Addus Continues Hunt for Future Growth Opportunities

Backed by a boost in billing and momentum from closing two major acquisitions in less than two months, Frisco, Texas-based Addus HomeCare Corporation (Nasdaq: ADUS) reported solid first-quarter financial results Monday. Addus leadership is looking to ink further deals this year and bullish on the possibility that Medicare Advantage plans could start offering a personal care benefit.

Among the earnings highlights, Addus reported net service revenues totaling $109.4 million this quarter, a nearly 8% increase compared to Q1 of 2017. Likewise, net income for the first quarter of 2018 increased to $4.9 million, a more than 14% jump from the $4.3 million Addus netted in the same quarter last year.

The uptick in revenue was driven by “relatively balanced increases” of 4% in billable hours per business day and 3.6% in revenue per billable hours, according to Addus President and CEO Dirk Allison, who discussed the financial results during an earnings call with investors Tuesday morning.


“Our strong operating performance continued into the first quarter of 2017, which led to our solid financial results,” Allison said during the call.

Addus, which moved its headquarters from Illinois to Texas last year, is a provider of home health, hospice and personal care services. With operations across 156 locations in 25 states, Addus and its roughly 31,000 employees currently provide home care services to about 39,000 people.

Similar to other prominent players in the home health and personal care industries—Baton Rouge, Louisiana-based Amedisys, Inc., (Nasdaq: AMED) and Dallas-based Encompass Health (NYSE: EHC) to name a couple—Addus has worked to expand both organically and through acquisition.


At the beginning of April, Addus announced that it had finalized its $18.5 million acquisition of Arcadia Home Care & Staffing, a move that carried the company into the new markets of Florida and Wisconsin. Last week, then, Addus announced the completion of its $40 million purchase of Ambercare, a strategic deal designed to strength Addus’ presence in New Mexico and supplement its offerings with hospice services.

With the Ambercare deal, Addus becomes the largest provider of personal care and hospice services in New Mexico.

Even after the recent moves, Addus will remain on the lookout for potential acquisition targets that make sense, Allison said, noting how the company’s dedication to finding the right culture fit has given it a leg up on competition in terms of striking deals.

“We will continue to look for opportunities that benefit our consumers, patients and payers,” Allison, who took over the CEO role two years ago and has since overseen a C-suite overhaul, said. “We do a pretty good job as a company in getting to know the company we’re going to acquire.”

Addus, one of the largest providers of Medicaid-reimbursed personal home care in the United States, already foresees the opportunity to close at least one additional transaction by the end of 2018, he said. He did not specify what service line that deal would involve.

In addition to helping Addus expand in Florida and Wisconsin, the purchase of Arcadia and its staffing business also gives Addus a new division entirely dedicated to the recruitment and retention of caregivers.

Moving forward, Addus is still well-capitalized for further acquisitions, according to the company. As of March 31, Addus maintained cash on hand of $63.4 million and bank debt of $43.9 million.

Besides keeping its eye on the M&A landscape, Addus is also having early discussions with managed care providers related to how non-skilled in-home care services will be allowed as a supplemental benefit in 2019 for Medicare Advantage plans. Company leadership said they are not able to size prospective opportunities at this time, however.

Addus’ stock was up 2.69% at end-of-day trading Tuesday to $53.40 per share.

Written by Robert Holly

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