Addus HomeCare Corporation Q3 FY2025 earnings call

• Overall financial performance: Total revenue for the third quarter of 2025 was $362.3 million, an increase of 25% compared to the third quarter of 2024. Adjusted earnings per share were $1.56, up 20% y-o-y. Adjusted EBITDA was $45.1 million, up 31.6% y-o-y. Operating cash flow was over $50 million for the quarter, and cash on hand as of September 30, 2025, was approximately $102 million.
• Personnel changes: Heather Dixon became President and COO on September 15, with Brad Bickham moving to adviser to the CEO.
• Rate increases: Texas personal care rate effective October 1, Illinois rate effective January 1, 2026. CMS finalized 2026 hospice wage index and payment rate update, resulting in a 3.1% increase in hospice rates.
• Hiring performance: Personal Care segment achieved 113 hires per business day in Q3 2025, an increase of 6.6% q-o-q.
• Acquisitions: Closed on acquisition of Del Cielo Home Care Services' personal care operations on October 1, adding $12.7 million in annualized revenue.

Addus HomeCare Corporation's third quarter 2025 financial results show the following segment performances. Personal care services segment was the largest, with revenues of $275.8 million, accounting for 76.1% of total revenue. Same-store revenue growth for personal care was 6.6% compared to the third quarter of 2024, and same-store hours increased by 2.4%. Hospice care revenues were $68.9 million, representing 19% of total revenue, with same-store revenue growth of 19% year-over-year. Home health services were the smallest segment, with revenues of $17.6 million, accounting for 4.9% of total revenue, and same-store revenue decreased by 2.8% compared to the same quarter in 2024.

• Gross margin expectation: Fourth quarter gross margins expected to be in the high 32% range.
• G&A leverage: Anticipate G&A leverage benefit in 2026 with top-line growth.
• Acquisition potential: Hopeful for larger acquisition opportunities in 2026 if market conditions allow, particularly in home health and personal care segments where there is overlap with existing operations.

• Home health: Uncertainty around 2026 proposed home health payment rule with a 6.4% aggregate reduction in Medicare payments.
• Pennsylvania: Uncertainty regarding rate increase, potential for flat rates in the next budget cycle.
• Reimbursement risks: Impact of OBRA on Medicaid programs and potential rate cuts in some states, particularly if states struggle to effectively allocate Medicaid dollars.

Q: About same-store volume growth on personal care side and caregiver app rollout in Illinois, New Mexico.

A: Brian Poff and Heather Dixon discussed the app rollout progress, with Illinois showing some fill rate uptick, and New Mexico and Texas having more headroom for improvement. The app helps caregivers be more efficient.

Q: On cash flow and Illinois Department of Aging DSOs.

A: Brian Poff stated DSO fluctuations are due to timing, with year-to-date net $5 million benefit from working cap changes.

Q: On organic momentum, hiring trend into 2026, and home health/hospice complementary assets.

A: Brian Poff noted strong hiring momentum, with anticipation of similar trends in Texas due to rate increases. R. Allison mentioned interest in home health in overlap markets but caution due to home health rate uncertainty.

Q: On margin opportunity in 2026 and home health rate update impact.

A: Brian Poff expected margin benefit in 2026 from top-line growth and G&A leverage. R. Allison discussed home health rate finalized and potential clawback impact on acquisitions.

Q: On acquisition and deal pipeline, pricing, and home health rate impact.

A: Brian Poff discussed acquisition pipeline, with smaller deals in personal care and home health, and potential larger deals in 2026 if rate clarity emerges.

Q: On overlapping operations in New Mexico/Tennessee impact and clinical labor challenges.

A: Heather Dixon discussed benefits of overlapping operations in referrals between home health and hospice, and clinical labor challenges in large urban markets.

Q: On hospice results, revenue per patient day, and Medicare cap cushion.

A: Brian Poff discussed revenue per patient day impact from rate update and Medicare cap cushion management, with focus on referral mix balance.

Q: On Medicaid payer pressure and dialogue in home health space.

A: R. Allison discussed Addus' role in showing value of personal care services in reducing Medicaid costs related to other care settings.