Addus HomeCare (Nasdaq: ADUS) reported a strong start to 2025 – driven largely by its personal care segment.

The company’s personal care segment accounts for 76.5% of the business and has grown through several acquisitions over the past few years. In Q1, Addus’ personal care business saw a 7.4% organic revenue increase year-over-year, which CEO and Chairman Dirk Allison attributed to higher volumes and a rate increase of 5.5% in Illinois, the company’s largest personal care market.

“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 costs of care, and put us in a favorable position as changes to the funding and other aspects of various Medicaid programs are considered,” Allison said during the company’s Q1 earnings call on Tuesday.

Frisco, Texas-based Addus provides home care services, including personal care to assist with daily living activities and hospice and home health services. The company currently serves around 62,000 consumers through 260 locations across 23 states.

The company reported a 20% increase in net service revenues compared to the first quarter of 2024. Net income rose to $21.2 million, up from $15.8 million in the same quarter of 2024. Additionally, adjusted EBITDA increased by just over 25%.

“Addus had a strong start to 2025, delivering a solid financial and operating performance as we continue to see demand for our home-based care services across the continuum,” Allison said. “These results reflect solid organic growth and include the first full quarter of the personal care operations of Gentiva, which we acquired on Dec. 2, 2024.”

Home health services accounted for 5.3% of Addus’ total revenue in the first quarter, with organic revenue growth of 1.3% compared to the first quarter of 2024.

“While this is our smallest segment, we believe home health is complementary to our personal care and hospice services, and we continue to look for opportunities to support and expand the service line,” said Addus CFO Bryan Poff.

According to Allison, Addus also found success in caregiver hiring during the first quarter. The company employed 79 caregivers daily in the personal care segment, which marks an increase of one hire per day compared to the first quarter of 2024.

He pointed to continuing improvements in the overall clinical labor environment as a catalyst for this success, along with the company’s use of funding from the American Rescue Plan Act, which aids caregiver recruitment and retention efforts and other opportunities to enhance caregiver experience and training.

In terms of same-store revenue growth for the Q1 personal care segment, the company grew by 7.4% compared to Q1 2024. Home health same-store revenue grew by 1.3%, and personal care same-store hours increased by 2%.

“We are pleased to see this segment of our business return to positive same-store revenue growth,” Allison said. “Our home health operations provide an important clinical partner to our hospice and personal care segments in the markets where we have these overlaps in services, which allow us to provide our patients with access to the right care at the right time.”

Acquisitional success

Uncertainty regarding how the new Centers for Medicare & Medicaid Services (CMS) will handle annual home health rate setting and potential revenue adjustments has led to smaller transactions in the home health market, according to Allison. Still, Addus plans to continue considering potential deals as part of its overall growth strategy.

“Despite this uncertainty, we will continue to source and evaluate potential accretive home health transactions that fit our strategy of selectively adding clinical services in our existing personal care markets,” he said.

Addus acquired hospice, home health care and palliative care provider Gentiva’s personal care assets in late 2024, bolstering its presence in several states, allowing it to enter other states for the first time and making it the largest provider of home care services in Texas.

Since the acquisition, Addus has begun looking for clinical and non-clinical acquisition opportunities to increase the density and geographic scope of its personal care service offerings in Texas, according to Allison.

Continuing the discussion of the Gentiva acquisition, he noted that the integration process has been positive and that Addus recently began implementing a paperless onboarding process for new employees, improving financial performance.

“The bottom line has been a little stronger than we thought it would be,” Allison said. “The top line may be a little bit lighter than we thought. But Texas was coming out of a redetermination process. That was just one of the states I’d highlight; if you look at our admissions and discharges, they’ve crossed the threshold, and you’re starting to see some growth.”

Allison reported positive progress following several of the company’s acquisitions of smaller businesses.

Addus acquired Tennessee Quality Care in 2023 for $106 million, and the company has since incorporated a bridge program from home health to hospice with promising results.

“The numbers have picked up,” he said. “The percentage of admissions coming from our home health into hospice has improved significantly and is now tracking almost where we are in New Mexico, where 25% to 30% of the admission volume is coming from our home health segment.”

In 2022, Addus acquired Glenview, Illinois-based Journey Care for $85 million. Journey Care has performed better than expected due to an increased census and broadening referral mix, Allison said.