Completing the acquisition of Gentiva’s personal care operations is still top of mind at Addus HomeCare Corp. (Nasdaq: ADUS). The $350 million transaction was first announced in June.

Addus Chairman and CEO Dirk Allison explained how he believes the deal will better position the company for the impacts of the “Ensuring Access to Medicaid Services” rule.

“We believe our personal care segment benefits from both scale and broad geographic coverage in the states where we operate,” Allison said Tuesday during the company’s third-quarter earnings call. “This is particularly true in managed Medicaid states, and as a result of the final Medicaid access rule, if and when it may be implemented, this scale and coverage allows us to spread our costs over a larger revenue base and provides Addus with the opportunity for meaningful advocacy with the states in which we operate, while also promoting a more favorable hiring and retention environment.”

With Gentiva’s personal care assets under its belt, Addus will become the largest personal care provider in Texas, a primarily managed Medicaid market.

Plus, the deal gives Addus a larger footprint in Arkansas, and strengthens the company’s private pay and Veterans Affair businesses in California and Arizona. It also increases the company’s presence in Tennessee, and provides entry into Missouri and North Carolina.

As part of the transaction, Addus is also focused on integrating Gentiva’s personal care staff.

“I believe we have done a very good job of planning for the changes that will occur once this acquisition closes,” Allison said. “Our planning has been focused on minimizing the impact on frontline staff and ensuring the continuation of the provision of quality services to our customers, as we go through the integration process. We are appreciative of the efforts of the Gentiva personal care team, as they continue to provide quality services to its customers. We look forward to the many new team members who will be joining the Addus family, once the transaction is closed.”

After Humana Inc. (NYSE: HUM) acquired Kindred at Home, it eventually divested the personal care and hospice assets of that enterprise. Humana created CenterWell Home Health, and those divested assets became Gentiva.

Gentiva has strategically shifted its focus to hospice and palliative care.

Allison noted that this deal is slated to close during the fourth quarter of 2024.

During the call, Allison also pointed out the success Addus has been experiencing when it comes to personal care hires. In Q3, the company achieved 79 hires per business day.

Additionally, Addus’ turnover rates have remained at “historically low” levels.

Meanwhile, Addus has seen continued improvement on labor metrics in its clinical service lines.

In Q3, Addus continued to leverage the funding the company received from the American Rescue Plan. The company received an additional $3.2 million in funding, and utilized over $2.5 million, leaving roughly $13 million remaining in accessible funds.

“These funds are continuing to be used to help with caregiver recruitment and retention efforts, as well as other opportunities to enhance our caregivers’ experience and training,” Allison said.

Allison also offered an update on the reimbursement environments that Addus is operating in.

“In our personal care segment, our services continue to receive favorable reimbursement support for many of the states in which we operate,” he said. “We continue to believe that our states remain in good financial position, as the economy seems to be stable at this time. We are confident that personal care services continue to deliver real value to state Medicare programs, as well as our managed care partners through a reduction in the overall cost of care.”

One example of the favorable reimbursement support the company is seeing is in Illinois. The state is Addus’ largest for personal care services, and will enact a 5.5% rate increase. The company anticipates that this rate increase will generate $23 million in annualized revenue.

On the home health side, Allison commented on the release of the 2025 home health final payment rule.

“While we are appreciative of the final rate adjustment being slightly more positive than the proposed rate, we are disappointed that CMS continues to pursue both temporary and permanent reimbursement reductions from home health providers, which we believe limits patient access to this valuable and much needed service,” he said. “Although the current Medicare home health rate remains challenging, and appears will also be in 2025, we continue to believe that traditional Medicare home health reimbursement pressures are likely to moderate over the next few years, in response to well documented patient access issues.”

Addus is still evaluating the impact the final rule will have on its business, but since home health care only makes up a small portion of it, CFO Brian Poff believes that impact will be “immaterial” to the company overall.

For Q3 2024, Addus net service revenues increased 7% to $289.8 million, compared to $270.7 million for the third quarter of 2023.

Personal care revenues were $215.4 million, compared to $201.8 million during the same period last year. Home health revenues were $17 million, compared to $15.7 million during Q3 2023.