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    ADUS
    Earnings call· Jun 2026(Q2 FY26)

    Addus HomeCare Q2 FY26 earnings call ADUS

    Aug 4, 2026 Source

    Executive summary

    Addus HomeCare Q2 FY26 — Strong Revenue Growth and Operational Execution

    Addus HomeCare delivered robust financial results in Q2 FY26, driven by strong revenue and adjusted EPS growth across its Personal Care and Hospice segments. The company continued its strategic M&A with an Indiana acquisition and maintained a disciplined capital structure, reducing debt. Operational improvements, including positive hiring trends and caregiver app adoption, supported growth, though Home Health faced a slight revenue decline and regulatory adjustments remain a focus.

    Highlights

    6

    • Total revenue increased 8% to $377.4 million compared to Q2 FY25.

    • Adjusted earnings per share grew 16.1% to $1.73.

    • Adjusted EBITDA rose 11.9% to $49.2 million.

    • Cash flow from operations was strong at $40 million, up from $22.5 million in Q2 FY25.

    • Personal Care segment achieved 6.8% same-store revenue growth, with same-store census up 1.2% sequentially.

    • Hospice same-store revenue increased 11.1%, with average daily census up 6.5% to 3,964.

    Concerns

    5

    • Home Health same-store revenue decreased 2.8% compared to Q2 FY25.

    • CMS proposed a negative 3% temporary adjustment for home health payments in 2027.

    • Hospice segment experienced a Medicare Cap impact of over $3 million in Q2 FY26, primarily in Ohio.

    • Gross margin percentage slightly declined to 32.2% from 32.6% in Q2 FY25.

    • The tax rate increased to 26.9% due to the expiration of the Work Opportunity Tax Credit (WOTC) program.

    Guidance & targets

    5
    CategoryTargetConfidence
    Adjusted EBITDA margin percentage
    between 12% and 13%
    high materiality
    High
    Tax rate
    in the upper 20% range
    medium materiality
    Medium
    Gentiva EMR synergy
    $1 million
    medium materiality
    High
    New Mexico Personal Care rate increase
    around 4%
    medium materiality
    Medium
    Personal Care authorized hours served fill rate
    up at least up into the upper 80s
    medium materiality
    Medium

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Personal Care
    Growth bolstered by higher volume trends and positive contributions from state-level rate support in Texas (9.9%) and Illinois (3.9%). Q2 included 2 months of HomeCourt home care operations.
    Revenue as % of total: 78.4%Same-store hours increase: 2.2% YoYPercentage of authorized hours served: mid-80sSame-store census increase: 1.2% sequential
    		$296 million6.8%——
    Hospice
    Steady performance powered by favorable year-over-year metrics across average daily census and revenue per patient day. Experienced Medicare Cap impact primarily in Ohio market.
    Revenue as % of total: 17%Average daily census: 3,964 (up 6.5% YoY)Median length of stay: 24 days
    		$64.2 million11.1%——
    Home Health
    Experienced a decrease in same-store revenue but saw sequential improvement in revenue, operating income, and admissions. Management is focused on upgrading leadership and improving referral conversion.
    Revenue as % of total: 4.6%Same-store new admissions growth: 9.8% YoY
    		$17.2 million-2.8%——

    Operational metrics

    39
    Total net service revenues
    $377.4 millionup 8% YoY
    Q2 FY26

    Compared to $349.4 million for Q2 FY25.

    Adjusted EBITDA
    $49.2 millionup 11.9% YoY
    Q2 FY26

    Compared to $43.9 million for Q2 FY25.

    Adjusted EBITDA margin
    13%up from 12.6% YoY
    Q2 FY26

    Compared to 12.6% for Q2 FY25.

    Gross margin percentage
    32.2%down from 32.6% YoY
    Q2 FY26

    Compared to 32.6% for Q2 FY25. Sequentially, reflects an expansion of 30 basis points from Q1 FY26.

    G&A expense as % of revenue
    20.8%down from 22.1% YoY
    Q2 FY26

    Compared to 22.1% for Q2 FY25.

    Adjusted G&A expense as % of revenue
    19.2%down from 20% YoY
    Q2 FY26

    Compared to 20% for Q2 FY25, reflecting leverage on higher revenues and cost discipline.

    Adjusted EPS (acquisition expenses impact)
    $0.06
    Q2 FY26

    Excluded from adjusted EPS for Q2 FY26.

    Adjusted EPS (noncash stock-based compensation expense impact)
    $0.17
    Q2 FY26

    Excluded from adjusted EPS for Q2 FY26.

    Adjusted EPS (restructure and other nonrecurring costs impact)
    $0.01
    Q2 FY26

    Excluded from adjusted EPS for Q2 FY26.

    Adjusted EPS (acquisition expenses impact)
    $0.11
    Q2 FY25

    Excluded from adjusted EPS for Q2 FY25.

    Adjusted EPS (noncash stock-based compensation expense impact)
    $0.18
    Q2 FY25

    Excluded from adjusted EPS for Q2 FY25.

    Tax rate
    26.9%
    Q2 FY26

    Slightly higher than historical average, primarily due to the lack of extension for the Work Opportunity Tax Credit (WOTC) program.

    DSOs
    35.5down from 36.3 days QoQ
    Q2 FY26

    Compared with 36.3 days at the end of Q1 FY26.

    DSOs Illinois Department of Aging
    26.8down from 47.4 days QoQ
    Q2 FY26

    Compared with 47.4 days at the end of Q1 FY26, reflecting strong collections at the end of Q2.

    Cash on hand
    $99.6 million
    as of June 30, 2026

    Approximately $100 million as of March 31, 2026.

    Revolving credit facility capacity
    $650 million
    Q2 FY26

    Total capacity under the facility.

    Revolving credit facility availability
    $577.8 million
    Q2 FY26

    Available funds under the facility.

    Total bank debt
    $64.3 milliondown $30 million QoQ
    Q2 FY26

    Reduced by $30 million from Q1 FY26.

    Revolver balance paid
    $10 million
    Q3 FY26 to date

    Paid to date in the third quarter.

    Working capital changes benefit
    just under $20 million
    H1 FY26

    Contributed to strong cash flow in the first half of the year.

    Texas reimbursement rate enhancement
    9.9%
    Late 2025

    Enacted late last year, bolstering Personal Care revenue growth.

    Illinois reimbursement rate increase
    3.9%
    January 1, 2026

    Took effect January 1, 2026, contributing to Personal Care revenue growth.

    Hospice rate increase (final)
    2.3%vs 2.4% proposed
    Fiscal 2027

    Final fiscal 2027 hospice rate, a 30 basis point decrease from the fiscal 2026 rate increase of 2.6%.

    Home Health payment rule (proposed 2027) statutory update
    2.1%
    2027

    Statutory required annual payment update for home health agencies.

    Home Health payment rule (proposed 2027) outlier payments increase
    0.3%
    2027

    Increase related to the proposed update to the fixed dollar loss ratio used for outlier payments.

    Home Health payment rule (proposed 2027) temporary adjustment
    negative 3%
    2027

    Proposed temporary adjustment, same as applied last year.

    Home Health payment rule (proposed 2027) net payment rate increase
    2.1%vs 1.3% decrease last year
    2027

    Net result of proposed payment updates and temporary adjustment, compared to a 1.3% decrease in the prior year.

    Hospice rate increase (final)
    2.6%
    Fiscal 2026

    Final hospice rate increase for fiscal 2026.

    Medicare Cap accrual
    over $3 million
    Q2 FY26

    Primarily impacted the Ohio market. Management expects no additional exposure for the remainder of the year and hopes to mitigate some of this expense.

    Average rate increase on wage side (hospice)
    closer to 3%
    Recent years

    Consistent with historical wage increases, which are a big component of cost.

    Adjusted EPS growth
    16.1%
    Q2 FY26

    Compared to adjusted EPS of $1.49 for Q2 FY25.

    Hospice average daily census growth
    6.5%
    Q2 FY26

    Compared to Q2 FY25, reaching 3,964.

    Hospice average daily census
    exceeding 4,000
    July 2026

    Continued growth in July.

    Home Health same-store new admissions growth
    9.8%
    Q2 FY26

    Reflecting improved results in the segment.

    Hires per business day (Personal Care)
    104approximately same as Q2 FY25
    Q2 FY26

    Down modestly from Q1 FY26, but consistent with prior year.

    Hospice median length of stay
    24up from 23 days QoQ and 22 days YoY
    Q2 FY26

    Compared to 23 days for Q4 FY25 and 22 days for Q2 FY25.

    Caregiver app adoption
    90-plus percent
    Q2 FY26

    Percentage of caregivers using the app in Illinois.

    Caregiver app fill rate impact
    mid-to-upper 80% range
    Q2 FY26

    Texas's fill rate has ramped quicker than expected due to caregiver app rollout.

    Work Opportunity Tax Credit (WOTC) program expiration
    —
    End of 2025

    Expired at the end of 2025, contributing to a higher tax rate in Q2 FY26.

    Industry KPIs

    4
    MetricValueDetails
    Utilization trends2.2%%
    Membership covered lives by line3,964patients
    Segment revenue operating income$296 millionUSD
    Adjusted EPS EBITDA leverage guidance$1.73USD/share

    Deals & partnerships

    2
    HomeCourt home careAcquisition of personal care operations

    Closed on May 1, 2026, marking entry into Indiana, adjacent to Illinois. The acquisition has exceeded expectations slightly from a volume perspective.

    Similarly sized personal care providerAcquisition of certain operating assets

    Definitive purchase agreement to acquire assets of a provider based in the Indianapolis, Indiana area, complementing the HomeCourt acquisition. Intent is to integrate it with the HomeCourt operations.

    Risks & headwinds

    4
    Continuing effect of temporary adjustment in home health payments2027

    negative 3%

    Mitigation: Company supports industry efforts to eliminate these adjustments; management believes the issue will be handled in the next year or two.

    Medicare Cap impact in Hospice segmentQ2 FY26

    over $3 million

    Mitigation: Mitigation strategies are in place to reduce the ultimate impact; no additional cap exposure expected for the remainder of the year, with potential for some Q2 expense mitigation before year-end.

    Expiration of Work Opportunity Tax Credit (WOTC)Ongoing from end of 2025

    Tax rate in upper 20% range

    Mitigation: None stated directly, but management notes the program has traditionally been extended retroactively as part of broader legislation.

    Medicaid payment withholding due to fraud and abuseCurrent

    Not quantified for Addus

    Mitigation: Not impacting Addus's markets to any significant degree; company is very supportive of appropriate focus on fraud and abuse and ensures compliance.

    What to watch in Q3 FY26

    5

    New Mexico Personal Care rate increase

    Next quarter
    CurrentNegotiations ongoing
    TargetAround 4% increase finalized with MCOs

    Why it matters

    Successful negotiation of the rate increase will directly impact revenue and margin in a key market.

    So I think at this time, until we finalize those conversations, we're not probably going to talk about a specific number. But I would say, generally, we feel pretty optimistic that we're going to get our portion of what that rate increase should be for us, which we had indicated before would be around 4% rate increase for us.

    Q&A highlights

    5

    What is the QTD census trajectory for Personal Care in Illinois, New Mexico, and Texas, and what is the status of the caregiver app rollout, particularly in New Mexico and Texas?

    Management noted nice momentum in Illinois and New Mexico for patient census, while Texas is holding steady. The consolidated fill rate improved to 84-85%, driven by Texas's quicker-than-expected caregiver app adoption (mid-to-upper 80% fill rate). New Mexico's app rollout has been slower due to state EBV app integration.

    “Texas has gotten up in kind of that mid sling toward the upper 80% range and fill rate. New Mexico, as we kind of expected with that rollout, having to work through the state's EBV app has been a little bit slower.”

    asked by Raj Kumar · answered by Brian Poff

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Acquisitions and Market Expansion

    Addus HomeCare closed the acquisition of HomeCourt home care's personal care operation in Fort Wayne, Indiana, on May 1, 2026, marking entry into a new, attractive state adjacent to Illinois. The company also has a definitive purchase agreement to acquire another similarly sized personal care provider in the Indianapolis area, expected to close pending regulatory approval. Management noted an increasing number of personal care acquisition opportunities and growing optimism around home health deals following the proposed 2027 payment rule.

    02

    Regulatory Environment and Advocacy

    CMS proposed a 2.1% net payment rate increase for home health in 2027, reflecting a 2.1% statutory update and 0.3% outlier payment increase, offset by a negative 3% temporary adjustment. The final fiscal 2027 hospice rate increased by 2.3%. Addus continues to advocate for the elimination of the temporary adjustment and the 80/20 provision of the CMS Medicaid access rule, believing the latter could be eliminated by year-end 2026, which would be encouraging for the industry.

    03

    Operational Efficiencies and Caregiver Management

    The company reported positive hiring trends in its Personal Care segment, with 104 hires per business day in Q2 FY26, consistent with Q2 FY25 levels. The rollout of the caregiver app, particularly in Texas, has accelerated faster than expected, contributing to an uptick in the consolidated fill rate to between 84% and 85%. This, along with slightly lower caregiver turnover, is helping to meet organic growth targets and improve the percentage of authorized hours served.

    04

    Segment Performance Drivers

    Personal Care same-store revenue grew 6.8%, driven by a 2.2% increase in same-store hours and positive contributions from state rate enhancements in Texas (9.9%) and Illinois (3.9%). Hospice same-store revenue increased 11.1%, supported by a 6.5% rise in average daily census to 3,964 and a median length of stay of 24 days. Home Health same-store revenue decreased 2.8% but showed sequential improvement in revenue, operating income, and admissions, attributed to new leadership and focus on referrals.

    05

    Cash Flow and Capital Allocation

    Addus generated strong net cash flow from operations of $40 million in Q2 FY26. The company reduced its bank debt by $30 million from Q1 FY26 to $64.3 million, ending the quarter with $99.6 million in cash and $577.8 million in revolving credit facility availability. This strong balance sheet provides financial flexibility to pursue strategic growth initiatives, including targeted acquisitions, while maintaining a disciplined capital allocation approach.

    06

    Bridge Program and EMR Integration

    The company is expanding its Bridge program, which connects Personal Care clients to clinical services, into Illinois, building on success in New Mexico and Tennessee. A significant ongoing initiative is the conversion of the legacy business to Homecare Homebase EMR, expected to complete by Q1 FY27. This integration is anticipated to significantly enhance the Bridge program's effectiveness across all three service lines (Personal Care, Home Health, Hospice) by operating on a single EMR platform.

    AI-generated summary of the company’s earnings call. Not investment advice.