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 adjusted EPS of $1.30 (up 13%) and net income of $20.2 million, reflecting strong operational execution and improved leverage.

• Adjusted EBITDA grew 11.1% to $34.3 million in Q3, with nine-month adjusted EBITDA up 19.4% to $102.0 million, driven by organic growth and acquisitions.

• The company is preparing to close the $350 million Gentiva personal care acquisition in Q4, expanding presence in Texas, Missouri, and other states.

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

• Services provided in 22 states to approximately 80,000 individuals through 214 offices, with a diversified payor mix and focus on elderly, chronically ill, or disabled individuals.

Financial highlights

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

• Adjusted EBITDA margin was 11.8% in Q3, up from 11.4% last year; gross margin was 31.8%, nearly flat year-over-year.

• Q3 2024 net income per diluted share was $1.10, up from $0.95; adjusted net income per diluted share increased to $1.30 from $1.15.

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

• Days sales outstanding improved to 32 days from 39 days at year-end 2023.

Outlook and guidance

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

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

• Gentiva acquisition is expected to close in Q4, adding $280 million to $350 million in annualized revenue.

• Same-store personal care hours growth is expected to return to 2% as Medicaid redetermination processes conclude.

• Management targets at least 10% annual revenue growth, supported by organic expansion and acquisitions.