Addus HomeCare (ADUS) Q2 2024 earnings summary

Executive summary

• Q2 2024 net service revenues grew 10.4% 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.

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

• Completed a $176 million equity raise, repaid all outstanding debt, and ended the quarter with $173.3 million in cash.

• Announced acquisition of Gentiva personal care assets for ~$350 million, expanding into Texas and other states, and divestiture of New York operations.

• Record hiring in personal care and historically low turnover supported growth.

Financial highlights

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

• Gross margin improved to 32.5% from 31.7% a year ago; adjusted EBITDA margin rose to 12.3% from 10.9%.

• Cash at June 30, 2024: $173.3 million; revolver capacity: $504.4 million.

• Net cash flow from operations was $18.8 million for Q2 and $57.5 million for the first half of 2024.

• DSO improved to 36 days at quarter end.

Outlook and guidance

• 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.

• Gentiva acquisition expected to close in Q4 2024, funded by public offering proceeds and credit facility.

• Illinois reimbursement rate to increase by 5.5% in 2025, supporting higher caregiver wages; future rate increases uncertain.

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

• Targeted minimum annual revenue growth of 10% remains in place, with continued focus on acquisitions.