Sign in

You're signed outSign in or to get full access.

AH

Addus HomeCare Corp (ADUS)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue grew 21.8% to $349.4M, adjusted EBITDA rose 24.5% to $43.9M, and adjusted diluted EPS was $1.49; GAAP diluted EPS was $1.20 .
  • Results modestly beat S&P Global consensus: EPS $1.49 vs $1.463*, revenue $349.4M vs $345.9M*, while SPGI “EBITDA” estimate exceeded the reported figure due to definition differences ($43.1M* vs $36.8M actual in SPGI vs $43.9M adjusted EBITDA in company materials) — a definitional mismatch investors should note*.
  • Personal Care same-store revenue grew 7.4% YoY; Hospice organic revenue grew 10.0% with ADC up 7%; Home Health organic revenue declined 6.0% YoY but margins improved .
  • Texas passed a 9.9% personal care rate increase effective 9/1/2025 and Illinois passed a 3.9% increase effective 1/1/2026, adding ~$17.7M and ~$17.5M annualized revenue respectively; hospice final rate +2.6% effective 10/1/2025 .
  • Balance sheet strengthened: cash ~$91.2M, bank debt $173.0M (down $30M QoQ), net leverage under 1x adjusted EBITDA; Q2 CFO reiterated full-year adjusted EBITDA margin outlook at 12–13% and tax rate mid-20% .

Values retrieved from S&P Global.*

What Went Well and What Went Wrong

What Went Well

  • Strong topline and profitability: revenue +21.8% YoY to $349.4M; adjusted EBITDA +24.5% to $43.9M; adjusted EPS $1.49 .
  • Segment momentum: Personal Care same-store revenue +7.4% YoY; Hospice organic revenue +10.0% YoY with ADC 3,720 (+7% YoY), patient days 338,505, and revenue per patient day $184.92 .
  • Strategic expansion: closed Helping Hands Home Care (PA) on 8/1 with ~$16.7M annualized revenue, enhancing density and adding clinical capabilities; expected EBITDA margins ~13–14% .
  • State rate tailwinds: Texas +9.9% (effective 9/1/2025) and Illinois +3.9% (effective 1/1/2026), each expected to contribute ~$17–18M annualized at ~20% margins .
  • Management quote: “We continue to see robust demand for our services… Addus is well positioned to meet this demand and continue to capitalize on additional growth opportunities.” .

What Went Wrong

  • Home Health softness: organic revenue declined 6.0% YoY; total volume and visits down 10.0% and 14.7% YoY respectively; management flagged tighter clinical hiring and payer rate pressures despite margin improvement .
  • Hospice cap exposure: booked “a little over a million dollars” in cap in Q2; manageable but a watch item .
  • Operational mix pressures: Personal Care revenue per billable hour lower due to Texas mix ($25.49 vs $27.47 YoY), and SPGI EBITDA definition likely caused a consensus mismatch vs company “adjusted EBITDA” optics .
  • Policy overhang: CMS proposed 2026 Home Health payment rule implies a 6.4% aggregate reduction and temporary clawback; management is actively advocating for moderation .

Financial Results

Consolidated P&L vs prior year, prior quarter, and estimates

MetricQ2 2024 (oldest)Q1 2025Q2 2025 (newest)
Revenue ($USD Millions)$286.9 $337.7 $349.4
Net Income ($USD Millions)$18.1 $21.2 $22.1
Diluted EPS ($)$1.10 $1.16 $1.20
Adjusted EPS ($)$1.35 $1.42 $1.49
Gross Margin %32.5% 31.9% 32.6%
Adjusted EBITDA ($USD Millions)$35.3 $40.6 $43.9
Adjusted EBITDA Margin %12.4% 12.0% 12.6%
Cash from Operations ($USD Millions)$18.8 $18.9 $22.5

Estimates comparison (Q2 2025):

  • Primary EPS Consensus Mean: $1.463* vs actual $1.49
  • Revenue Consensus Mean: $345.9M* vs actual $349.4M
  • EBITDA Consensus Mean: $43.1M* vs SPGI “actual” $36.8M; company-reported adjusted EBITDA $43.9M

Values retrieved from S&P Global.*

Segment Revenue Breakdown

Segment Revenue ($USD Millions)Q2 2024 (oldest)Q1 2025Q2 2025 (newest)
Personal Care$212.8 $258.3 $269.2
Hospice$56.0 $61.4 $62.2
Home Health$18.1 $18.0 $18.0
Total$286.9 $337.7 $349.4

KPIs

KPIQ2 2024 (oldest)Q1 2025Q2 2025 (newest)
Personal Care Billable Hours (000s)7,732 10,201 10,558
Personal Care Rev per Billable Hour ($)$27.47 $25.32 $25.49
Avg Billable Hours per Census per Month (PCS)67.7 67.4 69.8
Hospice Avg Daily Census3,477 3,515 3,720
Hospice Patient Days316,451 316,319 338,505
Hospice Rev per Patient Day ($)$179.47 $194.23 $184.92
Home Health Total Volume8,210 7,690 7,401
Home Health Visits111,053 94,593 94,692

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA Margin %FY 2025“Above 12%” 12–13% Maintained/tightened range
Effective Tax RateFY 2025Mid-20% Mid-20% Maintained
Hospice Medicare Rate UpdateFY 2026 (effective 10/1/2025)Proposed ~2.4% (implied) Final +2.6% Raised (vs proposal)
Texas PCS ReimbursementEffective 9/1/2025Watching legislative process +9.9% to $17.13/hr; ~$17.7M annualized revenue; ~20% margin New
Illinois PCS ReimbursementEffective 1/1/20265.5% increase effective 1/1/2025 already implemented +3.9% to $30.80/hr; ~$17.5M annualized revenue; low-20% margin New

Earnings Call Themes & Trends

TopicQ4 2024 (Q-2)Q1 2025 (Q-1)Q2 2025 (Current)Trend
State reimbursement (IL, TX)IL +5.5% eff. 1/1/2025; TX considering increase IL implemented; TX decision expected by early June TX +9.9% eff. 9/1/2025; IL +3.9% eff. 1/1/2026 Positive tailwind accelerating
Hospice growth & rateOrganic rev +7.8%; ADC improving Organic rev +9.9%; ADC +4.6%; rev/pt day up Organic rev +10.0%; ADC +7%; final +2.6% rate eff. 10/1 Strengthening trajectory
Home Health policyAdvocacy vs clawback; seeing small deals Watching CMS rule; MA rate progress Proposed -6.4% CY2026 cut; advocacy ongoing Macro headwind intensifies
Technology & schedulingCaregiver app rollouts planned; HCHB PCS under development IL caregiver app live; HCHB pilot continues ~90% IL adoption; rolling to NM; improving fill/service % Execution progress, early benefits
Labor environmentClinical hiring more challenging; PCS improving PCS hires 79/day; clinical tightness persists Clinical tight; PCS hiring sustained; immigration negligible impact Mixed: PCS strong, clinical constrained
Value-based & payer contractingPursuing VBC; PCS value prop Stable episodic/non-episodic mix; MA rates improving Payers discussing volume growth; case rate discussions in HH Constructive dialogue

Management Commentary

  • “Our Personal Care Services segment was the key driver… with a solid 7.4% organic revenue growth rate… supported by strong hiring trends and favorable rate support… Illinois… effective 01/01/2025. Going forward, we expect to benefit from additional rate increases in Illinois and Texas.” .
  • “The Gentiva acquisition… adding approximately $280,000,000 in annualized revenues and significantly expanding our market coverage.” .
  • “CMS… home health proposed payment rule… projects a 6.4% aggregate reduction… It is our view that this clawback is improper… will have a significant negative impact on the availability of home health care.” .
  • “We closed on our acquisition of Helping Hands Home Care… increases our personal care density… while also adding home health and hospice operations.” .
  • “We have a capital structure that supports our ability to continue investing… including acquisitions… and continue to diligently manage our net leverage ratios.” .

Q&A Highlights

  • Reimbursement environment: Despite MCO margin pressure, states remain supportive of PCS rates; Illinois & Texas passed increases; cadence may moderate over time but value recognized .
  • Hiring and technology: Caregiver app adoption (~90% in IL) improves fill rates and hours served; potential retention benefits over time; rollout underway in NM, with state-specific customization .
  • Hospice cap and sequestration: Booked >$1M cap in Q2 but manageable; management expects Congress to prevent sequestration increases from triggering Medicare cuts .
  • Margin outlook: Full-year adjusted EBITDA margin guided to 12–13% with typical Q4 expansion; Texas rate increase likely margin-neutral at ~20% segment margin .
  • M&A pipeline: Focus on tuck-ins that build PCS density and add clinical services; larger hospice assets’ multiples moderating; home health deals delayed by proposed rule overhang .
  • Clinical labor: Nurse supply constraints persist; competitive wages in institutions; Addus leverages flexibility and one-on-one care value proposition .

Estimates Context

  • Q2 2025 vs S&P Global consensus: EPS $1.49 actual beat vs $1.463*, Revenue $349.4M actual beat vs $345.9M*, SPGI “EBITDA” estimate $43.1M* compares to SPGI “actual” $36.8M — while company-reported adjusted EBITDA was $43.9M, indicating definition differences between SPGI EBITDA and company “adjusted EBITDA” .
  • Implication: Modest topline/EPS beats; investors should benchmark EBITDA using consistent definitions (GAAP vs adjusted) when assessing operating performance.

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Personal Care remains the growth engine; state rate momentum (TX, IL) plus hiring/tech execution underpin sustained same-store gains and margin stability .
  • Hospice trajectory is improving (ADC, patient days, revenue per day) with a finalized 2.6% rate uplift from October; watch manageable cap exposure and referral mix discipline .
  • Home Health faces macro headwinds (proposed -6.4% CY2026 cut/clawback); management is advocating, pursuing case-rate contracts, and prioritizing tuck-in deals less exposed to rate volatility .
  • Balance sheet supports accretive M&A; Q2 debt reduction ($30M) and net leverage <1x adjusted EBITDA preserve optionality while integrating Helping Hands .
  • Full-year margin cadence intact (12–13%); expect seasonal Q4 lift from hospice rate and payroll tax thresholds; Texas rate increase margin-neutral to slightly accretive .
  • Monitor PCS revenue per hour mix as Texas scales; technology-driven scheduling can improve service percentages and retention, partially offsetting lower bill rates .
  • Near-term catalysts: integration progress in PA, state rate implementations (TX Sep 1), hospice rate uplift (Oct 1); risks: CMS home health final rule and broader Medicaid policy developments .