Addus HomeCare Corporation Q4 FY2025 earnings call

• Revenue growth: Total revenue for Q4 2025 up 25.6% and for 2025 up 23.2%. Adjusted earnings per share and EBITDA also increased. • Rate increases: Texas rate increase effective 9/1/2025, Illinois rate increase effective 1/1/2026. • Hiring trends: Fourth quarter had 101 hires per business day, January first 2 weeks had 107 hires per business day, slight slowdown due to weather in late January, rebound in February. • Acquisitions: Completed Gentiva, Great Lakes Home Care, Helping Hands Home Care Services, Del Cielo Home Care acquisitions. • Hospice growth: Operational improvements led to 16% organic revenue growth, average daily census increase, and median length of stay change. • Home Health focus: Hiring new market president and sales leaders to focus on growth, seeing admissions growth. • Compliance: Strong compliance program focused on fraud and abuse

For the fourth quarter of 2025, total revenue was $373.1 million, up 25.6% from $297.1 million in 2024. Adjusted earnings per share were $1.77, up 28.3% from $1.38. Adjusted EBITDA was $50.3 million, up 33.3% from $37.8 million. For 2025, total revenue was ~$1.4 billion, up 23.2% from ~$1.1 billion. Adjusted earnings per share were $6.23, up 18.4% from $5.26. Adjusted EBITDA was $180 million, up 28.3% from $140.3 million. Personal Care segment: same-store revenue growth 6.3% in Q4 2025. Same-store hours up 2.4%. Billable census down slightly sequentially but growth in majority key states. Hospice segment: same-store revenue up 16% in Q4 2025. Average daily census up to 3,885 from 3,472. Median length of stay 25 days. Home Health segment: same-store revenue down 7.4% in Q4 2024. Revenue breakdown (excluding NY accounts receivable settlements): Personal Care revenues $284.1 million (76.5% of revenue), Hospice care revenues $70 million (18.9% of revenue), Home Health revenues $17.1 million (4.6% of revenue)

• First quarter 2026 expected to benefit from Illinois rate increase but offset by fewer business days in personal care and seasonal impact from winter storms. • Expect normal seasonality in gross margin percentage in Q1 2026 with negative impact from merit increases and payroll tax reset. • Will selectively pursue acquisitions in 2026 that complement organic growth and align with strategy, maintain disciplined capital allocation and manage net leverage ratio through debt reduction

• Potential future changes to Medicaid due to OB3 could impact business. • Winter weather in certain markets can slow hiring. • Uncertainty around future rate increases and retrospective payment adjustments for home health care. • Fraud and abuse focus by states could impact smaller players but also may have implications, but Addus is focused on compliance

Q: Just a quick question on the rate backdrop. Outside of Texas and Illinois, can you give a little bit of context of how your rate conversations are going?

A: Brian Poff said it's early in the year, New Mexico has a between 4%-5% rate increase passed through legislature waiting for governor's signature, Illinois governor's budget currently has no rate increase but will watch legislative process.

Q: Congrats on the quarter and the year. Maybe, Brian, just to follow up on Ben's question on New Mexico. How do we think about the pass-through there in terms of margin flow-through?

A: Brian Poff said there is a mandatory pass-through rule, still early stages of assessing what and where to pass through to caregivers.

Q: Congrats on the quarter and the year. Maybe as we talk about caregivers, just curious what you're seeing on the labor market.

A: Heather Dixon said Q4 hires per day were 101, January first 2 weeks had strong start, slowdown due to weather in late January, rebound in February, seeing stability with small pockets in urban areas.

Q: Part of the long-term growth algorithm for Addus has been tuck-in deals. I wonder if you could comment a little further on what you're seeing in the pipeline, prospects for transactions.

A: Brian Poff said looking at more things in pipeline comparable to 2025 deals, potential larger personal care assets mid-year or back half of year.

Q: Same-store billable census was down 1.1% year-over-year, and you mentioned that it was down slightly sequentially. But I think你 also said that you're seeing growth in a majority of your key states. So can you help us understand that dynamic and provide more detail on the geographies and items that are weighing on the portfolio?

A: Heather Dixon said same-store hours increased 2.4%, service percentage flat sequentially due to seasonality, seeing census growth trajectory with sequential growth and expecting positive year-over-year growth in second half of 2026.

Q: There's been heightened attention recently on fraud, waste and abuse in the personal care space. Can you talk about how states are approaching this issue and what steps you're taking to ensure that you're aligned with the evolving policy and guidelines?

A: R. Allison said management team built strong compliance program 10 years ago, has leader familiar with audits, pleased with focus on fraud and abuse as it may give opportunity to grow business while smaller players may not be able to comply.

Q: You all have done a good job driving penetration of authorized hours, particularly in Illinois you've rolled out the caregiver app. I was curious how the rollout has gone in New Mexico, just where that stands? And can you help us think through the sort of future opportunity in terms of driving greater penetration of authorized hours as you roll out to New Mexico and other states?

A: Heather Dixon said rolling out in New Mexico and Texas, seeing momentum in Illinois with app usage, utilization of flex hours, and aiming to complete app rollout in Texas by end of Q2 or early Q3.

Q: Maybe just to unpack the comments on the personal care labor side a little bit more. I'm curious how much of the strong hiring trends that you've experienced over the last couple of months would you attribute to, I guess, things Addus can control.

A: Heather Dixon said it's a mix of both macro trends and things Addus can control, focusing on sourcing, recruiting, onboarding caregivers efficiently.

Q: are there any guardrails or sort of puts and takes we should be thinking about relative to your opportunity to expand margins year-over-year in 2026 EBITDA margins?

A: Brian Poff said with consistent top line growth, should get leverage on G&A, expecting similar EBITDA margin expansion in 2026.

Q: I wanted to follow up on the caregiver app, and I might have just missed it, but are you able to more specifically quantify the volume lift that you've seen that you think is directly attributable to the app?

A: Heather Dixon said can't directly attribute specific growth to app, but sees metrics like caregiver app utilization, frequency of utilization, and flex hours utilization as encouraging.

Q: on the Homecare Homebase CMR transition in PCS, is there any update on the time line there? And how soon after the integration should that start to drive more clinical referrals and value-based opportunities?

A: Brian Poff said have 30-plus locations on system, enterprise-wide rollout scheduled over 2026 and into 2027.

Q: Dirk, you mentioned you believe the 80/20 will ultimately be repealed. And I think你 actually said specifically in the near future. Are you hearing anything specific from CMS or your lobbyists that give you the confidence they're going to ultimately repeal that rule?

A: R. Allison said hearing good things, team working with lobbyists and CMS, indication timing will be sooner rather than later but rule doesn't take effect soon.

Q: Just had a question on your payer mix in the quarter, specifically in personal care, shifting a little bit towards managed care. Just kind of wanted to get a sense for was that by design? Or is that kind of just happenstance?

A: Brian Poff said shift was direct result of Del Cielo acquisition in Texas.

Q: can you give us an update on the home health and hospice bridging program that you guys have in place, kind of how much more wood there is to chop on that front? And if we could start to see a potential return to growth in 2026 on the restart side?

A: Heather Dixon said heavy focus on bridging program, seeing benefits, continuing to drive in markets with density, hired new market president and sales leaders for home health, expecting growth in second half of 2026.

Q: Hard to just come up with a clever question, 54 minutes into a call. I just want to explain that. So my question is, a lot of companies are getting asked about technology, AI, et cetera. It wouldn't appear from the outside that there's a ton of opportunity there. I know你 rolled out the caregiver app, but I'm thinking in terms of back office automation and AI. Is there a technology lever longer term that we're not thinking about that the company is working on?

A: Brian Poff said looking at back office rev cycle and scheduling logistics in personal care business for AI implementation, have AI committee.

Q: John Ransom: Okay. And then just kind of speaking of your rate negotiations, is it different when you're talking to a Medicaid payer versus directly to the state? Do the payers seem more rational? Or is it kind of the same conversation regardless of where it comes from?

A: Brian Poff said depends on state, most states rate set by state, payers act as TPA, in New Mexico can negotiate with MCOs.

Q: Joanna Gajuk: And actually, I want to follow up on this last commentary around payers because we actually do hear so managed Medicaid plans calling out higher LTSS and that includes home care spending. It sounds like你 have a good relationship in New Mexico, but any incremental changes you're seeing there from any of your payers at the state level?

A: Brian Poff said haven't seen changes in other states, state controls processes.

Q: Joanna Gajuk: And as it relates also to payers, in the past, we talked about some opportunity there in managing the dual population because that's more underserved and high cost. So maybe give us an update where you stand there? Are you engaging any specific contracting that targets the dual population? And could this be an opportunity for you guys?

A: Brian Poff said doing value-based work with managed Medicaid, showing compelling results in New Mexico, Illinois, and Tennessee.

Q: Joanna Gajuk: And last one, different topic. I don't know if I missed it, but did you guys talk about the winter storms in late January? Have you seen much of an impact on how I guess the rescheduling or catching up on that occurred in February.

A: Brian Poff said saw little impact, tried to make up visits but variable.

Q: Joanna Gajuk: And any observation in February after the storms?

A: Brian Poff said nothing noticed as most operations not in affected areas.

Q: Maybe just kind of focusing on hospice length of stay. 4Q tends to be a seasonal high point, but it was a nice sequential bump. So I'm just kind of curious on what were kind of the underlying drivers, maybe kind of referral normalization or further play out of that? And then I guess maybe just any commentary around comfortability around kind of cap space on the hospice payment front as well.

A: Heather Dixon said focus on diversifying referral sources, seeing nice trends in length of stay and admissions, improvements in cap position in Q4.

Q: Raj Kumar: Got it. And then maybe just one more kind of broader question around kind of labor environment and then potential tailwinds from Medicaid work requirements. And I guess just thinking about the Arkansas book and how that state has had Medicaid work requirements. Any way to kind of contextualize that kind of labor market in Arkansas in terms of, if there has been kind of any benefit -- significant benefit on the hiring and labor front from an statement of Medicaid work requirements as you think about other states start to implement that towards the back half of '26 and the implications around that?

A: Heather Dixon said nothing specific in Arkansas, sees opportunity from work requirements as potential for flexible work