Addus Home Care at BofA Securities: Strategic Growth and Challenges

On Wednesday, 14 May 2025, Addus Home Care (NASDAQ:RYTM) presented at the BofA Securities 2025 Healthcare Conference. The company outlined its strategic focus on expanding clinical capabilities and integrating recent acquisitions, while addressing potential Medicaid changes. Addus remains optimistic about growth despite challenges such as reimbursement uncertainties in home health.

Key Takeaways

• Addus Home Care foresees minimal impact from potential Medicaid changes, viewing them as opportunities for hiring caregivers.
• Integration of Gentiva is on track, with positive bottom-line performance despite weather-related revenue impacts.
• The company is actively pursuing M&A opportunities, particularly in Texas, to bolster clinical services.
• Strong cash flow is expected, with plans to reduce debt and fund strategic acquisitions.
• Hospice segment shows robust recovery post-COVID, driven by favorable demographics.

Medicaid Changes

Addus Home Care anticipates that potential Medicaid changes, including work requirements, will not significantly impact its operations. Instead, these changes may offer opportunities to hire more caregivers. The company is confident that states will continue prioritizing care for the elderly and disabled, aligning with Addus’s services. Provider tax changes and immigration efforts are not expected to materially affect the company.

Gentiva Integration

The integration of Gentiva is progressing well, contributing positively to Addus’s bottom line. Despite weather-related challenges affecting revenue, admissions have shown positive growth trends. The main remaining task is transitioning Gentiva to the Home Care Homebase system, expected within 12 to 18 months. Addus plans to expand its home health presence in Texas following this acquisition.

M&A Strategy and Value-Based Care

Addus is actively pursuing mergers and acquisitions to enhance its clinical capabilities, particularly in Texas. The company aims to fill gaps in personal care and add mental health and hospice services. Addus is engaging with managed Medicaid plans on value-based care initiatives and formalizing existing value-based contracts from Gentiva. The company targets $75 million to $100 million in acquisitions annually.

Performance of Different Businesses

Personal Care: Personal care hours grew 2% year-over-year in Q1, with expectations of 2% to 2.5% growth for the year. Technology is being implemented to improve service delivery, with significant caregiver adoption in Illinois.

Home Health: Medicare Advantage contracts constitute 45% of the business mix, with cautious optimism due to reimbursement uncertainties.

Hospice: Hospice revenue grew beyond 5% to 7% in Q1, with expectations to exceed this range for the year. The segment is recovering strongly, aided by favorable demographics and normalization of patient length of stay.

Cash Flow and Capital Deployment

Addus forecasts strong and consistent cash flow, with a GAAP EBITDA to cash conversion rate of 75% to 80%. The company plans to use this cash to reduce debt and pursue strategic acquisitions, supporting its growth strategy.

Conclusion

Readers are encouraged to refer to the full transcript for a detailed understanding of Addus Home Care’s strategic plans and performance.

Full transcript - BofA Securities 2025 Healthcare Conference:

Joanna Gajuk, Analyst, America: Much for joining us. My name is Joanna Gajuk. I cover health care facilities managed care of America. Thanks so much for joining the conference and the session. So now a pleasure to to have Addus Home Care, so I’m pretty sure they would ask.

They’re one of the largest or maybe the largest provider of personal care services in The U. S, but they also do other things. We can talk about that. But today, we’d actually have an entire team. So Derek Alexander, the Chairman and CEO Patrick comes as COO and Brian Pogg, the CFO.

And I guess we’re going go right into Q and A, Justin. Why did you agree to that? All right. So maybe first, we should start with the hot topic maybe by by today, kind of back on a little bit, but reconsideration, though. Right?

So there was the house version that came out. You know, there are a bunch of things included, but there’s some things not included, some, you know, high level thoughts about, you know, how you think about this process and, the things that were included or not included, how this could impact the company?

Derek Alexander, Chairman and CEO, Addus Home Care: Yes. When we started looking at this a number of months back, where they were talking about a lot of different things that could come into play as far as Medicaid changes, We tried to talk about the fact that we didn’t see anything out there that we felt would be material, but there’s still a lot of questions. I think what we’ve seen over the last few weeks is more of a zeroing in on what really may be out there. And I think today as we as a company sit here and look at it, there’s a couple of things that appear that will occur that we would deal with. One is work requirements.

I think that’s one that we talked about earlier that could actually be a benefit and I’ll talk about how that can be. I think the rule that came out or at least proposed rule was if they’re under the age of 64 or under, they would have to put eighty hours a week, certain of them. And if you look at our personal care consumer, our personal care consumer is in their 70s, the average age. So our people that we serve are not going to be the ones required to go out and have a work requirement. On the other hand, when you think about the people that might have to do that, it would be the younger than the 64 age.

Some of them may be single parent families. Those are the type of individuals when they’re looking for work could actually be somebody we could employ. If you think about our average caregiver, probably in their late forties, early fifties, they work twenty hours a week. And according to the rule, at least has been proposed, they have to put in eighty hours a month. So that would be perfect with with, our caregiving, schedule.

And if you think in terms of some of the folks that might be required to go to work, they could have issues at home that they’re dealing with as far as timing. And we’re pretty flexible. We can give weekend hours. We can give evening hours. Flexible during the day.

So we look at it as a potential opportunity to maybe help us as we go out and try to interview our and hire our caregivers. Some of the other things, the provider tax, I think there’s no direct impact to us on the provider tax. I think the overall theme people might be asking questions about with Medicaid revolve around just total dollars. And if you think about a state, if any of their dollars are cut, what are they going to do with their Medicaid program? And that’s where I think the state’s going to look to say, first off, the population we take care of, which is elderly and disabled, is generally the population they’re still going to want to take care of in our minds.

Also, we’re the low cost provider. If you think in terms of if we can keep people at home, and there are some elderly patients that need more care than we can give them in the home environment. They need to be in nursing homes and other environments. But those that can stay home, that is a cheaper opportunity to take care of those patients than the state would have otherwise and in an environment the patient would rather be, which is in their home. So again, as we look at everything, they’re not talking about per caps now, they’re not talking about some of the other lowering the matches on some of the overall plans.

We really don’t see that there’s any material change to our company at this point in time. So we will continue to follow it as you would expect us to. We’re spending a lot of time with our government relations department being in Washington, making sure that we understand what’s happening. But at this point in time, we feel pretty good with what they’re talking about. We’re gonna be fine.

Joanna Gajuk, Analyst, America: And one item that was missing from the from this proposal was the Medicaid access rule, being repealed. I guess the the staffing rule was repealed and some other things were in there. I mean, it’s proposed. It’s not repealed. But, you know, you had talked about that.

Like, does it change anything that it wasn’t, you know, not repealed in the in the vehicle? Does it really matter to you?

Derek Alexander, Chairman and CEO, Addus Home Care: Yeah. I think we’ve been talking all along with the administration about the Medicaid access rule. The thing that was discovered as we went through, I believe, because the CBO couldn’t come up with a good score, it wasn’t going to be able to be handled through the reconciliation bill. What we have been told is it will be handled. Is not a rule that the administration supports, and they’re looking at a way to move that rule.

But I think there’s also a lack of if you realize, it’s still 5.5 away. And so it’s not like the staffing rule, which was very close. So I think from our standpoint, our belief is still that the Medicare access rule will go away. Certainly, eightytwenty component should go away. But it doesn’t seem to be something that fit into the reconciliation bill like they thought it might at first.

Joanna Gajuk, Analyst, America: And I guess another topic related to that a little bit is there have been also some staffing costs of HHS, CMS, and we heard about, like, something specific around the PACE program. So is any of that somehow, you know, impacting your operations in any way? I don’t know whether processing of approvals or payments or anything. Is there anything to be said or you’re kind of not seeing much of We’re

Patrick, COO, Addus Home Care: really not seeing anything. That’s a lot of the cuts in the programs that they’re talking about like PACE, that’s something that we don’t participate in. So right now, we’re not seeing any issue there. Could it slow down approval of waiver amendments or something like that? Possibly.

But there’s not any real big ones that are pending anyway for us.

Joanna Gajuk, Analyst, America: And maybe last piece of data, what’s going on in DC around immigration efforts, right? I guess it sounds kind of slow. I mean, it’s obviously in the headlines in surgical, but like are you seeing any impact to either your workforce or patients? And I guess, could there be something bigger, I guess, if there is something bigger that’s happening in the country?

Patrick, COO, Addus Home Care: Yes, not really. I mean, we looked at our workforce and kind of total employees that have kind of a green card, if you will. I mean, it’s like 600 on the personal care side. So it’s a very, very small component of

Derek Alexander, Chairman and CEO, Addus Home Care: our

Patrick, COO, Addus Home Care: workforce. We go through eVerify for everybody anyway. So I mean, it’s we don’t see really any material impact there.

Joanna Gajuk, Analyst, America: All right. So I guess moving on the Geneva integration, it sounds like it’s going pretty well. So maybe you can give us more color on some of the results of this particular asset, right? Because it is a sizable acquisition for the company, right? So maybe walk us through with the Sensors growth or anything around how you’re tracking on the cost savings?

And I guess what else is there left to be done with Gentiva when it comes to improving the margins there?

Patrick, COO, Addus Home Care: Yes. I’ll start and then you can add on some of the color on the financial side. It’s going well. The acquisition has performed on the bottom line like we had anticipated, a little lighter on the top line, but that was really become more of a function of when we talked about weather events in January, probably disproportionately impacted Gentiva because it was in Texas and Texans don’t do ICE very well. So that was a negative impact there.

But if you look at January to February, nice pickup. If you look at February to March, nice pickup and continuing to see some positive trends where admissions are outpacing discharges. So they went through the redetermination process. And what we’ve seen is it takes about six months to really start seeing that kind of build back up to normal levels. I think we’re starting to see that momentum in Texas moving back into positive territory.

With respect to integration, just real quick, really the big remaining item is one that’s probably twelve to eighteen months out, and that’s moving them to Home Care Homebase. They went through a change just back in the fall and we didn’t think that they would want to go through another change there. Plus it’s not we’re still working on the development with the Home Care Home base. So that will be probably the biggest remaining item. But when you think about the one that could be frankly the most disruptive was obviously payroll and benefits,

Joanna Gajuk, Analyst, America: and that went surprisingly well. And anything to be said about any change management or lawfully since people leaving because of

Derek Alexander, Chairman and CEO, Addus Home Care: No.

Patrick, COO, Addus Home Care: I mean, it’s a one thing that’s really nice and beneficial about this acquisition, they have been through like seven transactions, very seasoned veteran group of leaders still in place that we know at least the ones that are running like the state of Texas, the ones that are running the private pay division and the other states. So we have not had any turnover in leadership positions. So we’ve been very stable.

Joanna Gajuk, Analyst, America: And I guess part of our as a result of this acquisition, you’ve also been talking about growing, I guess, home health presence in Texas. So kind of how quickly, I guess, you’re going to move towards expanding, I guess, further in that market post Gentiba?

Brian Pogg, CFO, Addus Home Care: Yes. Think that definitely has moved toward the top of our wish list from an M and A perspective as building out clinical capabilities. I think we think there’s also opportunity in Texas to continue to backfill with more personal care as well. We’re the largest in Texas, but I think there’s still a lot of opportunity to maybe fill in some sections of the map in personal care. So those are all things that we’re looking at and looking to source today.

We have a little bit of hospice around more around Central Texas today, but we definitely could use some mental health and some additional hospice potentially. Some of the managed Medicaid plans in the state have expressed interest in doing some things with us on the value based front so we can add clinical services. That should definitely be helpful.

Joanna Gajuk, Analyst, America: So, yeah, that’s interesting. You mentioned that because there was on my list too. In terms of the value based care, right, and especially in Texas, it sounds like, you know, the payers, in particular, are interested in this. So in order for you to really participate, that’s why you need, you know, you put the co health assets on top of your list. Like, do you need kind of fill these blank before you can do something material or meaningful with these plans?

Or what’s the strategy there, I guess?

Patrick, COO, Addus Home Care: Yes. I mean, good thing, mean, what we have found and that we approach value based is really from the personal care standpoint. So where we’ve seen where opportunities for home health and hospice is actually starting with the value based program on the personal care side. We have a case management system that we utilize. We’re able to and we’re continuing to modify the algorithm to essentially identify clients that could use home benefit from home health and could transition to hospice.

So kind of similar to what we do in our home health to hospice portfolio using some analytics there. So you don’t have to have it. It’s really just being able to build out that continuum of care. And so you can kind of feed the different service lines through the personal care. But it starts with the personal care component with the changes in condition that our caregivers identify.

We also pull in some third party data sources as well, again, to risk or clients that instead of trying to focus on 10,000 clients, let’s focus on the 50 that may be most at risk over the next sixty days.

Joanna Gajuk, Analyst, America: So do you already have those contracts in Texas? Or are you saying you’re working on those?

Patrick, COO, Addus Home Care: So, Gentina actually had some value based contracts. They didn’t really do anything with it, honestly. It was you had a contract in place and you may or may not get an extra check, essentially. So we’re formalizing those relationships and working with the payers to build out a more robust value based component. And really, it’s not so much about the potential kind of gain share that you might get from saving the money.

It’s really about building a relationship and the volume that comes with that. That’s what we’re really focused on and working with the payers.

Joanna Gajuk, Analyst, America: All right. So you’re saying so this is upside only type structure

Patrick, COO, Addus Home Care: to It’s upside only. And again, it’s just the problem with challenge with value based arrangements, particularly if you’re on an upside only arrangement and even if you’re kind of full risk, the better you do, the smaller it gets, unless you’re constantly adding more lives to the program because they’re not going to pay you for what you did last year. They want to pay you for what you’re going to do this year. And so as you do better, you reduce hospitalizations by fifteen percent, that was great. We want to see another fifteen percent off of what you just did.

So it becomes a little more challenging. So really, the way we approach it is one, it can help us through kind of service line synergies, Continuum of Care, being able to build that out and maximize that, but then also just building kind of volume and relationships with the payers.

Joanna Gajuk, Analyst, America: So to grow volumes, I guess, under this contract, you’re saying this is sort of like an exclusive almost where you like have a preferential treatment on the less than

Patrick, COO, Addus Home Care: Those are the things we’re discussing. It’s fine. And we’re not going get you’re not going to see an exclusive, I don’t think. But can we get build out some sort of preferred provider arrangement. Somebody are talking to them about doing that.

But that’s again, the way we are approaching the value base is not so much how much can we get from the value based component. It’s really about trying to build out the volume side of it.

Joanna Gajuk, Analyst, America: And I guess as we’re talking about GenTiva, and it’s, again, like sizable acquisition for the company. So should we expect more acquisitions this year? Or are you kind of like pausing to first digest it? And also, yes, I mean, sounds like home health in Texas is priority. So like is this some sort of like order list of things you could have focused on this year?

Patrick, COO, Addus Home Care: Yes. Mean, I think from a bandwidth standpoint, we’ve learned a lot over all the acquisitions that we’ve done. We’ve really built out a pretty strong integration process. Long way of saying, we’re not on the sidelines. So we’re still looking.

So we’re not constrained by any resources. Yes.

Brian Pogg, CFO, Addus Home Care: That was really a big component of why we did the following last year after we announced Genceva was to keep our balance sheet in a position where we could be opportunistic. So we definitely want to continue to be active in M and A.

Joanna Gajuk, Analyst, America: And in the past, you talked about, I guess, adding 75,000,000 to 100,000,000 to a position a year. So is it still sort of a good framework? Or maybe the number is a little bit bigger now?

Derek Alexander, Chairman and CEO, Addus Home Care: Brian, do you want to take that?

Brian Pogg, CFO, Addus Home Care: No, I think it’s still a good target for us. So I think obviously market conditions are going to play into what your opportunities are. But I think just generally long term, we still would like to complete M and A in that range. Think some years you may not have that opportunity, it might be some smaller things. You might have a year like a Gentiva where you’re going to far exceed that with a larger acquisition.

But I think generally, I think we still think that’s something that’s reasonable if you can give an answer to it there.

Joanna Gajuk, Analyst, America: And I guess maybe switching gears to underlying performance of these different businesses. So starting with personal variable rate of business for you. So when I look at it, sales or sales have declined in the quarter, but the hours actually grew 2% year over year. So that was year over year. That was 2%, I guess.

I assume that’s hours for the year. Right? So what gives you confidence in that number for the year and kind of how you’re tracking maybe through April? Yes.

Patrick, COO, Addus Home Care: I mean, think I was pleased with the Q1, especially with this kind of a soft January with the weather events. So growing at the 2% on the hours basis, I still feel good about the kind of 2%, maybe we can press 2.5% there. I think that from the census perspective, we went through the redetermination process last year. It kind of depends on when the state went through it. If you look like a state like New Mexico went through redeterminations by midyear last year, you’re starting to see that census growth now.

It seems to take almost six months for them to kind of get back on track. We’re starting to see that a bit in Texas as well. That probably will move at more in the October by September, October, maybe August market for us. So starting to see discharges level out. So they’re down to the level that they were kind of pre redetermination.

This has taken them a little while to kind of ramp up the on the admission side and the referral side. So optimistic that Census should by the end of the year, we should be on track to grow Census. And I still think the hour side, I still feel pretty good about the 2%, two point five %, just because we’re doing a better job with servicing clients. And we’ve done some things from a technology standpoint to help us increase that service percentage.

Joanna Gajuk, Analyst, America: So maybe you can expand on that actually, on this technology. So is it rolled out across the markets? And I guess, sounds like you made it sound like it’s going well. So maybe is there something more, I guess, to be done?

Patrick, COO, Addus Home Care: Yes. So there’s actually a lot more to be done on that. We rolled it out in Illinois. So that’s our largest market and had really positive adoption of it. You kind of build an application and you’re kind of wondering, are they going to use it as one more app to download.

So we’ve built in a fair amount of functionality to make it where it’s a one stop shop. So they can go open the app, they can access their EDV system, they can access the payroll system easily. So good adoption in Illinois. And we’ve seen I think we have about 70% caregivers that registered, 70%, seventy five %. And then just kind of regular users is around 55%.

We’re rolling it out now in the process in New Mexico. We had to wait for a Spanish translation. So we’ve completed that. The challenge with rolling it out the other day because this is kind of the fundamental challenge with Medicaid and being a multistate provider, every state is different. And so you have to customize the programming of the application to fit that state’s rules around it.

But one of the features in Illinois that we have rolled out and we’re rolling out in New Mexico, a feature that allows the caregiver to be able to see that I’m going to underserved my clients by X number of hours. And it allows the caregiver to work with the client to adjust the schedules to pick up those additional hours that are authorized. And they do it without having to involve our local office staff at all. They can adjust their schedules and it just feeds into our system. We’ve seen some good uptake with that functionality.

So I think there’s features there. And the other component that’s there also updating their availability. We know that caregivers and most of them want to work more hours, not less. And the opportunities for them to in real time to update their availability that then feeds into our kind of workflows at the local office level to be able to know, okay, this caregiver says they’re working twenty hours a week, I want to work thirty. Let’s see if we can find an extra ten hours for them.

Joanna Gajuk, Analyst, America: And so you’re talking about employees, right? So maybe you can give us an update where you stand on in terms of wages, I guess, growth and retention and hiring?

Patrick, COO, Addus Home Care: Yes. So on the hiring, I’ll take that one first. On personal care, we’re a good place. And when you even factor in Gentiva, had set a goal for the company overall on the hires per business day and I probably should have been more aggressive because we kind of hit that out of the gate. So I feel good about where we are from a hiring standpoint on personal care.

Wage pressure on personal care, you may have some in some smaller markets, but it’s kind of just onesie, twosie type stuff. Most of our a large portion of our workforce is CDA driven, so collective bargaining. And so those don’t really reopen unless there’s a rate increase. So you’re able to kind of keep margins pretty consistent. On the clinical side, hiring is good.

I think we still have some it’s still more challenging than personal care, and it probably will be for the foreseeable future, but we’re not in a position where we’re constrained from a growth perspective because of hiring. It’s just could be better. You’re seeing a little bit more wage pressure there, but it’s moderating. I think we were in a 4% to 5%, three % to 4% environment. So I think it’s been steadily improving over the last twelve to eighteen months.

Joanna Gajuk, Analyst, America: And since we switch a little bit to clinical, this is just maybe we can talk about, I guess, home health as it relates to also recession because that’s another topic. At some point, the market was worried pain might be coming into recession. And I guess you just brought up the food, me, the concept around, sounds like the labor is not only issuing home health and doing a very good job in personal care. So how should we think about recession, if there was a recession, right? How this business has performed in prior cycles?

Maybe you can remind us, I guess, care and also patch on the clinical side.

Patrick, COO, Addus Home Care: Yes. I think when you think about clinical side, I don’t really there’s minimal impact. I mean if you need home health or you need hospice, and hospice doesn’t have co pays. So there’s really not much of a if you have a knee surgery, you have a knee surgery or a hip replacement or a cardiac event. So I don’t think recession really plays in there.

On the personal care side, as long as it’s not a prolonged deep recession that might negatively impact state budgets, it’s actually probably a little bit of a tailwind for us because you probably open up more caregivers opportunities.

Joanna Gajuk, Analyst, America: Just looking down my list. And I guess, yes, so we I wanted to switch to the home health, and I was asking a little bit about reimbursement, right? So what’s your expectations for the upcoming year? And more important, how you think this big recruitment is going to play out, if at all? Is there something to be said about, hey, maybe CMS will try to push it again or do they have to address it?

Then if they do, are they going to come out and say something like ten year phase in of this recruitment? How are you guys thinking about that for him?

Derek Alexander, Chairman and CEO, Addus Home Care: Yes. I think that is the challenging part of home health right now. And it’s one, I think we’ve been saying for three or four years, we felt the government would eventually change their attack, so to speak, on the rate environment in home health, and it hasn’t happened yet. That being the case, it will be interesting to see if the new administration takes a different approach to home health. I believe some of the new folks in CMS believe in home health.

So our thinking would be once we see if rates get back to a more normal cadence, we’ve been getting very little rate increases, but we get back up to that 2.5% rate increase. That makes the industry a lot more exciting. I think then you have to talk about the potential clawback. And that’s the thing that’s really an unknown. I think what you talked about is probably the only way it can be handled.

If they do believe there needs to be a recruitment, I think it’s going to have to be over a period of time with an annual adjustment negative factor to any rate increase that would be. I think to do it to any other way to the industry would be very difficult. So we don’t know. We have heard that potentially something will be decided by the end of the year, but we’re kind of waiting. It’s been an interesting time for us because certainly, as we’ve talked about, home health could be is a valuable part of our service.

It’s something that we’d like to do a little more growth in. Right now, it’s running just over 5% of our business, and it’s one that we’ve kind

Patrick, COO, Addus Home Care: of

Derek Alexander, Chairman and CEO, Addus Home Care: been careful, especially the last twelve months. So we’d love to do some more growth in Texas around both home health and hospice as well as personal care. But as far as the home health itself, we think we’re gonna wait and see the next few months what what the, government brings out.

Joanna Gajuk, Analyst, America: And I guess in home health, know, where are you stand on Medicare Advantage in terms of the mix of these contracts and facilities versus representatives? At some point, the company was clearly exiting some of these contracts that didn’t make sense. So is there more, you know, to be done or you’re kinda where you wanna be? And I guess, you know, where you are, I guess, we don’t manage your guys because of these big complaint about trend and such. So is it getting harder to kind of make some progress there and getting some better rates or

Patrick, COO, Addus Home Care: Yes. I mean, we’ve had some success on getting some increases in per visit rates. Currently, our kind of episodic, nonepisodic mix, when you look at traditional Medicare plus our episodic Medicare Advantage, we’re at around 55%, forty five % in favor of episodic. And that really hasn’t changed a whole lot. I think we had over the past twelve months, it may have gone from $56.44 to $55.45 from a revenue standpoint.

Well, from a volume standpoint, I should say. So we haven’t seen a lot of mix change there. We are having ongoing discussions with payers about moving to some sort of episodic or case rate. I think a lot of that is because of the Gentiva transaction. Honestly, on the personal care side, we’ve become a much larger provider for a lot of these payers.

And so that has opened us some doors to talk in terms of getting some national support for at least starting with some state contracts there. So we’re in active discussions on looking at some case rate contracts with some of the larger payers. Still work to be done there. But it will be an interesting year for us. But mix wise, we’ve been pretty stable.

Joanna Gajuk, Analyst, America: All right. And I guess moving on, because we didn’t talk about it yet, right? Hospice is bigger than home health for you guys. So it sounds like loans actually did accelerate nicely in Q1, right? So are you finally getting traction there?

Because, again, kind of that business was kind of slow to, I guess, recover post the pandemic and the mortality and such. So from here, should we expect this kind of type of growth that you saw in Q1 to continue?

Patrick, COO, Addus Home Care: Yes. I mean, we have said kind of long term, we expect kind of a 5% to 7% revenue growth for hospice. We exceeded that in Q1. I think we’ll be at the top end or above the 5% to seven for this year. We are starting to see, I think just industry wide, we’ve gone through COVID was had the biggest impact on hospice of any of our segments.

When you saw it’s kind of interesting, home health was almost like a V shaped recovery. I mean, it got just crushed and then within months, it was kind of back to recover. Personal care certainly was a little bit more of a drag over that time period, but we got great rate supports that helped us. Hospice is the one that has taken the longest to recover. I think the excess deaths from COVID have largely filtered through the system and you’re now starting to see the favorable demographics of the aging population start to come back.

There were some things that were in place during the public health emergency that allowed or incentivized SNFs to skill patients longer that probably would have been transferred to hospice. Those are now gone. And I think you’re starting to see a normalization of one length of stay and utilization. It’s so a favorable dynamic. So I am pretty confident that we’ll be at the high end of that 5% to seven this year and probably a little over it.

Joanna Gajuk, Analyst, America: We only have a few seconds. In fact, I want to ask that in terms of the cash flow outlook for the year, how we should think about it? I mean, think I know the answer, but talk about the uses of capital deployment strategy.

Brian Pogg, CFO, Addus Home Care: Yes. I think cash flow for us has been pretty consistent, pretty strong in the last few years. I think we expect that to continue this year. I think we’ve talked in terms of conversion rate of 75%, eighty % of GAAP EBITDA to cash. We’ll see a little bit of up and down usually with timing of AR this year, but nothing that we’re looking at that should really impact that.

But uses of cash for the moment, I think we still have a decent amount of debt on our balance sheet, even though we’re at a low leverage, but we’ll continue to make progress on paying down the revolver, mitigating interest expense at the moment. And then where we could find M and A, we definitely would like to deploy capital in M and A with those opportunities.

Joanna Gajuk, Analyst, America: Great. Thank you so much. That’s all the time we have today.

Derek Alexander, Chairman and CEO, Addus Home Care: Thank

Patrick, COO, Addus Home Care: you, Thank you. Thanks, Joanne.

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