Addus HomeCare Corporation (Nasdaq: ADUS) leaders revealed Tuesday that the company still has roughly half of its American Rescue Plan Act (ARPA) funds in its treasure chest.
It has been leveraging these funds as a retention lifeline. Its turnover rate is now below 55%, far better than the industry average.
The company still has another $12 or $13 million left to spend, its leaders said during the Oppenheimer Healthcare Conference.
“The way we structure that, primarily, is through retention bonuses, or in trying to encourage people to work more hours to qualify for an upper-bonus tier,” Brad Bickham, Addus’ executive vice president and COO, said.
The Frisco, Texas-based Addus currently provides home-based care services to approximately 46,500 consumers through 202 locations across 22 states.
Bickham noted that Addus has avoided changing the hourly pay rates, and instead has focused on these bonus structures, as it will give the company more flexibility when funds eventually run out.
Along these lines, Addus leaders believe that the ARPA funds have also been a helpful recruiting tool, but don’t believe the company will take a major hit when the funds are used up.
Aside from the ARPA funds, they also have their eye on the Biden Administration’s 2024 proposed budget, specifically, the plan to earmark $150 billion for home- and community-based services over the next 10 years.
“That’s something kind of similar to what they had in the Build Back Better Act, which didn’t go through,” Bickham said. “Certainly, it’s encouraging to see continued support by the administration of our services and in our caregiver population, and that they appreciate the fact that these individuals are out there serving a very challenging customer base.”
Addus builds market density
During the discussion, Addus leaders also went into detail about the company’s M&A strategy.
“If you look at the acquisitions, our overall strategy is to build density in the markets that we serve,” Bickham said. “That includes just geographic coverage on the personal care side throughout the state, but then also starting to add clinical services, such as home health and hospice, in those markets where we have a strong personal care presence.”
Most recently, Addus acquired the assets of JourneyCare, a large Chicago-based hospice and palliative care provider. Last year, the company bought Chicago-based Apple Home Healthcare, a medicare-certified home health agency.
Illinois – and Chicago specifically – is a major market for the company.
“That’s our largest single personal care market in the country,” Bickham said. “We are still kind of finalizing integration of both, to where they’re working seamlessly together. Now that we’ve got that nice presence on both the home health and hospice side, [we are looking at] de novo opportunities coming out of that Chicago market.”
In terms of M&A focus areas, Addus has its sights set on personal care and home health care.
“I think we have a pretty good footprint in hospice today,” Addus CFO Brian Poff said. “[For] the things that we’re doing on the value-based front, we think that adding skilled home health in areas where we have strong personal care gives us more of those opportunities, so you’ve seen us do that.”
For now, the company is taking its time before making any major M&A moves.
“We’re still active, we’re still looking for targets to put in our pipeline now, but we think it’s probably going to be a little later this year before you see some of those maybe larger opportunities present themselves that we’ll be interested in,” Poff said.