Addus HomeCare (ADUS) Q2 2024 earnings summary

Executive summary

• Q2 2024 net service revenues grew 10.4% year-over-year to $286.9 million, with adjusted EPS of $1.35 (up 26.2%) and net income of $18.1 million (up 21.7%).

• Adjusted EBITDA rose 24.7% to $35.3 million, and cash at quarter end was $173.3 million after repaying all outstanding debt.

• Growth was driven by higher rates in personal care, organic expansion, and acquisitions, with all three segments showing revenue gains.

• Completed a $175.6 million public offering, using $81.4 million to repay debt and the remainder to fund the pending $350 million Gentiva acquisition.

• Entered agreement to divest New York operations for up to $23 million, with transition ongoing as regulatory approvals are received.

Financial highlights

• Q2 2024 net service revenues: $286.9 million (up 10.4% year-over-year); adjusted EBITDA: $35.3 million (up 24.7%); net income: $18.1 million (up 21.7%).

• Gross margin improved to 32.5% from 31.7% last year, driven by a higher mix of clinical services and strong cash collections.

• Cash at June 30, 2024: $173.3 million; no outstanding revolving credit facility borrowings; $496.4 million to $504.4 million credit capacity.

• Net cash from operations for six months: $57.5 million; DSO at 36 days at June 30, 2024.

• Adjusted EBITDA margin was 12.3%, up from 10.9% a year ago.

Outlook and guidance

• Gentiva acquisition expected to close in Q4 2024, expanding presence in seven states and making the company the largest provider in Texas.

• Full-year 2024 adjusted EBITDA margin expected in the high 11%-12% range.

• Sequential margin compression anticipated in Q3, with expansion in Q4 from hospice rate increases.

• Illinois reimbursement rate to increase 5.5% in 2025, supporting $23 million in annualized revenue.

• CMS payment updates: hospice rates up 3.1% for FY24; home health Medicare payments up 0.8% for 2024.