Core Viewpoint - Addus HomeCare Corporation (NASDAQ: ADUS) is perceived as a "show me" story, with its Q2 '25 numbers reinforcing this perspective [1] Financial Performance - The company's recent financial results indicate a need for further validation of its growth narrative [1] Investment Sentiment - The stock is under scrutiny, with investors looking for clear evidence of sustainable performance before committing [1]

[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 Insights - Addus HomeCare reported strong Q2 2025 financial results, with revenue and earnings exceeding Wall Street estimates, driven by organic growth and acquisitions [1][2] Financial Performance - Q2 2025 GAAP revenue was $349.4 million, surpassing the estimate of $346.5 million, and reflecting a 21.8% increase from Q2 2024 [2] - Non-GAAP earnings per share reached $1.49, exceeding the consensus of $1.47 and marking a 10.4% year-over-year growth [2] - Adjusted EBITDA was $43.9 million, up 24.4% from $35.3 million in Q2 2024 [2] - Net income increased to $22.1 million, a 22.1% rise from $18.1 million in the previous year [2] - Cash flow from operations was $22.5 million, a 19.7% increase from $18.8 million in Q2 2024 [2] Business Overview - Addus HomeCare operates in 23 states, focusing on personal care, hospice care, and home health services [3] - Personal care services account for 77% of total revenue, with a year-over-year growth of 26.5% [5] - Hospice services contributed 17.8% of revenue, showing a 10.0% organic growth rate [6] - Home health services represented 5.2% of overall revenue, with a slight decline year-over-year [7] Strategic Initiatives - The company aims for organic growth through increased service volumes and rates, alongside strategic acquisitions [4] - Recent acquisitions, including Gentiva Personal Care Services, have enhanced market coverage and service density [5][8] - Technology adoption is progressing, with a caregiver scheduling app being rolled out to improve operational efficiency [8] Market Outlook - The company anticipates robust demand for home-based care and continues to focus on operational efficiency and accretive acquisitions [9] - Organic revenue growth in Personal Care exceeded the long-term target range of 3-5% [9] - Management is closely monitoring government reimbursement rates and regulatory developments, as most revenue is derived from Medicaid and Medicare [10]

Core Insights - Addus HomeCare reported revenue of $349.44 million for the quarter ended June 2025, reflecting a year-over-year increase of 21.8% and a surprise of +0.4% over the Zacks Consensus Estimate of $348.04 million [1] - The company's EPS for the quarter was $1.49, up from $1.35 in the same quarter last year, resulting in an EPS surprise of +2.76% compared to the consensus estimate of $1.45 [1] Revenue Breakdown - Personal Care revenue reached $269.18 million, exceeding the two-analyst average estimate of $265.88 million, with a year-over-year increase of +26.5% [4] - Home Health revenue was reported at $18.05 million, slightly below the two-analyst average estimate of $18.26 million, showing a year-over-year change of -0.2% [4] - Hospice revenue amounted to $62.21 million, surpassing the average estimate of $61.32 million from two analysts, with a year-over-year increase of +11% [4] Stock Performance - Over the past month, Addus HomeCare shares have returned -6.2%, contrasting with the Zacks S&P 500 composite's +0.6% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

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]

[Financial and Operational Highlights](index=1&type=section&id=Financial%20and%20Operational%20Highlights) [Q2 2025 Performance Overview](index=1&type=section&id=Q2%202025%20Performance%20Overview) The company reported significant Q2 2025 year-over-year growth in revenue, net income, and adjusted EBITDA Q2 2025 Key Financial Metrics (Year-over-Year) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Net Service Revenues | $349.4M | $286.9M | +21.8% | | Net Income | $22.1M | $18.1M | +22.1% | | Net Income per Diluted Share | $1.20 | $1.10 | +9.1% | | Adjusted EBITDA | $43.9M | $35.3M | +24.5% | | Adjusted Net Income per Diluted Share | $1.49 | $1.35 | +10.4% | H1 2025 Key Financial Metrics (Year-over-Year) | Metric | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | | Net Service Revenues | $687.2M | $567.7M | +21.0% | | Net Income | $43.3M | $33.9M | +27.7% | | Net Income per Diluted Share | $2.36 | $2.06 | +14.6% | | Adjusted EBITDA | $84.5M | $67.7M | +24.7% | | Adjusted Net Income per Diluted Share | $2.91 | $2.56 | +13.7% | - The company generated **$22.5 million in cash flow from operations** during the second quarter of 2025[6](index=6&type=chunk) [Management Commentary and Strategy](index=1&type=section&id=Management%20Commentary%20and%20Strategy) [CEO's Remarks on Performance](index=1&type=section&id=CEO's%20Remarks%20on%20Performance) The CEO attributed strong Q2 revenue growth to organic performance and acquisitions while emphasizing technology investments - Financial results reflect solid organic growth and the inclusion of revenue from the personal care operations of **Gentiva, acquired on December 2, 2024**[5](index=5&type=chunk) - The company is experiencing **robust demand for its services**, capitalizing on the growing recognition of the value and cost-effectiveness of home-based care[5](index=5&type=chunk) - Addus continues to invest in systems and tools, such as a more efficient care scheduling platform, to **support caregiver hiring and retention**[7](index=7&type=chunk) [Business Segment Performance](index=2&type=section&id=Business%20Segment%20Performance) The Personal Care and Hospice segments drove strong organic growth, while the Home Health segment remains a key clinical partner Segment Contribution and Organic Growth (Q2 2025) | Segment | % of Total Business | Organic Revenue Growth (YoY) | | :--- | :--- | :--- | | Personal Care | 77.0% | +7.4% | | Hospice Care | 17.8% | +10.0% | | Home Health | 5.2% | (6.0)% | - Personal Care growth was driven by **increased volume and supportive state rate increases**, particularly in Illinois[7](index=7&type=chunk) - The Hospice segment is showing **improving trends in average daily census**, patient days, and revenue per patient day compared to the prior year[8](index=8&type=chunk) [Acquisition Activity](index=2&type=section&id=Acquisition%20Activity) The company acquired Helping Hands Home Care Service for $21.3 million, expanding its presence in western Pennsylvania - The company acquired **Helping Hands Home Care Service, Inc. on August 1, 2025**, expanding its operations in western Pennsylvania[9](index=9&type=chunk) Helping Hands Acquisition Details | Metric | Value | | :--- | :--- | | Purchase Price | $21.3 million | | Annualized Revenues | ~$16.7 million | | Employees | >500 | | Patients Served Daily | ~600 | - This acquisition supports the company's strategy of offering a continuum of care, including personal care, home health, and hospice services, within the states it operates[10](index=10&type=chunk) [Financial Position and Outlook](index=2&type=section&id=Financial%20Position%20and%20Outlook) The company maintains a strong balance sheet and liquidity, positioning it for future strategic acquisitions Liquidity Position (as of June 30, 2025) | Item | Amount | | :--- | :--- | | Cash | $91.2 million | | Bank Debt | $173.0 million | | Revolving Credit Facility Availability | $454.6 million | - The company prioritizes deploying capital for **strategic acquisitions** while also investing in technologies to support operations[12](index=12&type=chunk) - Management expressed confidence in the company's outlook for 2025, citing a **proven, scalable operating model** and a dedicated team of caregivers[13](index=13&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) The Q2 2025 income statement reflects a 21.8% increase in net service revenues and growth in net income Q2 2025 vs Q2 2024 Income Statement (in thousands) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net service revenues | $349,443 | $286,922 | | Gross profit | $113,877 | $93,158 | | Operating income | $32,887 | $26,181 | | Net income | $22,052 | $18,079 | | Net income per diluted share | $1.20 | $1.10 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to $1.41 billion as of June 30, 2025, driven primarily by goodwill from acquisitions Balance Sheet Summary (in thousands) | Account | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total current assets | $263,045 | $294,988 | | Goodwill | $969,824 | $663,851 | | Total assets | $1,408,931 | $1,116,554 | | Total current liabilities | $151,383 | $147,532 | | Long-term debt, net | $169,059 | $ - | | Total liabilities | $387,077 | $194,899 | | Total stockholders' equity | $1,021,854 | $921,655 | [Net Service Revenue by Segment](index=7&type=section&id=Net%20Service%20Revenue%20by%20Segment) Personal Care remains the largest segment, contributing $269.2 million in revenue for Q2 2025 Net Service Revenue by Segment (Q2, in thousands) | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Personal Care | $269,183 | $212,817 | | Hospice | $62,212 | $56,030 | | Home Health | $18,048 | $18,075 | | **Total Revenue** | **$349,443** | **$286,922** | [Key Statistical and Financial Data](index=8&type=section&id=Key%20Statistical%20and%20Financial%20Data) Operational metrics show strong organic growth in Personal Care and Hospice, while Home Health volumes declined Q2 2025 vs Q2 2024 Segment Operating Metrics | Segment / Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Personal Care** | | | | Average billable census total | 50,404 | 37,993 | | Organic Revenue Growth | 7.4% | 8.8% | | **Hospice** | | | | Average daily census | 3,720 | 3,477 | | Organic Revenue Growth | 10.0% | 6.3% | | **Home Health** | | | | New Admissions | 4,568 | 4,933 | | Organic Revenue Growth | (6.0)% | 1.6% | - In Q2 2025, the primary payors for Personal Care were **state/local programs (51.4%)** and **managed care organizations (45.3%)**; for Hospice and Home Health, **Medicare was the dominant payor**[28](index=28&type=chunk) [Non-GAAP Financial Measures Reconciliation](index=3&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) [Reconciliation Tables](index=9&type=section&id=Reconciliation%20Tables) The company reconciles GAAP Net Income to non-GAAP measures like Adjusted EBITDA and Adjusted Net Income Q2 2025 Reconciliation of Adjusted EBITDA to Net Income (in thousands) | Description | Amount | | :--- | :--- | | Net income | $22,052 | | Interest expense, net | $2,942 | | Income tax expense | $7,893 | | Depreciation and amortization | $3,913 | | Acquisition expenses | $2,708 | | Stock-based compensation expense | $4,421 | | **Adjusted EBITDA** | **$43,928** | Q2 2025 Reconciliation of Adjusted Net Income to Net Income (in thousands) | Description | Amount | | :--- | :--- | | Net income | $22,052 | | Acquisition expenses | $2,708 | | Stock-based compensation expense | $4,421 | | Tax Effect | ($1,872) | | **Adjusted Net Income** | **$27,308** | - Non-GAAP adjustments are primarily made for **acquisition expenses, stock-based compensation, and gains/losses on asset sales** to provide a clearer comparison of business operations[15](index=15&type=chunk)

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]