Addus HomeCare Corp Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Acquisition Update: The Gentiva personal care acquisition closed on December 2, 2024. Integration was smooth with minimal disruption, and the new leadership team from Gentiva was oriented with Addus systems.
• Corporate Office Leave Write-off: A one-time write-off of approximately $4.9 million was recorded due to excess corporate office space after the pandemic and acquisition changes.
• Labor and Hiring: Personal care hiring was 76 hires per day in Q4 2024, up 2 hires per day from Q4 2023. Hospice same store revenue grew 7.8%, and home health same store revenue grew 1.6%.
• Medicaid Considerations: Discussed potential Medicaid program changes, including per capita caps, FMAP floor, etc. Believes Addus is well-positioned to handle any changes due to its position in the home care market.

Segment Performance

• Personal Care: Fourth quarter 2024 revenue was $216.9 million, accounting for 73.8% of total revenue. Organic revenue growth was 5.8%. Benefited from a 5.5% rate increase in Illinois effective January 1, 2025, contributing approximately $23 million in annualized revenue. Excluded New York operations divestiture and $3.5 million in retroactive New York rate increases.
• Hospice: Fourth quarter 2024 revenue was $59 million, 20.1% of total revenue. Organic revenue growth was 7.8%. Average daily census increased to 3,472, up from 3,381 in the same period last year. Same store average daily census grew 2.7%.
• Home Health: Fourth quarter 2024 revenue was $17.8 million, 6.1% of total revenue. Organic revenue growth was 1.6%.

Guidance

• Revenue Growth: Targeted minimum annual revenue growth of 10%. First quarter 2025 expected to benefit from Illinois rate increase and Gentiva revenue, partially offset by seasonal factors.
• Margin Expectations: Anticipated 200 basis point margin decline from Q4 2024 to Q1 2025 due to Gentiva mix, payroll taxes, and merits.
• Acquisitions: Continue to pursue strategic acquisitions in 2025, focusing on personal care assets and adding clinical services to expand market reach.

Risks

• Medicaid Program Changes: Uncertainty around potential cuts to federal Medicaid funding, which could impact state reimbursements.
• Labor Market Challenges: Continued challenges in hiring and retaining caregivers, especially in clinical segments.
• Legislative Uncertainty: Impact of potential Medicaid policy changes on reimbursement and operations.

Question and Answer Q: How are average revenue per hour and volumes in personal care performing?

A: Brian Poff and Brad Bickham discussed Texas bill rates, Gentiva integration impact, and volume growth expectations.

Q: What's the progress on the integration of Gentiva?

A: Brad Bickham provided updates on Gentiva integration, including payroll and benefits integration and plans for billing/scheduling system conversion.

Q: What's the outlook for hospice revenue and margins?

A: Brian Poff discussed hospice revenue growth, mix shifts, and margin expectations related to Medicare rate increases and implicit price concessions.