performance in the Personal Care segment, with hires per business day data including Gentiva PCS.
• Illinois finalized a 3.9% increase in base hourly reimbursement rate to $30.80 per hour, effective Jan 1, 2026, adding ~$17.5M in annualized revenue. Texas finalized a 9.9% increase to $17.13 per hour, effective Sep 1, 2025, adding ~$17.7M in annualized revenue.
• Hospice 2026 reimbursement rate finalized at 2.6%, effective Oct 1, 2025. Home health proposed 2026 payment rule projects a 6.4% aggregate reduction in Medicare payments.
• Acquired Helping Hands Home Care on Aug 1, 2025, adding personal care, home health, and hospice operations in Western Pennsylvania.

Segment Performance:

• Personal Care: Revenue was $269.2 million, accounting for 77% of total revenue. Same-store revenue growth was 7.4% compared to Q2 2024, and same-store hours increased by 1.6%.
• Hospice: Revenue was $62.2 million, representing 17.8% of total revenue. Same-store revenue grew 10%, and average daily census increased by 7%.
• Home Health: Revenue was $18 million, making up 5.2% of total revenue. Same-store revenue decreased by 6%, but profitability improved as the management rightsized the expense base.

Guidance:

• Expect margins to remain between 12%-13% for 2025.
• Continue to selectively pursue acquisitions that complement organic growth and align with strategy.
• Maintain disciplined capital allocation and manage net leverage ratio through debt reduction.

Risks:

• Home health proposed 2026 payment rule could significantly impact availability of home health care.
• Clinical hiring is more challenging than the Personal Care segment.
• Potential impact of sequestration on Medicare cuts if not waived.

Q: Andrew Mok from Barclays asked about the reimbursement environment and its future trajectory.

A: Brian Poff responded that there has been strong support in larger markets, some states tabled rate increase conversations, but long-term cadence may mitigate.

Q: Matthew Gilmor from KeyBanc inquired about personal care hiring and labor tools rollout.

A: Brad Bickham talked about the caregiver application rollout in Illinois with 90% adoption, rolling out in New Mexico, and its impact on retention.

Q: Jared Haase from William Blair asked about the impact of immigration policy on the home care workforce.

A: Brad Bickham stated there is minimal current impact, with a small portion of the workforce affected.

Q: Raj Kumar from Stephens asked about DOL provision on companionship services and overtime.

A: Brad Bickham said there is minimal impact, with nuances in the rule and potential effect on the private pay side.

Q: Constantine Davides from Citizens asked about the M&A pipeline for clinical assets.

A: Dirk Allison said focusing on personal care, some hospice opportunities with delayed multiples, and focus on smaller deals.

Q: John Ransom from Raymond James asked about public advocacy priorities and payer contracting.

A: Dirk Allison talked about state advocacy success and federal focus on home health rate reduction; Brad Bickham on value-based discussions in personal care and episodic payments in home health.

Q: Joanna Gajuk from Bank of America asked about Helping Hands acquisition margins and the Pennsylvania market.

A: Brian Poff said margins are comparable to PCS business, and Brad Bickham talked about Pennsylvania market being less competitive with potential for rate increases.