[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis for the period ended June 30, 2025 [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for Addus HomeCare Corporation as of June 30, 2025, show year-over-year growth in revenues and net income [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly decreased to $1.409 billion as of June 30, 2025, while total liabilities decreased, increasing stockholders' equity to $1.022 billion Condensed Consolidated Balance Sheet Highlights | Account | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | **Total Current Assets** | $263,045 | $260,382 | | **Total Assets** | **$1,408,931** | **$1,412,634** | | **Total Current Liabilities** | $151,383 | $155,871 | | **Total Liabilities** | **$387,077** | **$442,142** | | **Total Stockholders' Equity** | **$1,021,854** | **$970,492** | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For Q2 2025, net service revenues grew 21.8% to $349.4 million, with net income increasing 22.0% to $22.1 million and diluted EPS reaching $1.20 Consolidated Income Statement Summary | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | % Change | H1 2025 (in thousands) | H1 2024 (in thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net Service Revenues | $349,443 | $286,922 | 21.8% | $687,151 | $567,668 | 21.0% | | Gross Profit | $113,877 | $93,158 | 22.2% | $221,554 | $181,335 | 22.2% | | Operating Income | $32,887 | $26,181 | 25.6% | $63,401 | $49,826 | 27.2% | | Net Income | $22,052 | $18,079 | 22.0% | $43,280 | $33,909 | 27.6% | | Diluted EPS | $1.20 | $1.10 | 9.1% | $2.36 | $2.06 | 14.6% | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities for H1 2025 decreased to $41.5 million, while net cash used in financing activities was $49.5 million, driven by debt repayment Cash Flow Summary for the Six Months Ended June 30 | Activity | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $41,478 | $57,491 | | Net cash used in investing activities | $317 | $1,798 | | Net cash (used in) provided by financing activities | ($49,530) | $49,225 | | **Net change in cash** | **($7,735)** | **$108,514** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail operations, accounting policies, and key financial events, including divestitures, acquisitions, credit facility, and revenue breakdown by segment and payor - The company operates three business segments: Personal Care (non-medical assistance), Hospice (end-of-life care), and Home Health (skilled medical care)[20](index=20&type=chunk) - Effective May 20, 2024, the company agreed to sell its New York operations for up to **$23.0 million**, resulting in deconsolidation and a gain recognition in 2024[29](index=29&type=chunk) - In Q1 2025, the company completed two personal care acquisitions: Jacksonville for **$0.8 million** and Great Lakes Home Care for **$2.6 million**, adding **$3.4 million** in goodwill[38](index=38&type=chunk)[39](index=39&type=chunk) - As of June 30, 2025, the company had **$173.0 million** outstanding on its **$650.0 million** revolving credit facility, with an interest rate of **6.07%**[49](index=49&type=chunk)[56](index=56&type=chunk) - The Illinois Department on Aging is a significant payor, accounting for **18.6%** of net service revenues for the six months ended June 30, 2025[73](index=73&type=chunk) - Subsequent to the quarter end, on August 1, 2025, the company acquired Helping Hands Home Care Service in Pennsylvania for approximately **$21.3 million**[77](index=77&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes 21.0% revenue growth to the Gentiva acquisition and organic hospice growth, detailing segment performance, regulatory impacts, and strong liquidity [Overview and Recent Developments](index=23&type=section&id=Overview%20and%20Recent%20Developments) The company provides in-home care across 23 states, with growth driven by strategic acquisitions like Gentiva and smaller Q1 2025 deals, alongside the divestiture of New York operations - The Gentiva Acquisition, completed in December 2024 for approximately **$350.6 million**, significantly expanded the company's personal care segment and facilitated entry into Missouri and Texas[85](index=85&type=chunk) - In Q1 2025, the company completed the Jacksonville Acquisition for **$0.8 million** and the Great Lakes Acquisition for **$2.6 million**, further expanding its personal care segment[86](index=86&type=chunk)[87](index=87&type=chunk) [Regulatory and Policy Environment](index=28&type=section&id=Regulatory%20and%20Policy%20Environment) Government reimbursement policies significantly influence performance, with approved rate increases in Illinois, Medicare hospice rate increases, and potential impacts from the CMS '80/20' rule and OBBBA - Illinois approved an increase in hourly rates for in-home care services to **$29.63**, effective January 1, 2025, with a further increase to **$30.80** in the fiscal 2026 budget[97](index=97&type=chunk)[98](index=98&type=chunk) - Effective October 1, 2024, CMS increased Medicare hospice payment rates by **2.9%**[102](index=102&type=chunk) - CMS finalized the '80/20' rule, requiring states to ensure at least **80%** of Medicaid payments for certain home care services are spent on direct care worker compensation by mid-2030[108](index=108&type=chunk) - The company is evaluating the impact of the 'One Big Beautiful Bill Act' (OBBBA), which is expected to result in significant cuts to federal healthcare spending, particularly Medicaid[111](index=111&type=chunk)[112](index=112&type=chunk) [Results of Operations — Consolidated](index=32&type=section&id=Results%20of%20Operations%20%E2%80%94%20Consolidated) Consolidated results show strong top- and bottom-line growth, with Q2 2025 net service revenues increasing **21.8%** to **$349.4 million** and net income growing **22.0%** to **$22.1 million** Consolidated Results for the Three Months Ended June 30 | Metric (in thousands) | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Net service revenues | $349,443 | $286,922 | 21.8% | | Gross profit | $113,877 | $93,158 | 22.2% | | Operating income | $32,887 | $26,181 | 25.6% | | Net income | $22,052 | $18,079 | 22.0% | [Results of Operations – Segments](index=34&type=section&id=Results%20of%20Operations%20%E2%80%93%20Segments) Segment performance was led by Personal Care's **26.5%** revenue increase, Hospice's **10.0%** organic growth, and Home Health's nearly doubled operating income due to margin improvements Personal Care Segment Key Metrics (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Net Service Revenues | $269.2M | $212.8M | 26.5% | | Segment Operating Income | $51.6M | $43.1M | 19.8% | | Average Billable Census | 50,404 | 37,993 | 32.7% | | Revenues per Billable Hour | $25.49 | $27.47 | (7.2)% | Hospice Segment Key Metrics (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Net Service Revenues | $62.2M | $56.0M | 11.0% | | Segment Operating Income | $14.8M | $12.8M | 15.5% | | Average Daily Census | 3,720 | 3,477 | 7.0% | | Organic Revenue Growth | 10.0% | 6.3% | 3.7 p.p. | Home Health Segment Key Metrics (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Net Service Revenues | $18.0M | $18.1M | (0.1)% | | Segment Operating Income | $4.4M | $2.2M | 97.0% | | Gross Profit % | 45.9% | 37.6% | 8.3 p.p. | [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$91.2 million** in cash and **$454.6 million** available under its credit facility, despite decreased operating cash flow due to working capital changes - As of June 30, 2025, the company had a cash balance of **$91.2 million**[157](index=157&type=chunk) - The company had **$173.0 million** in revolving loans outstanding and **$454.6 million** available for borrowing under its credit facility[158](index=158&type=chunk) - Net cash from operating activities for H1 2025 was **$41.5 million**, down from **$57.5 million** in H1 2024, primarily due to the timing of receipts on accounts receivable[166](index=166&type=chunk) - Days Sales Outstanding (DSO) was **38 days** at June 30, 2025, compared to **39 days** at December 31, 2024[170](index=170&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk on its variable-rate long-term debt, where a **100 basis point** increase would decrease H1 2025 net income by approximately **$0.8 million** - The company's primary market risk is interest rate risk on its **$173.0 million** of variable-rate debt[175](index=175&type=chunk) - A **100 basis point** increase in interest rates would have reduced H1 2025 net income by **$0.8 million**[175](index=175&type=chunk) [Item 4. Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the quarter[177](index=177&type=chunk) - No material changes in internal control over financial reporting were identified during the quarter ended June 30, 2025[178](index=178&type=chunk) [PART II. OTHER INFORMATION](index=43&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, and other required disclosures, confirming no material changes or significant events for the reporting period [Item 1. Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various legal and administrative proceedings, but management believes their outcomes will not materially affect its financial position or results - Management does not expect pending legal proceedings to have a material impact on the company's financial condition[180](index=180&type=chunk) [Item 1A. Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024, were reported - No material changes to the company's risk factors were reported for the quarter[181](index=181&type=chunk) [Other Part II Items](index=43&type=section&id=Other%20Part%20II%20Items) The report indicates no unregistered sales of equity securities, no defaults upon senior securities, no mine safety disclosures, and no other material information - The company reported no activity for Item 2 (Unregistered Sales of Equity Securities), Item 3 (Defaults Upon Senior Securities), Item 4 (Mine Safety Disclosures), and Item 5 (Other Information)[182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk)

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $349.4 million, an increase of 21.8% compared to $286.9 million in Q2 2024 [6] - Adjusted earnings per share rose to $1.49, up 10.4% from $1.35 in the previous year [6] - Adjusted EBITDA increased by 24.5% to $43.9 million from $35.3 million in Q2 2024 [6][20] - Cash on hand as of June 30, 2025, was approximately $91 million, with a reduction in bank debt by $30 million to a total of $173 million [6][28] Business Line Data and Key Metrics Changes - Personal Care segment revenues were $269.2 million, accounting for 77% of total revenue, with a same-store revenue growth of 7.4% [25][14] - Hospice segment revenues were $62.2 million, representing 17.8% of total revenue, with a same-store revenue growth of 10% [25][15] - Home Health segment revenues were $18 million, making up 5.2% of total revenue, with a same-store revenue decrease of 6% [25][16] Market Data and Key Metrics Changes - Illinois and Texas have finalized budget increases for personal care services, with Illinois set to increase reimbursement rates by 3.9% effective January 1, 2026, and Texas by 9.9% effective September 1, 2025 [10][22] - The Illinois rate increase is expected to add approximately $17.5 million in annualized revenue, while the Texas increase is projected to add about $17.7 million [10][22] Company Strategy and Development Direction - The company continues to focus on strategic acquisitions to enhance geographic coverage and clinical services, with the recent acquisition of Helping Hands Home Care in Pennsylvania [17][24] - The company aims to maintain a conservative net leverage position to pursue further acquisition opportunities [6][29] - The focus remains on organic growth complemented by acquisitions, particularly in personal care and hospice services [24][29] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the reimbursement environment, noting strong support for personal care services from state budgets [33] - Concerns were raised about potential reductions in Medicare payments for home health services, which could impact availability and access to care [12][13] - The company believes that the value of home-based care will continue to be recognized, providing growth opportunities [18] Other Important Information - The company has experienced consistent cash collections and a reduction in bank debt, supporting its capital structure for future investments [28][29] - The adjusted net income per diluted share for Q2 2025 was $1.49, reflecting a solid financial performance [27] Q&A Session Summary Question: How is the overall reimbursement environment expected to unfold? - Management noted strong support from larger markets and expressed optimism about future rate increases, despite some states delaying discussions due to budget uncertainties [32][34] Question: What is driving the negative volumes in same-store census? - The decrease was attributed to the inclusion of New York in prior year comparisons, which has since been disposed of, and a sequential increase in same-store census was noted [35][36] Question: How is the caregiver application rollout impacting performance? - The caregiver application has seen good adoption in Illinois, with about 90% of caregivers registered, and is expected to improve fill rates and retention over time [42][45] Question: What is the impact of immigration policy changes on the workforce? - Currently, there is no significant impact observed, as the company has a small number of caregivers affected by immigration policies [51][52] Question: What are the expectations for hospice segment growth? - Long-term growth expectations for the hospice segment are projected to be in the 5% to 7% range, with recent operational improvements contributing to current growth [53][54] Question: What are the public advocacy priorities for the company? - The company is focused on advocating for the value of personal care services and addressing concerns regarding proposed Medicare payment reductions [81][84] Question: How are payer contracts evolving? - Discussions with payers are increasingly focused on driving volume into plans, with ongoing efforts to implement case rate or episodic payment structures in home health [85][86]

Core Viewpoint - Addus HomeCare (ADUS) reported quarterly earnings of $1.49 per share, exceeding the Zacks Consensus Estimate of $1.45 per share, and showing an increase from $1.35 per share a year ago [1][2] Financial Performance - The company achieved revenues of $349.44 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 0.40% and up from $286.92 million year-over-year [3] - Addus HomeCare has surpassed consensus EPS estimates three times over the last four quarters [2][3] Stock Performance - Addus HomeCare shares have declined approximately 16.3% since the beginning of the year, while the S&P 500 has gained 6.1% [4] - The current Zacks Rank for Addus HomeCare is 3 (Hold), indicating expected performance in line with the market in the near future [7] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.52 on revenues of $352.37 million, and for the current fiscal year, it is $6.07 on revenues of $1.39 billion [8] - The estimate revisions trend for Addus HomeCare was mixed ahead of the earnings release, which may change following the recent report [7] Industry Context - The Medical - Outpatient and Home Healthcare industry is currently in the top 26% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [9]

Exhibit 99.1 Overview Net service revenues were $349.4 million for the second quarter of 2025, a 21.8% increase compared with $286.9 million for the second quarter of 2024. Net income was $22.1 million for the second quarter of 2025 compared with $18.1 million for the second quarter of 2024, while net income per diluted share was $1.20 compared with $1.10 for the same period a year ago. Adjusted EBITDA increased 24.5% to $43.9 million for the second quarter of 2025 from $35.3 million for the second quarter ...

Summary of Addus HomeCare (ADUS) 2025 Conference Call Company Overview - **Company**: Addus HomeCare Corporation - **Industry**: Home Care Services - **Core Business**: Personal care services primarily for the elderly, focusing on activities of daily living [3][4] Key Points and Arguments Business Model and Services - **Service Breakdown**: 75% of business in nonclinical personal care, 20% in hospice, and 5% in clinical home health [4] - **Growth Strategy**: Expansion into clinical services initiated in 2018 to provide a continuum of care [4] Financial Performance - **Same Store Growth**: Achieved 7.4% same store organic growth, exceeding the target of 3-5% [5][8] - **Rate Increases**: Significant rate increase of 5.5% in Illinois, the largest market, contributing to growth [6][7] - **Future Outlook**: Anticipated continued growth due to potential rate increases in Texas [7][8] Hiring and Workforce Management - **Hiring Challenges**: High turnover rates historically (75-80%), currently reduced to 55% through improved scheduling and caregiver engagement [15][18] - **Hiring Strategy**: Focus on hiring initiatives and competitive wages above minimum wage to attract caregivers [10][11] Market Dynamics - **State Redetermination Process**: Previous impediments to volume growth due to state processes are now easing, leading to improved volume growth [12][14] - **Demographic Trends**: Texas is a key growth market due to its large elderly population and solid financial condition [23][24] Acquisition and Integration - **Gentiva Acquisition**: Successful integration of Gentiva, with Texas representing 75% of the business, positioning Addus as the largest personal care provider in the state [24][25] - **Future M&A Opportunities**: Plans to pursue additional personal care acquisitions and expand into home health and hospice services in Texas [27] Regulatory Environment - **Medicaid Policy**: Discussions around potential Medicaid cuts; however, Addus feels insulated due to its low-cost provider status [36][38] - **Work Requirements**: Potential work requirements for younger populations may create hiring opportunities for Addus [36][37] Financial Outlook - **EBITDA Margin**: Expected EBITDA margin above 12% for 2025, with typical seasonal improvements anticipated [41][43] - **Capital Deployment**: Preference for M&A opportunities while managing debt levels; $20 million paid down in Q1 and Q2 [46][47] Technology Investments - **Technology Initiatives**: Investment in caregiver technology to improve scheduling and operational efficiency [48][50] - **Unified Platform**: Development of a unified EMR system for clinical and nonclinical services to streamline operations [52] Valuation Multiples - **Acquisition Multiples**: Personal care acquisitions expected in the single-digit multiples, with smaller deals around 4-5 times and larger ones up to 8 times [54][55] Additional Important Insights - **Tariff Exposure**: Minimal exposure to tariffs as the business primarily involves services rather than goods [40] - **Market Positioning**: Addus positions itself as a low-cost provider, which may benefit from potential budget constraints faced by states [38]

Summary of Addus HomeCare (ADUS) 2025 Conference Call Company Overview - Addus HomeCare is one of the largest providers of personal care services in the U.S. [2] Key Industry Insights - Discussion on potential impacts of Medicaid changes, particularly work requirements for individuals under 64 years old, which may create employment opportunities for caregivers [3][4][5] - The company views itself as a low-cost provider, emphasizing the importance of keeping elderly patients at home rather than in nursing facilities [7][8] - No material changes expected from proposed Medicaid reforms, with ongoing monitoring of government relations [9] Financial Performance and Projections - The acquisition of Gentiva is performing as anticipated, with some challenges in top-line growth due to weather events in Texas [18][19] - Positive trends observed in admissions outpacing discharges, indicating a recovery in Texas [19] - The integration of Gentiva is progressing well, with payroll and benefits integration being notably smooth [20][21] - The company is actively looking for further acquisitions, particularly in Texas, to expand clinical capabilities [22][36] Value-Based Care Strategy - The company is focusing on building relationships with payers to enhance value-based care offerings, starting from personal care services [25][26][30] - Current contracts with payers are being formalized to create a more robust value-based component [29] Operational Updates - Personal care services saw a 2% year-over-year growth in hours, with expectations for continued growth in census numbers by year-end [41][42] - Technology adoption among caregivers is improving, with a significant percentage of caregivers using the new application rolled out in Illinois [46][47] - Hiring remains strong, particularly in personal care, with wage pressures being manageable due to collective bargaining agreements [51][53] Market Conditions and Recession Impact - Minimal impact from potential recession on clinical services, as home health and hospice care are essential regardless of economic conditions [55] - The company is cautiously optimistic about growth in home health and hospice services, particularly in Texas [60] Reimbursement and Regulatory Environment - Ongoing discussions regarding reimbursement rates for home health services, with expectations for potential changes from the new administration [57][58] - The company is actively pursuing increases in per visit rates and exploring episodic contracts with payers [62][64] Hospice Care Growth - Hospice services are expected to grow at a rate of 5% to 7%, with Q1 performance exceeding expectations [66][68] Cash Flow and Capital Deployment - Consistent cash flow expected, with a conversion rate of 75% to 80% of GAAP EBITDA to cash [70] - Plans to continue paying down debt while remaining opportunistic in M&A activities [71]

Financial Performance - Total net service revenue for Q1 2025 was $337.7 million, a 20.3% increase from $280.7 million in Q1 2024[78] - Net income for Q1 2025 was $21.2 million, compared to $15.8 million in Q1 2024, reflecting a 34.9% increase[78] - Net service revenues increased by 20.3% to $337.7 million for the three months ended March 31, 2025, compared to $280.7 million for the same period in 2024[112] - Gross profit margin increased to 31.9% for the three months ended March 31, 2025, compared to 31.4% for the same period in 2024[113] - General and administrative expenses rose to $73.2 million for the three months ended March 31, 2025, primarily due to the Gentiva Acquisition, but as a percentage of net service revenues decreased to 21.7%[114] - Interest expense increased to $4.0 million for the three months ended March 31, 2025, from $2.8 million for the same period in 2024, due to higher average outstanding borrowings[115] - The effective income tax rate was 21.4% for the three months ended March 31, 2025, down from 25.7% for the same period in 2024, primarily due to a higher excess tax benefit[116] Segment Performance - The personal care segment generated $258.3 million in revenue for Q1 2025, up 24.2% from $208.0 million in Q1 2024[78] - Revenue growth in the personal care segment was $50.3 million, in the hospice segment was $5.6 million, and in the home health segment was $1.1 million during the same period[112] - Net service revenues for the Personal Care Segment increased by 24.2% to $258,286, compared to $208,003 in the same period last year[117] - Hospice Segment net service revenues increased by 10.0% to $61,437, up from $55,863 year-over-year[126] - Home Health Segment net service revenues grew by 6.5% to $17,985, compared to $16,880 in the previous year[133] Revenue Sources - Managed care organizations accounted for 35.6% of net service revenues in Q1 2025, slightly down from 34.2% in Q1 2024[76] - The Illinois Department on Aging accounted for 18.5% of net service revenues in Q1 2025, down from 20.8% in Q1 2024[89] - The personal care segment's revenue from state, local, and other governmental programs was $132.9 million, representing 51.5% of segment revenues in Q1 2025[87] - The hospice segment's revenue from Medicare was $56.8 million, accounting for 92.4% of hospice segment revenues in Q1 2025[88] - Medicare accounted for 92.4% of net service revenues in the Hospice Segment for the three months ended March 31, 2025[130] - Home health segment net service revenues from Medicare accounted for 69.9% in Q1 2025, compared to 69.1% in Q1 2024[136] Operational Metrics - The company served approximately 72,000 individuals in Q1 2025, an increase from 57,000 in Q1 2024[78] - Average daily census in the Hospice Segment increased by 4.6% to 3,515, compared to 3,359 in the same period last year[126] - Revenue per patient day in the Hospice Segment rose by 6.3% to $194.23 from $182.78 year-over-year[126] - Days sales outstanding (DSO) improved to 37 days as of March 31, 2025, down from 39 days at December 31, 2024[154] Acquisitions and Investments - The company completed the acquisition of Gentiva for approximately $353.6 million, expanding its services in multiple states[81] - The company used $3.4 million in cash for acquisitions during Q1 2025 and repaid $20.0 million under its revolving credit facility[141] Cost and Efficiency - Gross profit as a percentage of net service revenues rose to 40.0% in Q1 2025 from 34.4% in Q1 2024[138] - General and administrative expenses as a percentage of net service revenues decreased to 23.2% in Q1 2025 from 26.9% in Q1 2024, reflecting more efficient operations[139] - Gross profit margin for the Personal Care Segment improved to 27.6% from 26.7%, attributed to lower payroll and benefits expenses[124] - Gross profit margin for the Hospice Segment decreased to 47.5% from 48.1%, primarily due to rising employee costs[131] Regulatory Changes - The Illinois Medicaid rate for in-home care services increased to $29.63 per hour effective January 1, 2025[91] - The per-beneficiary cap amount for Medicare reimbursement was updated to $34,465.34 for federal fiscal year 2025[95] - CMS increased hospice payment rates by 2.9% effective October 1, 2024, reflecting a 3.4% market basket increase[94] - Medicare payments to home health agencies are estimated to increase by 0.5% for calendar year 2025[97] - The Home Health Value-Based Purchasing Model allows for payment adjustments of up to 5% based on performance against quality measures[98] Financial Position - Cash balances were $97.0 million as of March 31, 2025, down from $98.9 million at December 31, 2024[140] - Outstanding accounts receivable increased by $11.7 million as of March 31, 2025, compared to December 31, 2024[153] - The company had $203.0 million in outstanding borrowings on its credit facility, all subject to variable interest rates[158] - If variable interest rates increased by 100 basis points, net income would decrease by $0.4 million, or $0.02 per diluted share[158]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $337.7 million, a 20.3% increase from $280.7 million in Q1 2024 [9] - Adjusted earnings per share rose to $1.42, up 17.4% from $1.21 in Q1 2024 [9] - Adjusted EBITDA increased to $40.6 million, a 25.1% rise from $32.4 million in Q1 2024 [9] - Gross margin percentage improved to 31.9% from 31.4% in Q1 2024 [24] - Adjusted EBITDA margin was 12%, compared to 11.6% in Q1 2024 [25] Business Line Data and Key Metrics Changes - Personal Care segment revenues were $258.3 million, accounting for 76.5% of total revenue, with a 7.4% organic revenue growth [23] - Hospice same store revenue increased by 9.9%, with average daily census rising to 3,515, a 4.6% increase year-over-year [14][21] - Home Health segment revenues were $18 million, representing 5.3% of total revenue, with a 1.3% organic revenue growth [22] Market Data and Key Metrics Changes - Personal Care services received favorable reimbursement support, including a 5.5% rate increase in Illinois effective January 1, 2025 [12] - Same store hours in Personal Care increased by 2% compared to Q1 2024, marking the largest year-over-year volume growth in recent quarters [13] - The company experienced solid caregiver hiring success, with 79 hires per day in Personal Care, up from 78 in Q1 2024 [10] Company Strategy and Development Direction - The company aims for a minimum annual revenue growth of 10%, focusing on acquisitions that complement organic growth [17] - The Gentiva acquisition added approximately $280 million in annualized revenues, significantly expanding market coverage [22] - The company is actively pursuing additional acquisition opportunities to enhance density in existing markets and add clinical services [23][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued demand for home-based care, viewing it as a growth opportunity [18] - The company anticipates stable gross margins and consistent cash flow conversion in line with historical averages [25][27] - Management noted that the clinical hiring environment remains challenging, but improvements have been observed in the personal care segment [11][67] Other Important Information - The company utilized approximately $2.5 million in ARPA funding during Q1 2025, with $8.8 million remaining [28] - As of March 31, 2025, the company had cash on hand of approximately $97 million and reduced bank debt by $20 million [9][28] Q&A Session Summary Question: Commentary on hospice cap limitations - Management indicated that cap limitations have not been material, with effective management of referral mix [33][34] Question: Impact of weather on personal care services - Management confirmed weather events affected January but noted a rebound in February and March, expecting hours growth to remain in the 2% to 2.5% range [40][41] Question: Hospice revenue growth expectations - Management projected hospice revenue growth in the 5% to 7% range, leaning towards the upper end [44] Question: Margin expansion expectations - Management expects typical margin expansion of 40 to 50 basis points into Q2, with Q1 usually being the low point [50][51] Question: Impact of Medicaid changes - Management stated that potential changes to Medicaid would likely have no direct impact on the company, as its patient base is primarily elderly and disabled [54][56] Question: Performance of Gentiva post-acquisition - Management reported that Gentiva's bottom line performance has exceeded expectations, while top line growth was slightly lighter than anticipated [77] Question: Update on home health services - Management noted stability in Medicare rates and improvements in contracting with Medicare Advantage plans, with discounts narrowing from 40% to 15-20% [106]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $337.7 million, a 20.3% increase from $280.7 million in Q1 2024 [6] - Adjusted earnings per share rose to $1.42, up 17.4% from $1.21 in Q1 2024 [6] - Adjusted EBITDA increased to $40.6 million, a 25.1% rise from $32.4 million in Q1 2024 [6] - Gross margin percentage improved to 31.9% from 31.4% in Q1 2024 [21] - Adjusted EBITDA margin was 12%, compared to 11.6% in Q1 2024 [22] Business Line Data and Key Metrics Changes - Personal Care segment revenues were $258.3 million, accounting for 76.5% of total revenue, with a same-store revenue growth of 7.4% [20] - Hospice segment revenues were $61.4 million, representing 18.2% of total revenue, with same-store revenue growth of 9.9% [20] - Home Health segment revenues were $18 million, making up 5.3% of total revenue, with a same-store revenue growth of 1.3% [20] Market Data and Key Metrics Changes - Personal Care hiring reached 79 hires per day, an increase from the previous year [7] - Average daily census for hospice increased to 3,515, up 4.6% from 3,359 in Q1 2024 [11] - Same-store hours for Personal Care increased by 2% compared to Q1 2024 [10] Company Strategy and Development Direction - The company aims for a minimum annual revenue growth of 10%, focusing on acquisitions that complement organic growth [13] - The strategy includes expanding personal care services in Texas and evaluating smaller acquisition opportunities [14] - The company is committed to maintaining a conservative approach to valuation and due diligence in acquisitions [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued demand for home-based care services, which are seen as cost-effective and safe [15] - The company anticipates stable gross margins and consistent cash flow conversion for the full year 2025 [22][24] - Management noted that the clinical hiring environment remains challenging but is improving overall [8][66] Other Important Information - The company utilized approximately $2.5 million in ARPA funding during Q1 2025, with $8.8 million remaining [25] - As of March 31, 2025, the company had cash on hand of approximately $97 million and reduced bank debt by $20 million [6][25] Q&A Session Summary Question: Commentary on hospice cap limitations - Management indicated that cap limitations have not been material, emphasizing a balanced referral mix [28][30] Question: Growth expectations for personal care services - Management acknowledged weather-related impacts in January but expects growth in hours to remain in the 2% to 2.5% range [38] Question: Hospice revenue growth expectations - Management anticipates hospice revenue growth in the 5% to 7% range, likely at the higher end [40] Question: Margin expansion expectations - Management expects 40 to 50 basis points of margin expansion from Q1 to Q2, consistent with historical patterns [46] Question: Impact of ACA expansion rollback - Management stated that potential changes to ACA expansion would likely have no direct impact on the company [50][52] Question: Same-store revenue growth components - Management attributed strong same-store revenue growth to improved scheduling and caregiver assignment practices [56] Question: Industry-wide workforce retention improvements - Management noted improvements in workforce retention across the industry, particularly in personal care [66] Question: Updates on Gentiva's performance - Management reported that Gentiva's bottom line performance has exceeded expectations, while top-line growth has been slightly lighter [76] Question: State budget and rate increase outlook - Management expressed confidence in state budgets and is closely monitoring potential rate increases, particularly in Texas [79]

Core Insights - Addus HomeCare (ADUS) reported revenue of $337.71 million for the quarter ended March 2025, reflecting a year-over-year increase of 20.3% [1] - The earnings per share (EPS) for the quarter was $1.42, up from $1.21 in the same quarter last year, with an EPS surprise of +6.77% compared to the consensus estimate of $1.33 [1] - The reported revenue was slightly below the Zacks Consensus Estimate of $340.01 million, resulting in a revenue surprise of -0.68% [1] Revenue Breakdown - Personal care revenue was $258.29 million, which is a 24.2% increase year-over-year, but below the average estimate of $261.89 million [4] - Home Health revenue reached $17.99 million, exceeding the average estimate of $17.66 million, with a year-over-year growth of 6.6% [4] - Hospice revenue amounted to $61.44 million, surpassing the average estimate of $59.79 million, and showing a year-over-year increase of 10% [4] Stock Performance - Over the past month, Addus HomeCare shares have returned +4.7%, outperforming the Zacks S&P 500 composite, which saw a +0.4% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]