Addus HomeCare (NASDAQ:ADUS) held its first-quarter earnings conference call on Tuesday. Below is the complete transcript from the call.
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Summary
Addus HomeCare reported Q1 2026 revenue of $363.6 million, a 7.7% increase from Q1 2025, with an adjusted EPS of $1.62, up 14.1%.
The company reduced its bank debt to $94.3 million and has $103 million in cash, providing financial flexibility for acquisitions.
Addus HomeCare closed a significant acquisition in Indiana, marking entry into a new market, and expects another acquisition in the state soon.
Operational highlights include a 6.5% same-store revenue growth in personal care and 7.7% in hospice care, with positive hiring trends.
Management remains optimistic about future growth, supported by strategic acquisitions and favorable regulatory developments.
Full Transcript
OPERATOR
Good morning and welcome to the Addus HomeCare’s first quarter 2026 earnings call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s remarks, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Drew Anderson. Please go ahead.
Drew Anderson (Moderator)
Thank you. Good morning and welcome to the Addus HomeCare Corporation first quarter 2026 earnings conference call. Today’s call is being recorded to the extent any non GAAP financial measure is discussed. In today’s call, you will find a reconciliation of that measure to the most directly comparable financial measure calculated according to GAAP by going to the Company’s website and reviewing yesterday’s news release. This conference call may also contain forward looking statements within the meaning of the Private Securities Litigation Reform act of 1995, including statements, among others, regarding Addus expected quarterly and annual financial performance for 2026 or beyond. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward looking statements. Without limiting the foregoings, discussions of forecasts, estimates, targets, plans, beliefs, expectations and the like are intended to identify forward looking statements. You are hereby cautioned that these statements may be affected by important factors, among others set forth in Addus filings with the Securities and Exchange Commission and in its first quarter news release. Consequently, actual operations and results may differ materially from the results discussed in the forward looking statements. The Company undertakes no obligation to update any forward looking statements, whether as a result of new information, future events or otherwise. I would now like to turn the call over to the Company’s Chairman and Chief Executive Officer, Mr. Dirk Allison. Please go ahead, sir.
Dirk Allison (Chairman and Chief Executive Officer)
Thank you, Drew. Good morning and welcome to our 2026 first quarter earnings call. With me today are Brian Popp, our Chief Financial Officer, and Heather Dixon, our President and Chief Operating Officer. As we do on each of our quarterly earnings calls, I will begin with a few overall comments and then Brian will discuss the first quarter results in more detail. Following our comments, the three of us would be happy to respond to any questions. As we announced yesterday afternoon, our total revenue for the first quarter of 2026 was $363.6 million, an increase of 7.7% as compared to $337.7 million for the first quarter of 2025. This revenue growth resulted in an adjusted earnings per share of $1.62 as compared to adjusted earnings per share for 1Q25 $1.42, an increase of 14.1%. Our adjusted EBITDA was $44.5 million compared to 40.6 million for the first quarter of 2025, an increase of 9.7% for the first quarter of 2026. Cash flow from operation was $52.4 million as compared to $18.9 million for the same period in 2025. As of March 31, 2026, we had cash on hand of approximately $103 million. With our strong cash flow in the first quarter, we reduced our bank debt to $94.3 million, leaving us with the financial flexibility to consider larger acquisitions as we continue to pursue expansion of our market reach and creating geographic density. During the first quarter we saw an impact on revenue due to the widespread weather event that occurred towards the end of January. Our team did a good job of rescheduling affected personal care visits where possible. However, we could not make up for every weather impacted missed visit. While the amount of the revenue was immaterial to our company, overall, we did see a loss of revenue of approximately $1.5 million as a result of these storms. However, February and March returned to our normalized revenue expectations. As we announced on May 1, we closed on the acquisition of the personal care operations of Homecourt Homecare based in Fort Wayne, Indiana. This acquisition marks our entry into an attractive state which is adjacent to our largest personal care market of Illinois. We have been interested in Indiana for some time as over the past three years they increase rates and work to eliminate client wait lists. I’m excited to welcome all of our new team members from Homecourt Homecare. We have also entered into a definitive purchase agreement for an additional personal care operation in Indiana which will complement Homecourt Homecare. We anticipate that this additional Indiana acquisition should close in the coming months subject to customary regulatory approvals. These two acquisitions continue our strategy of entering new markets with scale and where we have the ability to expand our services. As we mentioned on our last earnings call, the State of Illinois increased our rates in personal care service effective on January 1, 2026, adding approximately $17.5 million in annualized revenues. This most recent rate increase continues to show the important support we are receiving from our state partners as we continue to provide these much needed services to to our elderly and disabled clients. We also understand the New Mexico Legislature included increased funding of $10 million for home and community based services in the budget for the upcoming fiscal year. We are waiting for communications from the New Mexico Medicaid Department regarding how and to which programs the funding will be expended. As we’ve stated before, we continue to believe that the 80:20 provision of the CMS Medicaid Access Rule will be eliminated in the near future. While implementation is still several years away and has no current impact on our business or financial performance, we believe this outcome would be an encouraging development for both our industry and our company. All our recent communications indicate that this part of the Medicaid Access Rule is expected to be eliminated this year. During the first quarter of 2026, we continued to experience positive hiring trends in our personal care segment. Our number of hires per business day in the first quarter of 2026 was 108, up sequentially from 103 hires per day in the fourth quarter of last year and consistent with the first quarter of 2025. We achieved this number in spite of the impact of the weather eventually. I mentioned earlier, as we have mentioned in the last few quarters, our clinical hiring remains consistent and has been mostly stable outside of a few of our urban markets. However, even in those markets we have been able to staff our operations appropriately. Now let me discuss our same store revenue growth for the first quarter of 2026. For our personal care segment, our same store revenue growth was 6.5% compared to the first quarter of 2025. During the first quarter 2026, we saw personal care same store hours increase by 2.2% compared to the same period in 2025, while our percentage of authorized hours served in the first quarter remained consistent with what we experienced in the fourth quarter of 2025. On a sequential basis, personal care same store census was down slightly, partially due to the weather we mentioned before. However, during the first quarter we saw growth in clients served in Illinois, our largest market, which is something we had anticipated for a while. This is important as we look to achieve year over year census growth during 2026. Turning to our clinical operations, our hospice same store revenue increased 7.7% compared to the first quarter of 2025. Our average daily census increased to 3,804 for the first quarter, up from 3,515 for the same period last year, an increase of 8.2% for the first quarter of 2026. Our hospice medium length of stay was 23 days as compared to 25 days for the fourth quarter of 2025 and 19 days for the first quarter of 202025 we are very pleased by the continued growth in our hospice segment over the past several quarters. While our home health same store revenue decreased when compared to the same quarter of 2025, our home health operating income improved over last year’s first quarter and sequentially versus the fourth quarter of 2025. It is also important to understand that over 25% of our hospice admissions in New Mexico and now Tennessee are coming from our own ADDAS home health operations which overlap in these two markets. As we continue to focus on our BRIDGE program, we are pleased to see more patients receiving the benefit of the full continuum of post acute home based care and anticipate seeing similar clinical teamwork to be in Illinois where we also have both home health and hospice operations. We continue to believe that size and scale are important to healthcare services and have been the focus of our strategy for the past 10 years. We continue to evaluate opportunities which would increase both density and geographic coverage as well as seek to further strengthen our relationships with states and managed care organizations. Recently we have begun to see an increasing number of personal care opportunities. Due to our focus on maintaining a conservative balance sheet, we have the ability to actively pursue these transactions. Recently there appears to be more optimism around home health care due to the final home health rule for 2026 being more favorable than was originally proposed. While there is still some uncertainty about the future rate increases, there does seem to be more potential activity in home health care. While we will be open to home health opportunities, we will continue to be diligent as we evaluate possible transactions to further our strategy. Before I turn the call over to Brian, it is important that I thank the Addus team for the care they are providing to our elderly and disabled consumers and patients. We all have come to understand that the majority of this population prefers to receive care at home, which not only remains one of the safest but also the most cost effective places to receive this care. We believe the heightened awareness of the value of home based care is favorable for our industry and will continue to be a growth opportunity for our company. We understand and appreciate that our operations and growth are dependent on both our dedicated caregivers and and other employees who work so incredibly hard providing outstanding care and support to our clients, patients and their families. With that, let me turn the call over to Brian.
Brian Popp (Chief Financial Officer)
Thank you Dirk and good morning everyone. The first quarter of 2026 marked a solid start to a new year for Addus HomeCare. The results for the quarter reflect our continued ability to execute our strategy and deliver consistent growth. Results were highlighted by a 7.7% increase in top line revenue to $363.6 million and a 9.7% increase in adjusted EBITDA to $44.5 million when compared with the first quarter of 2025. Our Personal Care Services segment, which accounted for 77.3% of our revenues, was a key driver of our business. Revenues for the segment grew to $281.1 million, an increase of 8.8% overall and an increase of 6.5% on a same store basis compared to the same quarter last year. We are continuing to see contributions from our acquisition of Gentiva personal care operations in late 2024 and the acquisitions of Helping Hands Home Care Services and Del Ciella Home Care, both of which were acquired in the back half of 2025. The revenues of Gentiva personal care operations are included in our same store numbers for the first time this quarter. In addition to higher volumes, we are continuing to benefit from rate support in some of our key state markets, including our two largest in Illinois and Texas. Our first quarter results included the impact of the 3.9% rate increase in Illinois which became effective on January 1, 2026 as well as the 9.9% rate increase in Texas that became effective on September 1, 2025. Our hospice care business continued to perform well and accounted for 18.1% of revenues for the first quarter. Our hospice revenues were $65.8 million with a same store increase of 7.7% over the same period last year and year over year improvement in average daily census for the period. Home Health Services, our smallest segment, accounted for 4.6% of first quarter revenue at $16.7 million. We continue to look for ways to support and expand our home health service line including through acquisitions as we believe important synergies can be realized by offering multiple levels of home based care in the markets we serve. Yesterday we announced two transactions in Homecourt Homecare, based in Fort Wayne which closed on May 1st, and the signing of a definitive agreement to acquire additional operations of a similar size in the state. Currently, Home court serves approximately 240 clients with annual revenues of approximately $9.7 million. We anticipate our second acquisition in the state will close later this year. We believe our announced expansion into Indiana, a new market for attas, is aligned with our strategy of broadening our geographic coverage with density and scale. Our team looks forward to welcoming the clients and caregivers to the Addas family. We intend to provide additional details on the second acquisition when regulatory considerations permit. Strategic opportunities will continue to play a role in our long term growth planning. Our primary focus will be on identifying opportunities where we can leverage geographic coverage and density providing us with a competitive advantage. We will also seek opportunities to add services to meet our ultimate objective of offering multiple levels of care in the markets we serve. With our size and expanding scale and the support of a strong balance sheet, we are well positioned to execute our strategy. As Dirk noted, total net service revenues for the first quarter were $363.6 million. The revenue breakdown is as Personal Care revenues were $281.1 million or 77.3% of revenue Hospice Care revenues were $65.8 million or 18.1% of revenue and Home Health revenues were $16.7 million or 4.6% of revenue. Other financial results for the first quarter of 2026 include the Our gross margin percentage was 31.9% consistent with the first quarter of 2025. As usual, our gross margin was affected in the first quarter by our annual merit increases and the annual reset of payroll taxes. Looking forward, we anticipate our gross margin percentage will remain relatively stable and consistent with our historical annual pattern. G&A expense was 21.4% of revenue compared with 21.7% of revenue for the first quarter a year ago. Adjusted G&A expense for the first quarter was 19.6% compared with 19.9% a year ago. As we continue to generate leverage from our growing revenue base, the company’s adjusted EBITDA for the first quarter of 2026 was $44.5 million compared with $40.6 million a year ago, an increase of 9.7%. Adjusted EBITDA margin was 12.2% compared with 12% for the first quarter of 2025. Consistent with 2025, we anticipate our adjusted EBITDA margin percentage for the full year will remain above 12%. Adjusted net income per diluted share was $1.62 compared with $1.42 for the first quarter of 2025. The adjusted per share results for the first quarter of 2026 exclude the acquisition expenses of $0.06 and non cash stock based compensation expense of $0.20, including the impact of accelerated vesting for the previously announced retirement of our former President and COO. The adjusted per share results for the first quarter of 2025 exclude the acquisition expenses of $0.13 and non cash stock based compensation expense of $0.13. Our effective tax rate for the first quarter of 2026 was 22.7%. Benefiting from the excess tax benefit related to our stock compensation for the full year 2026, we expect our tax rate to be in the mid 20% range. Day Sales Outstanding (DSOs) were 36.3 days at the end of the first quarter of 2026, compared with 38.2 days at the end of the fourth quarter of 2025, with Day Sales Outstanding (DSOs) for the Illinois Department of Aging at 47.4 days, compared with 54.7 days at the end of the fourth Quarter of 2025. As expected, we saw resolution in some of the normal timing differences in payment cycles we experienced around year end. Our net cash flow from operations was $52.4 million for the first quarter of 2026, a strong start to the year. As of March 31, 2026, the company had cash of $103.1 million with capacity and availability under our revolving credit facility of $650 million and $547.8 million, respectively. Total bank debt was $94.3 million at the end of the quarter, a reduction of 30 million from the end of the fourth quarter of 2025. We have continued to reduce our revolver balance in the second quarter of 2026, with $10 million paid to date. We have a capital structure that supports continued pursuit of our strategic initiatives. Looking ahead, we expect to maintain our disciplined capital allocation strategy and continue to diligently manage our net leverage ratio while also focusing on enhancing shareholder value. This concludes our prepared comments this morning and thank you for being with us. I’ll now ask the operator to please open the line for your questions.
OPERATOR
Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you’re using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. In the interest of time, please limit yourself to one question and one follow up. this time, we’ll pause momentarily to assemble our roster. Our first question comes from Brian Tankweloot from Jefferies. Please go ahead.
Brian Tankweloot (Equity Analyst)
Good morning, good morning, guys. Maybe I’ll start Dirk when we think about the caregiver app rollout, I know that’s something that you’re working on in Texas. How do you think about the progress there and what it will take to get it to where you want it to be as quickly as possible? And then what are the expected benefits from that? I mean, how do we think about the P&L translation of this app rollout and why it’s so important.
Heather Dixon …
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