ADUS Q1 Earnings Call: Personal Care Drives Growth as Addus HomeCare Looks to Expand

Home healthcare provider Addus HomeCare (NASDAQ: ADUS) missed Wall Street’s revenue expectations in Q1 CY2025, but sales rose 20.3% year on year to $337.7 million. Its non-GAAP profit of $1.42 per share was 6.5% above analysts’ consensus estimates.

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StockStory’s Take

Addus HomeCare’s first quarter results for 2025 reflected the continued expansion of its Personal Care segment, supported by successful caregiver hiring and the full integration of the Gentiva acquisition. Management attributed the company’s revenue growth to higher service volumes, particularly in core states like Illinois, where reimbursement rates increased. CEO Dirk Allison emphasized, “We saw Personal Care hiring at 79 hires per day, up one hire per business day compared to the first quarter of 2024.”

Looking ahead, management highlighted ongoing acquisition opportunities and efforts to build density in existing markets, especially Texas, as key to sustaining growth. With state-level reimbursement dynamics and operational efficiency initiatives in focus, CFO Brian Poff stated, “We are well positioned to execute our acquisition strategy and expect our adjusted EBITDA margin percentage for the full year to remain above 12%.” Management also noted that legislative developments in Texas and further technology rollouts could impact future performance.

Key Insights from Management’s Remarks

Addus HomeCare’s management cited several operational and market factors behind Q1’s financial outcomes and laid out ongoing priorities for future growth. Lower-than-expected revenue was attributed to transitional dynamics after the Gentiva acquisition and state-level Medicaid redeterminations, while margin performance reflected both organic growth and cost discipline.

• Personal Care Hiring Momentum: Management pointed to daily hiring improvements in the Personal Care segment, which reached 79 hires per day. This hiring pace enabled the company to meet elevated service demand and contributed to a 2% increase in same-store personal care hours.
• Gentiva Acquisition Impact: The first full quarter of Gentiva operations added scale and expanded Addus’ market coverage, but management acknowledged that top-line results were slightly below internal expectations due to Texas’ Medicaid redetermination process. However, bottom-line results were stronger than anticipated.
• Technology Initiatives: The rollout of a proprietary caregiver scheduling app in Illinois and New Mexico improved service percentages and operational efficiency. Management observed high app adoption rates, which enabled caregivers to autonomously adjust schedules and increase fill rates without increased administrative burden.
• Favorable Reimbursement Environment: Illinois implemented a 5.5% rate increase for Personal Care services, supporting revenue growth in Addus’ largest market. Management noted ongoing monitoring of legislative sessions in other key states, particularly Texas, for additional rate support.
• Clinical Segment Improvements: The hospice segment benefited from targeted leadership changes and a balanced referral mix, leading to nearly 10% revenue growth and improved patient census. Management indicated that the industry-wide labor environment for clinical roles has improved but remains geographically variable.

Drivers of Future Performance

Management’s outlook for the rest of the year centers on acquisition-driven expansion, continued hiring in Personal Care, and state reimbursement trends. The company expects its adjusted EBITDA margin to remain stable with further operational efficiencies and ongoing technology investments.

• Acquisition Pipeline Focus: Addus is seeking accretive acquisitions, especially in Texas, to increase service density and add clinical offerings. Management believes M&A opportunities will be a primary growth lever, though they remain cautious regarding transaction valuations.
• Reimbursement Rate Developments: The outcome of pending legislative sessions, particularly in Texas, may yield additional rate increases for Personal Care services. Management expects these outcomes to directly influence future revenue growth and profitability.
• Operational Efficiency and Technology: Rollout of scheduling and workforce management tools is expected to drive higher fill rates and reduce administrative burden, supporting both revenue and margin goals. Management also cited ongoing pilot programs and the potential for broader adoption by year end.

Top Analyst Questions

• Ben Hendrix (RBC Capital Markets): Asked about hospice cap limitations, with management responding that cap issues were immaterial due to careful market mix and recent leadership changes.
• Joanna Gajuk (Bank of America): Inquired about Personal Care hour growth and weather impacts. Management confirmed weather-related headwinds early in the quarter but expects hours to remain in the 2–2.5% growth range.
• Tao Qiu (Macquarie): Asked about margin cadence post-Gentiva acquisition. Management indicated Q1 is typically the lowest margin quarter, with sequential expansion expected through the year due to payroll tax caps and seasonal trends.
• Jared Haase (William Blair): Queried about industry-wide retention improvements. Management said workforce retention has improved since the pandemic, especially in Personal Care, though clinical hiring remains regionally challenging.
• Matthew Gillmor (KeyBanc): Sought detail on Gentiva’s performance versus expectations. Management said bottom line was slightly better than expected, though top-line growth was affected by state Medicaid redeterminations in Texas.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will be monitoring (1) the outcome of Texas’ legislative session for potential reimbursement rate increases, (2) the pace and integration success of future acquisitions, particularly in high-density markets, and (3) the broader rollout and adoption rates of workforce management technology across more states. Progress in clinical labor retention and further improvements in hospice census will also be key markers for tracking Addus’ execution.

Addus HomeCare currently trades at a forward P/E ratio of 18×. Should you double down or take your chips? The answer lies in our free research report.

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