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Addus HomeCare Corp (ADUS)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered broad-based outperformance: net service revenue rose 25.0% to $362.3M, adjusted EPS reached $1.56, and adjusted EBITDA increased 31.6% to $45.1M; both revenue and EPS were modest beats vs Wall Street consensus, supporting a constructive setup into Q4 . Versus consensus: revenue $362.3M vs $354.5M estimate (+$7.8M), EPS $1.56 vs $1.53 estimate (+$0.02) [Values retrieved from S&P Global]*.
  • Personal Care drove the quarter (76.1% of revenue) with 6.6% organic growth aided by a 9.9% Texas rate increase effective 9/1 and stable hiring; Hospice posted 19.0% organic growth on admissions and ADC strength; Home Health remained a small, complementary service with revenue down 2.8% organically .
  • Management guided to seasonal margin strength in Q4: gross margin tailwinds (+40 bps from hospice rate update) and lower unemployment taxes (+20 bps), with adjusted EBITDA margin expected to be ≥13% (vs ~12.5% in Q3), underpinning near-term estimate support .
  • Capital and M&A remain catalysts: Del Cielo Personal Care acquisition closed 10/1 ($12.5M annualized revenue), Helping Hands closed 8/1, net leverage under 1x adjusted EBITDA, and ample revolver capacity ($650M) to pursue further tuck-ins, particularly in Texas PCS and overlapping clinical markets .

What Went Well and What Went Wrong

What Went Well

  • PCS growth and funding tailwinds: “Our personal care business was the key driver… with 6.6% organic revenue growth… including a recent 9.9% rate increase in Texas effective September 1, 2025” . Personal Care revenue reached $275.8M (76.1% of total) .
  • Hospice momentum with improved cap cushion: “Hospice… has continued to improve… with solid 19.0% organic revenue growth driven by increases in admissions, ADC, patient days and revenue per patient day” and no additional cap liability accrued in Q3 .
  • Strong cash generation and collections: Operating cash flow of $51.3M in Q3; DSOs improved to 35 days overall and 32.5 days for Illinois DoA, supporting debt paydown and flexibility .

What Went Wrong

  • Home Health softness and regulatory uncertainty: Same-store Home Health revenue fell 2.8% YoY; CMS proposed a 6.4% Medicare payment reduction for CY2026, tempering M&A appetite until rates are finalized .
  • Sequential gross margin drift: Gross margin declined to 32.2% from 32.6% in Q2, attributed primarily to one extra holiday in the quarter .
  • Higher net interest expense YoY: Net interest expense was $2.6M in Q3 2025 vs a net benefit in Q3 2024, reflecting higher debt costs despite ongoing deleveraging .

Financial Results

Quarterly Financials and Margins

MetricQ3 2024Q2 2025Q3 2025
Net Service Revenues ($USD Millions)$289.8 $349.4 $362.3
Diluted EPS (GAAP) ($)$1.10 $1.20 $1.24
Adjusted EPS ($)$1.30 $1.49 $1.56
Gross Margin (%)31.8% 32.6% 32.2%
Operating Income ($USD Millions)$26.0 $32.9 $32.9
Adjusted EBITDA ($USD Millions)$34.3 $43.9 $45.1
Cash from Operations ($USD Millions)$48.5 $22.5 $51.3

Results vs Wall Street Consensus (S&P Global)

MetricQ3 2025 ActualQ3 2025 Consensus*Surprise
Revenue ($USD Millions)$362.3 354.5*+$7.8; Beat
Primary EPS Consensus Mean ($)$1.56 1.534*+$0.02; Beat

Values retrieved from S&P Global*

Segment Net Service Revenue

SegmentQ3 2024 ($MM)Q2 2025 ($MM)Q3 2025 ($MM)
Personal Care$215.4 $269.2 $275.8
Hospice$57.3 $62.2 $68.9
Home Health$17.0 $18.0 $17.6
Total$289.8 $349.4 $362.3

Operating KPIs

KPIQ3 2024Q2 2025Q3 2025
PCS Billable Hours (000s)7,776 10,558 10,855
PCS Revenue per Billable Hour ($)$27.66 $25.49 $25.40
PCS Avg Billable Hours per Census per Month68.7 69.8 72.0
Hospice Admissions3,105 3,260 3,326
Hospice Average Daily Census3,534 3,720 3,889
Hospice Patient Days325,160 338,505 357,221
Hospice Revenue per Patient Day ($)$176.25 $184.92 $191.66
Home Health New Admissions4,437 4,568 4,577
Home Health Visits104,730 94,692 90,639

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA Margin (%)Q4 2025~12% “solidly in 12% all year” ≥13% expected in Q4 Raised
Gross Margin TailwindQ4 2025Not specified~+40 bps from Hospice reimbursement update; ~+20 bps sequential from lower unemployment taxes New detail
Effective Tax Rate (%)FY 2025Mid-20% range Mid-20% range Maintained
Hospice Reimbursement RateEffective 10/1/2025 (FY 2026 rates)Proposed update+3.1% expected realized based on mix Raised
Texas PCS RateEffective 9/1/2025Prior rates+9.9% statewide increase Raised
Illinois PCS RateEffective 1/1/2026Prior rates+3.9% announced, subject to federal approvals Raised
DividendN/ANoneNone mentionedMaintained

Earnings Call Themes & Trends

TopicQ1 2025 (Prior-2)Q2 2025 (Prior-1)Q3 2025 (Current)Trend
PCS rate environmentIL +5.5% effective 1/1; PCS organic +7.4% PCS organic +7.4%; strong hiring; integration of Gentiva TX +9.9% effective 9/1; IL +3.9% announced for 1/1/26; PCS organic +6.6% Strengthening tailwinds
Hiring and technologyInvesting in systems/tools, scheduling platform Continued stable hiring Caregiver App rollout boosting utilization; hires/day at 113 (+6.6% QoQ) Improving execution
Hospice operational executionOrganic +9.9%; ADC, RPPD up Organic +10%; ADC and patient days up Organic +19%; cap cushion improved; no cap accrual Accelerating growth
Home Health rates/regulatoryComplementary to PCS/Hospice Focus on episodic MA; admissions stabilizing CY2026 proposed -6.4% Medicare cut; deal appetite moderated until clarity External headwind
M&A pipelineGentiva closed 12/2/24 Helping Hands closed 8/1/25 Del Cielo PCS closed 10/1/25; low multiples in PCS; clinical deals pricier Active, disciplined
Medicaid/OBRA dialogueValue and cost-effectiveness of home care Recognition by payers of home-based care value OBRA pressures; VBC contracts show cost savings (ER, readmits, SNF avoidance) Constructive advocacy
EMR integrationN/AN/AMoving PCS to Homecare Homebase; goal of unified bridge across care levels Building infrastructure
Cash/DSOs/leverageOCF $18.9M; cash $97M OCF $22.5M; cash $91M OCF $51.3M; DSOs down; net leverage <1x Adj. EBITDA Strengthening balance sheet

Management Commentary

  • Dirk Allison: “Our third quarter results reflect the continued strong momentum… with net service revenues up 25.0% and adjusted EBITDA up 31.6% over the third quarter of 2024… favorable demand trends… value and cost benefits of home-based healthcare services” .
  • Allison on segments: “Our personal care business was the key driver… 76.1% of revenues… 6.6% organic revenue growth… 9.9% rate increase in Texas… Hospice accounted for 19.0% of revenue… has continued to improve… Home health represents our smallest business segment… integral part of our strategy to offer three levels of home-based care” .
  • Brian Poff: “Adjusted EBITDA margin was 12.5%… Looking ahead… expect normal seasonality in Q4 with Hospice reimbursement update to benefit gross margin by ~40 bps and ~20 bps sequential from lower unemployment taxes… tax rate mid-20%” .
  • Allison on strategy: “We have a strong competitive advantage with a proven and scalable operating model and the ability to offer the full continuum of home-based care in select markets” .

Q&A Highlights

  • Caregiver App and utilization: Rollout in IL boosting fill rates; expansion to NM and TX expected to improve hours served; over one-third of PCS same-store revenue growth in Q3 came from billable hours increases .
  • Margin trajectory and Q4 setup: Management affirmed typical Q4 seasonality with adjusted EBITDA margin ≥13% and gross margin support from hospice rate update and lower unemployment taxes .
  • Home Health outlook and M&A: Proposed -6.4% CY2026 rate cuts depress deal appetite; company will focus on small overlapping opportunities; maintaining discipline with potential larger 2026 opportunities .
  • Hospice cap and revenue per patient day: No cap accrual in Q3; sequential benefit to revenue per patient day; balanced referral mix improvements continue .
  • Payers/Medicaid under OBRA: Addus positioning PCS as cost-saving vs institutional care through VBC protocols (lower ER, readmits, SNF costs), advocating for support in state budgets .

Estimates Context

  • Q3 2025 results were slight beats vs consensus: revenue $362.3M vs $354.5M estimate; EPS $1.56 vs $1.53 estimate. Tailwinds (TX +9.9% PCS rate, hospice +3.1% reimbursement, stable hiring) and Q4 margin comments likely bias near-term EPS revisions upward . Consensus data from S&P Global*.
  • Forward quarters: Q4 2025 consensus revenue $372.9M; EPS $1.72*. Management’s ≥13% adjusted EBITDA margin commentary and gross margin tailwinds could support modest EPS upside if execution holds . Values retrieved from S&P Global*.

Key Takeaways for Investors

  • Mix-led resilience: PCS funding (TX +9.9%; IL +3.9% in 2026) and stable hiring underpin volume and pricing; Hospice showing sustained organic strength, offsetting Home Health uncertainty .
  • Near-term margin upside: Q4 seasonal pattern plus hospice rate update and lower unemployment taxes set the stage for ≥13% adjusted EBITDA margin in Q4, a constructive backdrop for tactical longs into earnings season .
  • Cash flow and balance sheet optionality: Strong OCF ($51.3M) and net leverage <1x adjusted EBITDA provide capacity for continued tuck-in M&A, particularly in PCS-heavy states like Texas .
  • Strategy execution: Overlapping PCS/Home Health/Hospice footprint is driving internal referrals (e.g., 25%+ of hospice admissions in NM/TN from Home Health), supporting structurally higher hospice growth .
  • Regulatory watch: CY2026 Home Health proposed cuts are an external overhang; company remains cautious on larger Home Health deals pending clarity, limiting near-term clinical M&A risk .
  • Technology leverage: Caregiver App and EMR unification (Homecare Homebase) aim to improve utilization and enable cross-level care “bridging,” potentially enhancing PCS volumes and referral efficiency over time .
  • Valuation catalysts: Continued organic growth, visible Q4 margin lift, and accretive PCS tuck-ins (low multiples) in Texas/other states are near-term stock drivers; monitor PCS rate actions and hospice reimbursement updates for upside signals .

Notes: Consensus values marked with an asterisk are from S&P Global and do not carry document citations.