At Addus HomeCare Corp. (Nasdaq: ADUS), the more recent ability to hire caregivers has been a major tailwind.
“Being able to hire caregivers has turned around what we saw for a period of time during the pandemic, which was very little volume growth, but a lot of revenue growth from increases from states because of the federal money,” Addus CEO Dirk Allison said during a discussion at Oppenheimer’s Healthcare MedTech & Services conference Tuesday. “We’re now back to a more normal cadence, 50% to 60% of our same store growth is volume, which is really where we like to be.”
Addus credits the end of many of the pandemic-related relief for the increase of hirable caregivers.
“The advanced child care credit, enhanced unemployment — when all of that kind of went out of the system, we saw people coming back to the labor force,” Brad Bickham, president and COO of Addus, said during the discussion. “We saw our candidate volume increase, which then drove our hiring increases as well.”
Along these lines, Addus’ personal care business is seeing success. However, the company’s home health segment is experiencing some challenges.
“The whole industry has faced not only lower increases, but also the challenge of trying to work with Medicare Advantage players and being sure we can serve the ones that are able to pay us enough money so that we can continue to do the good service that we try to do,” Allison said.
Based in Frisco, Texas, Addus provides personal care, home health care and hospice to more than 49,000 consumers via its 217 locations across 22 states.
Addus expects to see about 3% to 5% top line growth in 2024. Whether the company will see a higher growth percentage is dependent on how states operate in the near-term future.
Allison pointed out that, during the pandemic, Addus saw support to cover minimum wage and cost-of-living increases. The company would need to see this continue before its leaders can determine if it will be able to surpass 5% growth.
“With Illinois, we’ve been very appreciative,” Allison said. “They wanted to get their minimum wage up to $15, and they’ve done that. Now what they’re doing is they’re raising the rates above $15 each year, in a cost of living adjustment. The state has come back out, as you saw this year, and they supported that cost of living adjustment, and they gave us a rate increase to cover it. We believe going forward, we won’t see the large dollar per hour minimum wage increases, we believe it’ll be more of the cost of living from this point forward.”
Bickham noted that the company sees annual rate increases in states such as Washington and Oregon.
“It kind of keeps the margin roughly intact in those states,” he said. “We will continue to see those types of rate increases.”
He also explained that Addus doesn’t operate in any other states that have minimum wage increases on the table.
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