Addus(US:ADUS)2025-08-05 20:31PART I. FINANCIAL INFORMATION 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 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 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 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 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 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 - 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 202429 - 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 goodwill3839 - 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%4956 - The Illinois Department on Aging is a significant payor, accounting for 18.6% of net service revenues for the six months ended June 30, 202573 - Subsequent to the quarter end, on August 1, 2025, the company acquired Helping Hands Home Care Service in Pennsylvania for approximately $21.3 million77 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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 Texas85 - 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 segment8687 Regulatory and Policy Environment 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 budget9798 - Effective October 1, 2024, CMS increased Medicare hospice payment rates by 2.9%102 - 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-2030108 - 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 Medicaid111112 Results of Operations — Consolidated 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 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 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 million157 - The company had $173.0 million in revolving loans outstanding and $454.6 million available for borrowing under its credit facility158 - 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 receivable166 - Days Sales Outstanding (DSO) was 38 days at June 30, 2025, compared to 39 days at December 31, 2024170 Item 3. Quantitative and Qualitative Disclosures About Market Risk 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 debt175 - A 100 basis point increase in interest rates would have reduced H1 2025 net income by $0.8 million175 Item 4. Controls and Procedures 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 quarter177 - No material changes in internal control over financial reporting were identified during the quarter ended June 30, 2025178 PART II. OTHER INFORMATION 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 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 condition180 Item 1A. Risk Factors 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 quarter181 Other Part II Items 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)182183184185