Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-34504 ADDUS HOMECARE CORPORATION (Exact name of registrant as specified in its charter) Delaware 20-5340172 (State or other ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-34504 ADDUS HOMECARE CORPORATION (Exact name of registrant as specified in its charter) Delaware 20-5340172 (State or other ...

Financial Performance - Net service revenues for 2018 were $518.1 million, an increase of 21.6% from $425.99 million in 2017[9] - Net income from continuing operations for 2018 was $17.38 million, up 28.5% from $13.53 million in 2017[9] - Total assets as of December 31, 2018, were $355.39 million, compared to $271.69 million in 2017, reflecting a growth of 30.8%[9] - In 2018, approximately 58.2% of net service revenues in the personal care segment were derived from state and local government programs, while 35.3% came from managed care organizations[35] - The Illinois Department on Aging accounted for 31.0% of total net service revenues in 2018, highlighting the dependency on this key payor[46] Consumer and Market Growth - The company served approximately 57,000 consumers in 2018, an increase from 51,000 in 2017[7] - The population over the age of 65 is expected to more than double by 2050, driving demand for personal care services[16] - Federal and state Medicaid expenditures for fee-for-service personal care services were over $29.9 billion in 2016, reflecting a $1.9 billion increase from 2015[17] - As of July 2018, 39 states contracted with risk-based managed care organizations for Medicaid enrollees, indicating a shift towards managed care models[18] Strategic Initiatives - The company plans to continue organic growth by enhancing sales capabilities and expanding relationships with payors[26] - The company has expanded its presence through acquisitions, including the purchase of Ambercare Corporation in 2018, enhancing its service offerings in New Mexico[15] - The company completed three acquisitions in 2018, including Ambercare, which expanded its hospice and home health segments, supporting its growth strategy[28] - The company anticipates further growth opportunities in hospice care through acquisitions, leveraging its operational capabilities[29] Regulatory and Compliance Environment - The company is subject to extensive federal, state, and local regulations, which may impact its operations and reimbursement methods[69] - The company must maintain written policies regarding federal and state laws for employees, contractors, and agents due to receiving at least $5.0 million in Medicaid payments annually[81] - Compliance with HIPAA and other privacy and security standards is expected to impose significant costs on the company's business lines[90] Financial Management and Risks - As of December 31, 2018, the company had outstanding borrowings of approximately $20.0 million on its credit facility, all subject to variable interest rates, down from $44.4 million in the previous year[343] - If the variable interest rates on the debt were 100 basis points higher, the company's net income would have decreased by $0.6 million, or $0.05 per diluted share[343] - The company is exposed to market risks associated with changes in interest rates on its variable rate long-term debt[343] - The company has not implemented any derivative or hedging arrangements to mitigate interest rate exposure[343] Internal Controls and Audit - The company identified a material weakness in internal control over financial reporting due to reliance on a vendor's software without a third-party attestation report[345] - The Company has not maintained effective internal control over financial reporting as of December 31, 2018, based on COSO criteria[353] - Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting[360] - Limitations of internal control may prevent or detect misstatements, and effectiveness evaluations are subject to future risks[362] - The audit of the consolidated financial statements was conducted in accordance with PCAOB standards, ensuring the effectiveness of internal controls was assessed[358] Operational Metrics - The company measures segment performance using various metrics, including billable hours and revenue per patient day, to assess operational efficiency[40] - The company utilizes the Qlik Business Intelligence platform for operational performance analysis, integrating various applications to measure performance against budget[67] - The company plans to convert to Oracle Fusion for financial management in the first half of 2019, enhancing its general ledger, accounts payable, and fixed assets management[68] Labor Relations - Approximately 49.0% of the company's total employees are represented by labor unions, maintaining strong relationships with these unions[63] Payment and Reimbursement Changes - Hospice payment rates increased by 1.8% in federal fiscal year 2019, reflecting a 2.9% market basket update, a negative 0.8% multifactor productivity adjustment, and a negative 0.3% adjustment required by the ACA[51] - Home Health Prospective Payment System (HHPPS) rates will increase by 2.2% in 2019, including a 2.2% home health payment update and a 0.1% increase due to a decrease in the fixed-dollar-loss ratio[52] - The aggregate cap for hospice reimbursement in 2019 is set at $29,205, limiting the amount of Medicare reimbursement based on the number of Medicare patients served[51] Client Relationships - The company is focusing on building relationships with managed care organizations to ensure continued referrals of new clients[43] - The company has relationships with the Veterans Health Administration to provide personal care services in several states, primarily Illinois, Tennessee, and California[57] - Managed care organizations are increasingly administering Medicaid and Medicare personal care programs to better manage costs[55]