Industry Overview - The Medical sector is undergoing a significant transformation as it approaches 2026, shifting from a defensive haven to a growth engine driven by innovation and demographic demand [1] - Key trends include the integration of artificial intelligence into clinical workflows, enhancing efficiency and precision in diagnostics and drug discovery [2] - The industry faces cost inflation and regulatory changes, pushing providers towards value-based care and operational innovation, while aging populations and chronic diseases sustain long-term demand [3] Stock Recommendations - Analysts are bullish on three medical stocks: Cencora, Inc. (COR), Addus HomeCare Corporation (ADUS), and Select Medical Holdings Corporation (SEM), due to their operational strength and long-term growth potential [4][5] - All three stocks have a Zacks Rank 2 (Buy), a VGM Score of A, and a market capitalization exceeding $1 billion, with over 70% of brokers rating them as a strong buy or buy [6] Cencora, Inc. (COR) - Cencora is benefiting from higher unit volume and improved sales of GLP-1 drugs and specialty products, with strong performance in Canada and strategic investments in European distribution [10] - The Zacks Consensus Estimate for COR's fiscal 2026 earnings is $17.62 per share, indicating a 10.1% year-over-year increase, with six upward estimate revisions in the past 60 days [12] Addus HomeCare Corporation (ADUS) - Addus provides personal care services to elderly and chronically ill individuals, with stable hiring trends and growing market size due to the cost benefits of home-based healthcare [13] - The Zacks Consensus Estimate for ADUS's 2025 earnings is $6.19 per share, signaling a 17.7% year-over-year growth, followed by a 10.7% increase in 2026 to $6.85 [15] Select Medical Holdings Corporation (SEM) - Select Medical operates critical illness recovery facilities and rehabilitation clinics, with strategic expansions and rising patient admissions driving performance [16] - The Zacks Consensus Estimate for SEM's 2025 earnings is $1.23 per share, indicating a 30.9% year-over-year jump, followed by a 9.9% increase in 2026 to $1.36 [18]

Core Insights - Investors are increasingly seeking growth stocks that demonstrate above-average growth in financials, which can lead to exceptional returns, but identifying such stocks is challenging due to inherent volatility and risks [1] Company Overview - Addus HomeCare (ADUS) is currently highlighted as a recommended growth stock, benefiting from a favorable Growth Score and a top Zacks Rank [2] Earnings Growth - The historical EPS growth rate for Addus HomeCare stands at 16.1%, but projected EPS growth for this year is significantly higher at 29.5%, surpassing the industry average of 19.9% [5] Cash Flow Growth - Addus HomeCare exhibits a year-over-year cash flow growth of 19.5%, which is substantially higher than the industry average of 1.5% [6] - The company's annualized cash flow growth rate over the past 3-5 years is 21.4%, compared to the industry average of 7% [7] Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for Addus HomeCare, with the Zacks Consensus Estimate for the current year increasing by 1.2% over the past month [8] Conclusion - Addus HomeCare has achieved a Zacks Rank of 2 and a Growth Score of A, indicating its potential as an outperformer and a solid choice for growth investors [10]

Addus HomeCare FY Conference Summary Company Overview - **Company**: Addus HomeCare (NasdaqGS:ADUS) - **Industry**: Home-based care and support services, focusing on personal care, hospice, and home health Key Points and Arguments Operational Opportunities and Priorities - **Caregiver App**: High utilization rates observed in Illinois, with plans to roll out in New Mexico and Texas, aiming to increase service utilization percentage [3][4] - **Census Growth**: Illinois has seen an increase in admissions while discharges decrease, setting up for growth in 2026 [4][6] - **Integration of Services**: Long-term strategy to connect personal care services (PCS) with skilled home health and hospice for seamless care [5] Financial Metrics and Growth Projections - **Revenue Growth**: Targeting 3%-5% revenue growth, split evenly between volume and rate [6] - **Census Metrics**: Consistent growth in census expected, with New Mexico showing over 3% growth post-redetermination [9][10] - **Fill Rate**: Current fill rate at approximately 83%-83.5%, with a goal to reach mid-80s [12][16] Reimbursement Environment - **Medicaid Landscape**: Ongoing uncertainty in Medicaid reimbursement, particularly in New Mexico and Pennsylvania, with expectations for potential rate updates in early 2026 [19][20] - **Advocacy for Rate Increases**: Emphasis on the importance of reimbursement increases to support caregiver wages and attract more caregivers [21][30] Market Dynamics and Competitive Positioning - **Low-Cost Provider Advantage**: Addus positions itself as a low-cost provider, emphasizing the cost savings of home care versus skilled nursing facilities [24] - **Minimum Wage Increases**: Minimal impact from recent minimum wage increases in certain states, with Illinois rates outpacing CPI increases [26] M&A Strategy and Market Position - **M&A Focus**: Targeting $100 million in annualized revenue through M&A, with a preference for blended asset acquisitions [46][48] - **De Novo Opportunities**: Open to de novo expansions but historically focused on acquisitions due to quicker profitability [43] Clinical and Hospice Business Performance - **Hospice Growth**: Year-to-date organic growth in hospice is in the low teens, outperforming the targeted 5%-7% growth [35] - **Bridge Program Success**: A quarter of hospice referrals are coming from the Bridge program, which connects home health to hospice [37] Future Outlook and Challenges - **2026 Projections**: Anticipation of continued growth in personal care and hospice, with a focus on maintaining margins and managing costs [39][55] - **Technological Integration**: Plans to leverage technology and AI for operational efficiency and cost management [65] Conclusion - Addus HomeCare is strategically positioned to capitalize on growth opportunities in the home care sector, with a focus on operational efficiency, caregiver support, and integration of services. The company is navigating a complex reimbursement landscape while maintaining a commitment to growth through both organic and acquisition strategies.

Core Insights - The company has faced challenges related to Medicaid access rules but has managed to turn these challenges into positives due to its position as a low-cost provider in the personal care service sector [1][2] Company Performance - The company operates primarily in the Medicaid space, which has been a significant factor in its business dynamics this year [1] - Initial challenges related to Medicaid access have not adversely affected the company, and instead, these challenges have evolved into opportunities [2]

Addus HomeCare Conference Call Summary Company Overview - **Company**: Addus HomeCare (NasdaqGS:ADUS) - **Industry**: Home healthcare services, primarily focusing on personal care and hospice services Key Points Industry Dynamics - **Medicaid Dependency**: Approximately 75% of Addus's business is derived from Medicaid, making it sensitive to changes in Medicaid regulations and funding [3][4][5] - **Rate Increases**: Significant rate increases have been observed in key states like Texas and Illinois, which have positively impacted revenue growth [4][5][19] Financial Performance - **Growth Targets**: The company aims for a long-term revenue growth of no less than 10% annually, with 3-5% expected from organic growth and the remainder from acquisitions [5][50] - **Recent Growth**: In the third quarter, personal care services experienced about 6.6% organic growth, with expectations to maintain or exceed the 3-5% range in the upcoming quarters [18][19] Hiring and Labor Market - **Hiring Trends**: Strong hiring trends are noted, with the need for 100-105 hires per business day to support growth, particularly in personal care services [9][10][13] - **Labor Market Conditions**: The labor market is showing positive trends, although challenges remain in specific geographies and skilled roles [13][16] Operational Focus - **Census Growth**: The company is focusing on increasing the census in personal care, which is critical for revenue as they are paid by the hour [10][20] - **Technology Utilization**: The rollout of a caregiver app has improved scheduling and service levels, with over 90% adoption in Illinois [22][28] Hospice Services - **Strong Performance**: Hospice services have seen a 19% increase in discharge growth, driven by improved admissions and patient days [30][31] - **Future Expectations**: Anticipated organic revenue growth for hospice is expected to moderate to mid to upper single digits by mid-2026 [34] Home Health Services - **Complementary Role**: Home health services account for less than 10% of total business but are essential for value-based care integration with personal care and hospice [37][39] - **Regulatory Uncertainty**: The company is navigating uncertainties regarding reimbursement rates, with potential impacts estimated at $3 million if proposed cuts are implemented [56] M&A Strategy - **Acquisition Goals**: The company aims to add over $100 million in acquired revenue annually, focusing on personal care and smaller home health acquisitions [50][58] - **Market Conditions**: Current market conditions are described as slower, with expectations for more opportunities in the upcoming year [51][52] Financial Management - **Expense Management**: The company typically runs SG&A in the 20-21% range, with expectations for improvement as revenue grows [59] - **Capital Deployment**: The primary focus remains on M&A, with share repurchases considered a secondary option [68] Future Outlook - **2026 Projections**: The company is optimistic about growth driven by demographic trends, particularly as the elderly population increases [16][18] - **Legislative Monitoring**: Ongoing monitoring of legislative changes and Medicaid funding is crucial for future planning [41][43] Additional Insights - **Community Engagement**: Local recruitment efforts are emphasized, leveraging community ties to enhance hiring effectiveness [12] - **Technology Adoption**: The app's voluntary use by caregivers is seen as a significant factor in improving operational efficiency and caregiver satisfaction [26][28] This summary encapsulates the key insights and strategic directions discussed during the Addus HomeCare conference call, highlighting the company's focus on growth, operational efficiency, and navigating industry challenges.

FRISCO, Texas--(BUSINESS WIRE)--Addus HomeCare Corporation (Nasdaq: ADUS), a provider of home care services, today announced its participation at the following investor conferences in November: 2025 UBS Global Healthcare Conference in Palm Beach Gardens, Florida. Dirk Allison, Chairman and Chief Executive Officer, Heather Dixon, President and Chief Operating Officer and Brian Poff, Executive Vice President and Chief Financial Officer, will present at 9:15 a.m. Central Time / 10:15 a.m. Eastern. ...

Financial Performance - For the three months ended September 30, 2025, total net service revenue was $362.3 million, a 25.0% increase from $289.8 million in the same period of 2024[90] - Net income for the three months ended September 30, 2025, was $22.8 million, compared to $20.2 million for the same period in 2024, reflecting a 13.3% increase[90] - Net service revenues increased by 25.0% to $362.3 million for the three months ended September 30, 2025, compared to $289.8 million for the same period in 2024[129] - Net service revenues increased by 22.4% to $1,049.5 million for the nine months ended September 30, 2025, compared to $857.5 million for the same period in 2024[135] Segment Performance - The personal care segment generated $275.8 million in net service revenue for the three months ended September 30, 2025, up 28.0% from $215.4 million in 2024[90] - For calendar year 2025, CMS estimates a 0.5% increase in Medicare payments to home health agencies, based on a 2.7% payment update percentage[113] - The hospice segment revenue increased due to organic growth, contributing to overall revenue increases[129] - The personal care segment generated net service revenues of $803.2 million for the nine months ended September 30, 2025, reflecting a 26.2% increase from $636.3 million in 2024[140] Revenue Sources - Managed care organizations accounted for 37.0% of net service revenues in Q3 2025, compared to 34.3% in Q3 2024[88] - Medicare accounted for 93.1% of hospice segment revenues in Q3 2025, up from 91.5% in Q3 2024[101] - Net service revenues from Medicare accounted for 93.1% of total revenues for the three months ended September 30, 2025[153] - Net service revenues from state, local, and other governmental programs accounted for 50.5% of net service revenues for the three months ended September 30, 2025[144] Acquisitions and Goodwill - The company completed the acquisition of Curo Health Services for approximately $350.6 million, expanding its personal care segment into new markets[93] - The company recognized goodwill of $19.0 million from the acquisition of Helping Hands, which expanded its services into hospice and home health markets in Pennsylvania[96] - Revenue growth in the personal care segment was primarily due to the completion of the Gentiva Acquisition and the Helping Hands Acquisition[129] - The company completed the Gentiva Acquisition on December 2, 2024, contributing to revenue growth in the personal care and home health segments[135] Expenses and Profitability - Gross profit margin improved to 32.2% for the three months ended September 30, 2025, up from 31.8% in the same period in 2024, driven by growth in the higher margin hospice segment[130] - General and administrative expenses rose to $79.4 million for the three months ended September 30, 2025, compared to $62.8 million for the same period in 2024, with a notable increase due to acquisitions[131] - Interest expense increased significantly to $3.3 million for the three months ended September 30, 2025, from $0.6 million in the same period in 2024, primarily due to higher borrowings[132] - Gross profit as a percentage of net service revenues increased to 49.4% for the three months ended September 30, 2025, up from 46.8% in 2024[155] Cash Flow and Financing - The company had cash balances of $101.9 million as of September 30, 2025, compared to $98.9 million at December 31, 2024, and a total of $650.0 million available under its revolving credit facility[165] - During the nine months ended September 30, 2025, the company used $3.4 million for acquisitions and drew $11.3 million on its credit facility, while repaying $80.0 million[166] - Net cash provided by operating activities was $92,744,000 for the nine months ended September 30, 2025, down from $106,016,000 in 2024, while net cash used in investing activities increased to $(22,444,000) from $(124,000)[173] - Financing activities included an $80.0 million payment on the revolving credit facility, with borrowings of $11.3 million to partially fund the Helping Hands Acquisition[176] Market Conditions and Challenges - The company faced significant competition for new caregivers due to a tight labor market and ongoing inflationary pressures[98] - The company anticipates that future Medicaid reform initiatives may further reduce expenditures and involve additional administrative changes, impacting reimbursements for services rendered[118] - If variable interest rates on outstanding borrowings of approximately $154.3 million increased by 100 basis points, net income would decrease by $1.1 million, or $0.06 per diluted share[183] Operational Metrics - Average billable census increased by 33.9% to 50,480 for the three months ended September 30, 2025, compared to 37,701 in the same period of 2024[140] - New admissions increased by 3.2% to 4,577 in the three months ended September 30, 2025, compared to 4,437 in 2024, while total volume decreased by 7.5% year-over-year[164] - Days sales outstanding (DSO) improved to 35 days as of September 30, 2025, down from 39 days at December 31, 2024, indicating better collection efficiency[178]

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $362.3 million, a 25% increase from $289.8 million in Q3 2024 [4] - Adjusted earnings per share rose to $1.56, up 20% from $1.30 in Q3 2024 [4] - Adjusted EBITDA increased by 31.6% to $45.1 million compared to $34.3 million in Q3 2024 [5][20] - Gross margin percentage improved to 32.2% from 31.8% in Q3 2024 [20] - Adjusted EBITDA margin was 12.5%, compared to 11.8% for the same quarter last year [22] Business Line Data and Key Metrics Changes - Personal care revenues were $275.8 million, accounting for 76.1% of total revenue, with a same-store revenue growth of 6.6% [20] - Hospice care revenues reached $68.9 million, representing 19% of total revenue, with same-store revenue growth of 19% [20][11] - Home health revenues were $17.6 million, or 4.9% of total revenue, with a same-store revenue decrease of 2.8% [20][12] Market Data and Key Metrics Changes - Texas and Illinois announced rate increases for personal care services, effective October 1, 2025, and January 1, 2026, respectively [6][7] - The Texas rate increase is expected to add approximately $17.7 million in annualized revenue [17] - The Illinois rate increase is projected to add about $17.5 million in annualized revenue [17] Company Strategy and Development Direction - The company continues to pursue strategic acquisitions to enhance geographic coverage and density, with recent acquisitions including Del Cielo HomeCare Services [12][19] - Focus on maintaining a strong balance sheet to support acquisition strategies and organic growth [24][25] - The company aims to leverage the increased demand for home-based care as a growth opportunity [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the favorable reimbursement support from states, which recognizes the value of personal care services [7] - The company anticipates continued growth in hospice and personal care segments, supported by strong hiring trends and rate increases [16][18] - There is caution regarding the home health segment due to potential Medicare payment reductions, but management remains hopeful for improvements [9][41] Other Important Information - The company had cash on hand of approximately $102 million as of September 30, 2025, with net leverage under one times adjusted EBITDA [5][24] - The company is actively working on legislative efforts in various states to advocate for future rate increases [7] Q&A Session Summary Question: Can you provide an update on the Caregiver App rollout in Illinois and New Mexico? - Management noted improvements in fill rates in Illinois and expressed optimism for New Mexico, where the rollout is planned next [28][30] Question: How do you view the hiring trends into 2026 given the strong volume growth? - Management indicated strong hiring momentum with 113 hires per business day, suggesting a positive outlook for organic growth in 2026 [36][39] Question: What is the company's strategy regarding home health and hospice assets? - Management confirmed interest in home health acquisitions that complement personal care and hospice services, while being cautious due to current reimbursement uncertainties [41][42] Question: Can you clarify the impact of overlapping operations in New Mexico and Tennessee on referrals? - Management highlighted the benefits of continuity of care and improved patient outcomes due to the overlap of services [72] Question: What is the outlook for gross margins in Q4 and next year? - Management expects Q4 to be the highest margin quarter, projecting adjusted EBITDA above 13% [54][56] Question: Are there any updates on potential rate increases in New Mexico and Pennsylvania? - Management expressed hope for a rate increase in New Mexico but noted uncertainty regarding Pennsylvania's budget situation [59][60]

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $362.3 million, a 25% increase from $289.8 million in Q3 2024 [6] - Adjusted earnings per share rose to $1.56, up 20% from $1.30 in the previous year [6] - Adjusted EBITDA increased by 31.6% to $45.1 million compared to $34.3 million in Q3 2024 [6][18] - Operating cash flow exceeded $50 million for the quarter, with cash on hand of approximately $102 million as of September 30, 2025 [6][25] - Net leverage was under one times adjusted EBITDA, providing flexibility for strategic acquisitions [6] Business Line Data and Key Metrics Changes - Personal Care segment revenues were $275.8 million, accounting for 76.1% of total revenue, with same-store revenue growth of 6.6% [21] - Hospice segment revenues increased by 19% year-over-year, with same-store average daily census rising to 3,872, up 9.5% from the previous year [13][20] - Home Health segment revenues were $17.6 million, representing 4.9% of total revenue, with a 2.8% decrease in same-store revenue compared to Q3 2024 [14][22] Market Data and Key Metrics Changes - Texas and Illinois announced rate increases for personal care services, with Texas effective October 1, 2025, and Illinois set for January 1, 2026 [8][19] - The hospice reimbursement rate update effective October 1, 2025, is expected to increase rates by approximately 3.1% [20] - Proposed home health payment rule indicates a 6.4% aggregate reduction in Medicare payments for 2026 [10] Company Strategy and Development Direction - The company continues to pursue strategic acquisitions to enhance geographic coverage and density, with recent acquisitions including Del Cielo Home Care Services [15][21] - Focus on maintaining a balanced approach to organic growth and acquisitions, particularly in overlapping markets for home health and hospice services [16][68] - Emphasis on the value of home-based care and the benefits of personal care services in reducing overall care costs [8][17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the growth potential in personal care services due to favorable rate increases and strong hiring trends [19][40] - The company anticipates continued organic growth momentum into 2026, supported by recent rate increases and hiring performance [41] - Management acknowledged challenges in the home health segment but remains focused on improving operational efficiencies and profitability [50][52] Other Important Information - The company reported a gross margin percentage of 32.2%, an increase from 31.8% in Q3 2024 [22] - Adjusted G&A expenses were 19.8%, a decrease from 20% in the prior year [23] - The company maintains a strong balance sheet with total bank debt of $154.3 million, down from the previous quarter [25] Q&A Session Summary Question: About same store volume growth in Personal Care - Management noted improvements in fill rates and billable hours, attributing part of the 6.6% same store revenue growth to these factors [28][33] Question: On cash flow and DSOs - Management indicated that fluctuations in DSOs are typical and attributed the strong cash flow to timing rather than specific changes in payer behavior [34] Question: Organic growth expectations for 2026 - Management expressed confidence in maintaining above 2% year-over-year volume growth, supported by strong hiring and rate increases [40][41] Question: Home health and hospice asset allocation - Management remains interested in home health acquisitions that complement existing personal care and hospice services, despite current market uncertainties [44] Question: Hospice revenue per patient day and Medicare cap dynamics - Management confirmed that the absence of cap liability this quarter positively impacted revenue per patient day, with expectations for similar dynamics in Q4 [104]

Financial Performance - Net service revenues increased by 25.0% to $362.3 million in Q3 2025 compared to $289.8 million in Q3 2024[2] - Net income for Q3 2025 was $22.8 million, or $1.24 per diluted share, up from $20.2 million, or $1.10 per diluted share in Q3 2024[2] - Adjusted EBITDA rose by 31.6% to $45.1 million in Q3 2025 from $34.3 million in Q3 2024[2] - Adjusted net income for the first nine months of 2025 was $82.1 million, compared to $65.9 million in the same period of 2024[2] - Net income for the nine months ended September 30, 2025, was $66.1 million, up 22.3% from $54.1 million in the same period of 2024[20] - Operating income for the nine months ended September 30, 2025, was $96.3 million, a 27% increase from $75.8 million in the same period of 2024[20] - Adjusted net income for Q3 2025 was $28,723 million, representing a 20.5% increase from $23,780 million in Q3 2024[28] - Net income per diluted share for Q3 2025 was $1.24, compared to $1.10 in Q3 2024, reflecting a 12.7% increase[28] - Adjusted net income per diluted share for Q3 2025 was $1.56, up 20% from $1.30 in Q3 2024[28] Revenue Growth - Personal care business accounted for 76.1% of total revenues in Q3 2025, with organic revenue growth of 6.6%[5] - Hospice care revenue grew by 19.0% in Q3 2025, driven by increases in admissions and revenue per patient day[6] - Personal Care segment generated $275.8 million in Q3 2025, a 28% increase from $215.4 million in Q3 2024[24] - Hospice segment revenues grew by 20.3% year-over-year in Q3 2025, reaching $68.9 million compared to $57.3 million in Q3 2024[24] - Net service revenues for Q3 2025 reached $362.3 million, a 25% increase from $289.8 million in Q3 2024[20] - Adjusted net service revenues for the nine months ended September 30, 2025, totaled $1,049,439 million, up 22.4% from $857,259 million in the same period of 2024[28] Operational Metrics - Average billable census total increased to 50,480 in Q3 2025, compared to 37,701 in Q3 2024, reflecting a significant growth in service capacity[26] - Gross profit margin improved to 32.2% in Q3 2025 compared to 31.8% in Q3 2024[20] - Cash flow from operations was $51.3 million in Q3 2025, with cash on hand of $101.9 million[9] - Cash at the end of Q3 2025 was $101.9 million, down from $222.9 million at the end of Q3 2024[22] - Total assets increased to $1.42 billion as of September 30, 2025, compared to $1.15 billion in 2024, reflecting strong growth in the company's financial position[22] Strategic Activities - The company completed the acquisition of Del Cielo Home Care Services for $7.4 million on October 1, 2025, which serves approximately 700 clients[7] - The company expects continued growth supported by favorable trends in home-based care and strategic acquisitions[11] - The company served 23 states at the end of Q3 2025, up from 21 states at the end of Q3 2024, indicating market expansion[26] Expenses - Acquisition expenses for Q3 2025 amounted to $2,012 million, consistent with $2,072 million in Q3 2024[28] - Stock-based compensation expense for Q3 2025 was $4,286 million, an increase from $2,833 million in Q3 2024[28] - The company reported restructuring and other non-recurring costs of $1,500 million for Q3 2025, with no such costs reported in Q3 2024[28]