Addus HomeCare (ADUS) Q3 2024 earnings summary

Executive summary

• Net service revenues rose 7.0% year-over-year to $289.8 million in Q3 2024, with net income of $20.2 million and adjusted EBITDA up 11.1% to $34.3 million, driven by strong demand, organic expansion, and recent acquisitions.

• Adjusted EPS increased 13% to $1.30, and net income per diluted share was $1.10, reflecting improved operating leverage.

• The company is preparing to close the $350 million Gentiva personal care acquisition, expected to expand presence in Texas, Missouri, and other states, adding 16,000 patients per day.

• Divestiture of New York operations is underway, with an initial $4.6 million payment received and full exit expected upon regulatory approval, streamlining operations and improving margins.

• As of September 30, 2024, services were provided in 22 states to approximately 80,000 individuals through 214 offices.

Financial highlights

• Q3 2024 net service revenues: $289.8 million (up 7.0% year-over-year); nine months: $857.5 million (up 9.6%).

• Q3 2024 net income: $20.2 million (up 30.8%); nine months: $54.1 million (up 25.9%).

• Adjusted EBITDA was $34.3 million in Q3, with margin at 11.8%; gross margin was 31.8%, nearly flat year-over-year.

• Q3 2024 diluted EPS: $1.10 (up from $0.95); adjusted net income per diluted share: $1.30 (up from $1.15).

• Cash at period end was $222.9 million, with $503.5 million available under the revolving credit facility.

Outlook and guidance

• Illinois will implement a 5.5% personal care rate increase effective January 1, 2025, expected to add $23 million in annualized revenue.

• Medicare hospice reimbursement increased by 2.9% effective October 1, 2024; home health reimbursement will see a 0.5%–0.8% net increase in 2025.

• Gentiva acquisition is expected to close in Q4, funded by a $175.6 million public offering and credit facility, and is anticipated to be accretive to EPS.

• Margin expansion is anticipated in Q4 due to the New York divestiture and hospice rate updates.

• Management targets at least 10% annual revenue growth, supported by organic growth, acquisitions, and value-based care opportunities.