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Addus HomeCare Corp (ADUS)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 net service revenue was $297.1M (+7.5% YoY), adjusted EBITDA $37.8M (+10.3% YoY), and adjusted diluted EPS $1.38 (+4.6% YoY); GAAP diluted EPS was $1.07, impacted by a $4.97M lease impairment and $7.03M acquisition costs .
  • Segment mix: Personal Care 74.1% of revenue (organic +5.8% YoY), Hospice 19.9% (organic +7.8% YoY), Home Health 6.0% (organic +1.6% YoY) .
  • Gentiva Personal Care acquisition closed Dec 2, 2024, adding ~$280M annualized revenue; integration proceeding smoothly, making Addus the largest personal care provider in Texas and Arkansas—an expansion that supports value-based contracting and scale benefits .
  • Management guides to a ~200 bps sequential gross margin decline in Q1 2025 (payroll tax reset, merit increases, and mix shift from full-quarter Gentiva and Illinois rate increase), tax rate mid-20s for 2025, and free cash flow of ~$115–$120M for 2025; EBITDA margin expected to follow typical seasonal cadence (Q1 low, gradual step-up to Q4) .
  • Wall Street consensus (S&P Global) was unavailable due to access limits; beat/miss vs estimates cannot be assessed this quarter.*

What Went Well and What Went Wrong

What Went Well

  • Personal Care organic revenue growth of 5.8% with strong hiring and favorable state rate support; “Our personal care services have been the key driver of our business” (Dirk Allison) .
  • Hospice strengthened: ADC rose to 3,472, revenue per patient day up 5.6% YoY to $185.95, aided by the Oct 1, 2024 Medicare hospice rate update; “We achieved 7.8% organic revenue growth… and higher ADC, patient days and revenue per patient day” (Brian Poff) .
  • Gentiva PCS integration largely smooth with payroll/benefits transitioned day 1; expanded seven-state coverage and entry into Texas at scale; “We took over operations… with minimal disruption” (Allison) .

What Went Wrong

  • GAAP EPS declined YoY to $1.07 (from $1.20) due to one-time lease impairment ($4.97M) and acquisition expenses ($7.03M); adjusted EPS rose to $1.38 .
  • Average Personal Care revenue per billable hour fell to $26.40 from $27.66 sequentially, largely driven by lower Texas reimbursement rates in Gentiva PCS; “Texas reimburse rate is a little under $17 an hour… expect average per hour down” (Poff) .
  • Medicaid redeterminations slowed PCS hours and admissions in certain markets (especially northern Illinois), leaving sequential PCS volume flat; management expects normalization as redeterminations conclude .

Financial Results

Quarterly progression vs prior periods

MetricQ2 2024Q3 2024Q4 2024
Net Service Revenues ($M)$286.9 $289.8 $297.1
GAAP Diluted EPS ($)$1.10 $1.10 $1.07
Adjusted Diluted EPS ($)$1.35 $1.30 $1.38
Gross Margin %32.5% 31.8% 34.2%
Adjusted EBITDA ($M)$35.3 $34.3 $37.8
Adjusted EBITDA Margin %12.3% 11.8% 12.9%

YoY snapshot (Q4 2024 vs Q4 2023)

MetricQ4 2023Q4 2024
Net Service Revenues ($M)$276.4 $297.1
GAAP Diluted EPS ($)$1.20 $1.07
Adjusted Diluted EPS ($)$1.32 $1.38
Gross Margin %33.4% 34.2%
Adjusted EBITDA ($M)$34.3 $37.8

Segment revenue and mix

SegmentQ2 2024 ($M)Q3 2024 ($M)Q4 2024 ($M)
Personal Care$212.8 $215.4 $220.3
Hospice$56.0 $57.3 $59.0
Home Health$18.1 $17.0 $17.8
Mix (% PC/Hospice/HH)74.2/19.5/6.3 74.3/19.8/5.9 74.1/19.9/6.0

Selected KPIs

KPIQ2 2024Q3 2024Q4 2024
Personal Care billable hours (000s)7,732 7,776 8,210
PC revenue per billable hour ($)$27.47 $27.66 $26.40
Hospice average daily census3,477 3,534 3,472
Hospice revenue per patient day ($)$179.47 $176.25 $185.95
Home Health new admissions4,933 4,437 4,365

Estimates vs actuals

MetricQ4 2024 ConsensusQ4 2024 Actual
Revenue ($M)N/A (S&P Global consensus unavailable)*$297.1
GAAP Diluted EPS ($)N/A (S&P Global consensus unavailable)*$1.07
Adjusted Diluted EPS ($)N/A (S&P Global consensus unavailable)*$1.38

*Values retrieved from S&P Global were unavailable due to access limits; beat/miss cannot be assessed this quarter.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Gross Margin % (sequential)Q1 2025 vs Q4 2024N/A~200 bps decline expected (payroll taxes, merits, mix from full-quarter Gentiva & IL rate increase) New detail
Tax RateFY 2025Mid-20s (implied)Mid-20% range maintained Maintained
Free Cash Flow ($M)FY 2025N/A~$115–$120 New target
Adjusted EBITDA Margin cadenceFY 2025 seasonalityN/AQ1 lowest; +30–40 bps into Q2; Q3 ~flat; Q4 best Seasonal framework reiterated
Illinois Personal Care rate impactFY 2025N/A+$23M annualized revenue; margin low-20s (77% rule) New detail
Segment mix commentaryQ1 2025N/AGentiva (Texas) mix lowers average PC bill rate; IL rate offsets partially New detail

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2024)Trend
Technology initiatives (caregiver app, scheduling)Operational tools improved hiring/onboarding and scheduling; incremental gains expected App fully rolled out in Illinois, expanding to NM; strong caregiver adoption improving hours served vs authorized Improving operational leverage
Policy/Medicaid/FM­APHospice +2.9% final rate; home health proposed cuts; 80/20 discussions and state budget stability Detailed FMAP/cap discussion; management confident ADUS as low-cost provider will be resilient; Senate path seen difficult Heightened policy focus; constructive stance
Value-based careData demonstrates lower ER visits/readmits; Texas entry boosts VB prospects Expect VB arrangements to expand with larger TX presence; strengthens payer relationships Expanding, relationship-driven
Hospice performanceADC up; rate lift expected to benefit Q4; admissions softness addressed via sales changes Organic revenue +7.8% YoY; ADC up; revenue per patient day up; sales retraining completed Improving
Medicaid redeterminationsSlowed PCS approvals; expected normalization by Q4 Northern IL remains impacted; process nearing end; admissions improved in January Easing
Gentiva integrationPending close; rationale: scale & value-based potential; pipeline commentary Closed Dec 2; day-1 payroll/benefits; billing/scheduling conversion in ~18 months; accretive Integration on track

Management Commentary

  • “Our fourth quarter financial and operating performance marked a strong finish… Revenues were up 9.1% to reach $1.15 billion” (Allison) .
  • “We achieved 7.8% organic revenue growth [in hospice] and higher average daily census, patient days and revenue per patient day” (Poff) .
  • “We took over operations of this large PCS business with minimal disruption… experienced a smooth process” (Allison on Gentiva PCS) .
  • “Cumulatively, we expect [Q1 gross margin] items to contribute a decline… of approximately 200 basis points compared to Q4 2024” (Poff) .
  • “We believe… Addus is in the right place… low-cost provider… in the home” (Allison on FMAP/Medicaid changes) .

Q&A Highlights

  • Texas mix and revenue per hour: average PC revenue per hour declined with Gentiva’s Texas rates (~<$17/hr reimburse), partially offset by Illinois +5.5% rate; net slight down sequentially expected (Q4→Q1) .
  • PCS volumes/hours: YoY PCS hours up just under 1%; sequential flat; target 2.0–2.5% hours growth via app-driven scheduling/utilization and hiring; redeterminations easing .
  • Margin outlook: Q1 gross margin down ~200 bps sequentially; seasonal EBITDA margin cadence reiterated; hospice and NY exit benefit margins over year .
  • Gentiva integration timeline: billing/scheduling system conversion in ~18 months; cash flow conversion stable; $5.6M investment banking/professional fees included in ~$7M acquisition expense .
  • Capital allocation/FCF: 2025 free cash flow ~$115–$120M; debt paydown continuing; M&A remains priority .
  • Operational impacts: January storms caused modest PCS hour disruptions; flu season impact immaterial; PCS turnover ~50–55%, improving with “preferred worker” mix in Texas .

Estimates Context

  • We attempted to pull S&P Global (Capital IQ) consensus for EPS, revenue, EBITDA for Q2–Q4 2024, but access limits prevented retrieval; therefore, beat/miss vs Wall Street estimates cannot be assessed this quarter.*
  • Given Gentiva mix shift and Illinois rate increase, Street models may need to reflect lower average PC bill rates but higher gross margin dollars, and the ~200 bps Q1 gross margin headwind from payroll taxes and merit increases .

*Values retrieved from S&P Global were unavailable due to access limits.

Key Takeaways for Investors

  • Q4 delivered solid top-line and adjusted profitability with notable hospice strength and continued PCS growth; GAAP EPS was dampened by one-time lease impairment and acquisition costs .
  • Mix shift from Gentiva PCS (Texas) lowers average PC revenue per hour, but statewide rate increases (e.g., Illinois) and full-quarter Gentiva should boost gross margin dollars even as gross margin % faces near-term pressure .
  • Expect Q1 2025 margin headwinds (~200 bps) from payroll tax resets and merits; model seasonal cadence with recovery through the year and Q4 strongest .
  • Integration of Gentiva is on track; system conversion slated ~18 months; expanded TX presence should support value-based care arrangements and long-term organic growth .
  • Policy backdrop (FMAP/Medicaid changes) remains fluid; management sees ADUS’s home-based, low-cost model as well-positioned to withstand potential changes and even benefit from efficiency-focused initiatives .
  • 2025 free cash flow targeted at ~$115–$120M with ongoing debt reduction, leaving capacity for accretive M&A; watch pipeline for small clinical deals and further PCS density in Texas .
  • Tactical implication: near-term margin softness is well-telegraphed; focus on sustained revenue growth, hospice rate tailwinds, and integration execution as catalysts through 2025 .