Clark Murphy

Clarke Murphy inquired about the shift in personal care payer mix towards managed care, asking if it was intentional or coincidental, and requested an update on the home health and hospice bridging program, including its potential to drive home health growth in 2026.

Answer

Brian Poff, EVP and CFO, Addus HomeCare, clarified that the payer mix shift was a direct result of the Del Cielo acquisition in Texas, a managed Medicaid-heavy state. Heather Dixon, President and COO, Addus HomeCare, highlighted the bridging program's success in New Mexico and Tennessee, driving appropriate care transitions. She noted Q4 admissions growth in home health, the hiring of a new market president, and new sales leaders, anticipating a return to home health growth in H2 2026.

Clarke Murphy inquired about the shift in personal care payer mix towards managed care, asking if it was intentional or coincidental, and requested an update on the Home Health and Hospice bridging program and its potential to drive Home Health growth.

Answer

Brian Poff, EVP and CFO, attributed the shift in personal care payer mix to the Del Cielo acquisition in Texas, a managed Medicaid-heavy state. Heather Dixon, President and COO, discussed the bridging program's success in New Mexico and Tennessee, and highlighted Home Health admissions growth in Q4, a new market president, and sales team focus, expecting growth in H2 2026.

Clark Murphy with Truist Securities asked about common themes contributing to the rapid positive impact of new facilities on overall results. He also inquired about observations regarding the company's expansion in the Southeast, specifically concerning demand trends, labor availability, and ability to attract clinical talent. Additionally, he requested more specific labor metrics, including wage inflation, turnover rates, and contract labor usage, along with details on actions taken to drive labor improvements.

Answer

CFO Suzanne Snapper noted that recently acquired facilities, now totaling 68, contribute significantly to revenue (15.5% in Q3), though initial profit contribution is lighter as clinical systems and managed care partnerships develop. Chairman and CEO Barry Port added that new acquisitions are ahead of schedule, not causing a margin drag, and expressed excitement about the Southeast portfolio's potential due to strong leadership. President and COO Spencer Burton highlighted that the operations-driven acquisition process, with shared best practices among operators and clinicians, contributes to the speed of improvements. Regarding labor, Spencer Burton stated contract labor is minimal (less than a fifth of crisis levels), mostly in new acquisitions, with same-store operations having very little. Barry Port added that wage inflation is back to low to mid-single digits, and turnover is on its fourth year of decline, nearing pre-COVID levels.

Clark Murphy inquired about common themes driving the quick contribution of new facilities to Ensign's overall results. He also asked about observations regarding Ensign's expansion in the Southeast, specifically concerning demand trends, labor availability, and attracting clinical talent. Additionally, he requested more specific labor metrics on wage inflation, turnover, and contract labor usage.

Answer

CFO Suzanne Snapper noted that recently acquired locations, now totaling 68, contribute significantly to revenue, though initial EBIT contribution is light. Chairman and CEO Barry Port highlighted that new acquisitions are ahead of schedule, contributing positively without creating a margin drag, and expressed excitement about the potential and leadership in the Southeast. President and COO Spencer Burton attributed the speed of improvements to an operations-driven acquisition process and shared best practices. Regarding labor, Spencer Burton stated that contract labor usage is minimal, less than a fifth of crisis levels, with same-store facilities having very little. Barry Port added that wage inflation is back to low to mid-single digits, and turnover is on its fourth year of decline, nearing pre-COVID levels.