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Among the storylines to emerge during Q1 2025 earnings calls, I was particularly interested in the divergent results that Addus HomeCare (Nasdaq: ADUS) and Modivcare (Nasdaq: MODV) posted in their personal care segments.
While Addus reported a 20.3% year-over-year increase in net service revenue, which leadership directly attributed to its personal care services, Modivcare reported a 4.9% decline in service revenue – which it also attributed in part to its personal care line.
Modivcare’s CEO, Heath Sampson, said its personal care segment problems were “largely behind them.” The company’s confidence in its personal care line was demonstrated by signing four strategic personal care agreements in Q1.
Addus, meanwhile, posted strong results in its personal care business. Leaders with the company cited Medicaid rate increases in Illinois as one factor driving the numbers. The company also appears to have made some shrewd decisions in acquiring Gentiva’s personal care business and exiting its personal care business in the state of New York.
In this week’s exclusive members-only HHCN+ Update, I draw on Q1 earnings calls of Modivcare and Addus to discuss the differences in their personal care financials and the strategies they are using to solidify their standing in their respective markets. I’ll offer analysis and key takeaways, including:
- Reasons for the revenue differences between the organizations
- The tension between the scale of Modivcare and Addus and the local nature of personal home care
- Leadership strategies for growth
A dip in personal care performance
In its Q1 earnings call, Modivcare reported a decline in service revenue, which it attributed in part to lower volumes in its personal care segment.
The company reported overall service revenue of $650.7 million for the first quarter of 2025, which represents a 4.9% year-over-year decrease.
“The decline was primarily driven by known [non-emergency medical transportation] (NEMT) contract attrition, lower billed hours in (personal care services) PCS and membership churn in monitoring,” Modivcare CEO, Heath Sampson, said on the call. “These impacts are expected and reflect prior year customer transitions and market dynamics that are now largely behind us.”
Denver-based Modivcare provides NEMT, and its Modivcare Home division includes personal care, remote patient monitoring and meal delivery services.
The company’s personal care services segment revenue totaled $181.8 million, accounting for 28% of its total revenue. While revenue per hour increased, service hours declined, which Sampson attributed to expected seasonal fluctuations and localized labor shortages.
Labor shortages have plagued the home-based care industry at large. While home health and personal care aides are projected to be among the fastest-growing occupations in the country, with an anticipated 21% growth rate in the next decade per the World Economic Forum, agencies continue to face challenges in retaining staff due to the low median wage of approximately $15 per hour and limited benefits.
Modivcare has previously found success in its personal care line, relying on its revenues to support the company’s overall performance in light of struggles in other parts of its business. In its Q2 2024 earnings call, the company landed a reimbursement increase in New Jersey that it predicted would improve its margins.
Most recently, the company announced that it signed four strategic agreements for its personal care business, spanning geographies in the northeast and southeast. If the company continues to find rate improvements, as it did in 2024, and expand into new agreements, as it did in Q1 of this year, we could see the trend of revenue decrease reverse.
Bolstering this prediction, Modivcare has made serious efforts to improve its personal care line’s efficiency. In 2024, Sampson said the company was undergoing a “transformation” in its personal care line, increasing automation and digital tools to enhance efficiency.
“The key here is to free up our frontline members,” he said on the company’s Q2 2024 earnings call. “This will enable us to outpace the inherent growth within the market.”
Now it seems that transformation has already made a difference in the company’s personal care line performance.
“Going forward in personal care, we expanded deployment of digital tools, including for shift scheduling, caregiver engagement and e-earning, which achieved a 72% completion rate among newly onboarded caregivers,” Sampson said on Modivcare’s Q1 call. “These are industry leading tools which enable recruiting and retaining caregivers, while also strengthening compliance in revenue cycle management and supporting robust fraud, waste and abuse control in monitoring.”
Given the company’s efforts to streamline its personal care segment, its continued confidence in its performance (evident through the signing of new agreements in Q1) and the Sampson’s assurance that the worst challenges are behind the company, I’m inclined to believe that Modivcare’s future earnings callswill reflect significant improvement in the segment.
Positive personal care results
In contrast to Modivcare, Addus’ personal care business experienced a 7.4% organic increase in Q1, which CEO and Chairman Dirk Allison attributed to higher volumes and a 5.5% rate increase in Illinois, the company’s largest personal care market. Allison also reported that the company’s net income rose to $21.2 million – a 20% increase over the same quarter of 2024.
“Our personal care segment, which accounted for 76.5% of our business, was the key driver of our growth with a 7.4% organic revenue increase over the first quarter last year,” Allison said in a statement. “We benefited from higher volumes as well as additional rate support, including a 5.5% increase effective January 1, 2025, for Illinois, our largest personal care market.”
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.
Addus’ personal care segment accounts for 76.5% of its business. It has grown through several acquisitions over the past few years, including that of Gentiva’s personal care assets in late 2024, which reportedly performed beyond expectations in Q1. This acquisition strengthened its presence in several states, enabling it to enter new markets for the first time and become the largest provider of home care services in Texas.
“We are confident that personal care services continue to deliver real value to state Medicaid programs as well as our managed care partners through a reduction in 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 earnings call.
Addus plans to continue to expand its personal care line, according to Allison. While seeking to expand this segment, the company has demonstrated that strategy matters more than quantity. In May 2024, Addus announced that it would sell its New York personal care business (along with its fiscal intermediary services for the state’s currently beleaguered consumer-directed care program).
Divining the difference
When considering the difference in personal care results from Modivcare and Addus, I’m struck by the tension between the size of these companies – among the few publicly traded at-home care providers in the United States – and the local dynamics of personal care.
Consider that Modivcare’s challenges partly came down to “localized” labor market dynamics. While the company’s automation and other technological tools should help it bolster its workforce across the board, navigating the peculiarities of specific labor markets is also an important piece of the puzzle for any personal home care provider.
Then there’s the obvious and crucial matter of varying reimbursement rates.
While Medicaid covers 100% of the costs for medically necessary home-based care services and theoretically provides one standard benefits package to all enrollees, because of state-level variations in populations, service supply and local practice patterns, national policy changes may have unequal impacts on access and service usage, according to the National Institute of Health.
Medicaid rates for personal services can fluctuate, and certain states like Massachusetts, Alaska and New York stand out for offering higher reimbursement rates, particularly within the context of consumer-directed personal assistance programs (CDPAP) and other state-specific care programs.
Depending on the saturation of clientele in key states such as these, the reimbursement rate and its impact on revenue could fluctuate significantly enough to have a substantial effect on the bottom line.
As Sampson said some of the new agreements are in the Northeast, I speculate that the deals are located in states with higher reimbursement rates, like New York and Massachusetts, but we will see when the company is ready to announce specifics.
Additionally, remember that Addus has the Illinois reimbursement rate increase on its side, as well as being the largest provider in Texas, thanks to the Gentiva acquisition, which serves one of the country’s largest populations of citizens over the age of 65.
Sampson ended the Q1 earnings call saying that he was proud of his company for weathering the “unprecedented” storm that was 2024, and that he looked forward to updating investors in Q2 on the company’s continued progress. I look forward to hearing the company’s next quarter results, too – to see if Modivcare can claw back success in its personal care segment.
But regardless of the results at Modivcare or Addus, the two companies highlight the tension that I believe more providers will face as the personal care market continues to grow and consolidate. That is, leveraging efficiencies of scale to invest in enterprise-wide technology and operational initiatives that can benefit the whole company, while also maintaining nimbleness to adapt to local market conditions, all while shrewdly choosing which markets are best for expansion and how to limit the risks posed exposure to less favorable geographies.
