Addus HomeCare at KeyBanc Forum: Strategic Growth and Challenges

On Wednesday, 19 March 2025, Addus HomeCare Corporation (NASDAQ: ADUS) presented at the KeyBanc Annual Healthcare Forum 2025, offering a strategic overview that highlighted both opportunities and challenges. The company’s integrated service model and recent acquisition of Gentiva were central to discussions, alongside the potential impacts of Medicaid policy changes.

Key Takeaways

• Addus targets a minimum of 10% top-line growth in 2025, with 40% to 50% expected to be organic.
• The integration of Gentiva is on track, expanding Addus’s reach and market strength.
• Rate increases, particularly in Illinois, bolster the company’s growth prospects.
• The labor environment has improved, aiding workforce stability in personal care.
• Addus is focused on expanding in Texas and leveraging value-based arrangements.

Financial Results

• Target Growth: Addus aims for at least 10% growth, with nearly half expected to be organic.
• Rate Increases: Significant rate increases in Illinois position Addus at the high end of a 3% to 5% organic growth range.
• Gentiva Acquisition: Completed on December 1, this acquisition strengthens Addus’s market presence and offers new state opportunities.

Operational Updates

• Geographic Density: Operating in 23 states, Addus prioritizes being the largest in its existing markets.
• Gentiva Integration: The acquisition has been smoothly integrated, with payroll and benefits transitioned on day one.
• Workforce Leverage: Efforts continue to maximize personal care workforce efficiency and reduce turnover.

Future Outlook

• 2025 Expectations: Addus anticipates a robust year, driven by the full impact of Gentiva and ongoing rate increases.
• Texas Expansion: Plans include acquisitions and the addition of clinical services to strengthen presence.
• Medicaid Policy: Addus is prepared to navigate potential changes, leveraging its low-cost provider status.

Q&A Highlights

• Integration Durability: The company benefits from increased appreciation for home care services.
• Private Pay Expansion: Addus explores expanding Gentiva’s successful private pay business across its footprint.
• Margin Impact: Seasonal factors and business mix shifts are expected to compress margins in early 2025.

For a detailed understanding, readers are encouraged to refer to the full transcript below.

Full transcript - KeyBanc Annual Healthcare Forum 2025:

Matthew Gilmore, Healthcare Equity Research, KeyBank: Alright, I think we’re ready to get started. I’m glad you’re here too for the Addis Homecare presentation. So welcome to everyone. My name is Matthew Gilmore and I lead healthcare equity research coverage for KeyBank. Joining me on screen is Addis Homecare CEO Dirk Allison, President Brad Brickham and CFO Brian Poff.

Addis is a leading provider of home care services, including personal care, home health and hospice. The company operates over 200 locations across 22 states and cares for approximately 48,000 people every day. This will be a fireside chat format, so I’ll be leading Q and A. Feel free to submit questions through the dialogue box. We’d be delighted to get them addressed.

So with that, Dirk and team, welcome and thanks for joining us.

Dirk Allison, CEO, Addis Homecare: Thanks, Matt. Thank you, Ms. Rose.

Matthew Gilmore, Healthcare Equity Research, KeyBank: Well, I, you know, I’ve been trying to start these conversations at a at a higher level before we kind of dig into financials and maybe some of the policy discussions even. So I did sort of want to start off at that level. But you know, maybe either you know Dirk or Brad or or Brian, if you could, if you could start off by describing why it makes sense to have these three businesses together. What are some of the benefits you all get from the density that you’ve really purposefully created across your, across your state markets, that that’d be a great place to to start off the conversation.

Dirk Allison, CEO, Addis Homecare: You bet. Appreciate it, Matt. You know, if you go back a number of years back to 02/2016, and that’s when we, as a team started to join as a management team of Addis, we were 100% personal care at that point in time. All of us had come from a clinical background. We had hospice in our background most recently.

Some of us had home health in our background in prior years. And so once we started looking at the personal care market, what we discovered in our mind was this was a great first entry into the home based care. You know, we’re we’re one of the services that’s the earliest in the home. We stay there between two and three years on average with every client in which we take care of. But what we saw after a year or so was we felt like there was additional services in the home that we could offer that would be very beneficial to our clients and their families.

When you think in terms of personal care, you look at our elderly and disabled population, our average age is probably between 75 and 80. So these are individuals that while they need help with the activities of daily living in their home each day, They also it’s not unusual for them to have occasional need for home health. They may go into the hospital and they come out and need home health services and, you know, who can offer them that services? Can you keep them in the home? And so we thought, well, this would be a great way to extend the care that we can give to our current, families and clients.

And so that’s why we looked at home health. And then we obviously felt like that because of the age of our clients and the personal care side of our business, that in their future, they were going to be a number of them, a high percentage of them that would benefit by that most viable service that we offer, which is hospital hospice, which is in our mind one of the great services you can offer families as their family member goes through end of life. So for us, it was a natural extension. Now when we thought about that, it all starts with what you talked about density in the state. We weren’t trying to be the largest in The United States.

We were trying to be the largest in the states in which we operate, which stay about 23 states. Having geographic coverage gave us a lot of strength when we not so much negotiated rates with all of our services, because most of our services have a stated rate, but it allowed us to be have the coverage necessary to the payers, whether that’s the state, whether it’s MCOs, whoever that might be. It allowed us to take care of their members or their residents, all across the state. So they didn’t have to worry about, well, if we use Addis, they can’t service in this part of state, but they can in others. We could traverse the entire market.

So that’s really why we started with geographic density adding these additional services on top. And what we have found is there’s great synergies between the three levels of care. We have a number of our home based clients that we might serve either, let’s say, home health and then they move into hospice. We might have folks that we service home health and personal care. There’s different avenues that we can service these clients, but we felt it made a lot of sense even though as these clients and patients move up the scale, they have choice.

We thought by having them be familiar with Addus and the type service we offer, the quality we try to perform each day, that it made sense to try to then work with them as they went up the scale on clinical services. And that’s really what led us to where we are today with our strategy.

Matthew Gilmore, Healthcare Equity Research, KeyBank: Got it. That that makes a lot of sense. And, you know, your your guys’ tenure in terms of running the company is really, you know, been pretty remarkable in terms of performance of the business over the last six years. I did want to sort of transition to a sort of State of the Union, and maybe looking forward a little bit. You’re you’re coming off a strong ’24 and, you know, same store revenue growth again, you know, over the high end of your long term outlook and that translated into some nice EBITDA growth.

And you’ve also, you know, made some improvement to the portfolio in terms of exiting New York and and, the Gentiva acquisition that you recently closed. But I I thought we might do a quick kind of retrospective in terms of what have been some of the items driving the stronger performance in in ’24. And then as we look ahead, what are some of the expectations you have for ’25 in terms of same store revenue growth and and pricing and and the labor environment that, ultimately kind of roll up into the EBITDA for the company?

Dirk Allison, CEO, Addis Homecare: Why don’t I start off just the general, then you guys can talk about labor and some of the other things. You know, I think ’24 was a good year for us. We had great support from our states. Our operations team did a great job in trying to work their way through redeterminations, which while redeterminations that the states had to go through was not a direct impact, as big a direct impact as a lot of healthcare services were affected by. If you look at us, it was more the fact that the states had to take their time to do redeterminations as opposed to, especially in the personal care world, looking at new patients, looking at new consumers, going out and actually doing the assessment on-site, determining how many authorized hours they were going to give us and then pass them along.

And that slowed down a bit towards the latter half of the year. And we’re now Brad can talk about how we’re starting to see that improve. But it was still a good year. And so, you know, we’ve set this target out there. It started in 2016.

We wanted to grow a minimum of 10% on the top line, half of that being, you know, 40% to 50% of that being organic, the rest being both acquisition growth. And, we had a really good year as far as organic growth. We had some strong support from states with rate increases. We started to see some volume growth come back from the redeterminations. So that was very helpful.

And then, you know, we spent the year waiting and planning for our largest acquisition, JunTiva, to close, which happened on December 1. And so it really sets us up. You talked about what do we expect in 2025. We’re now rolling into this year where we’re going to have all twelve months with Gentiva, an important acquisition for us that gave us two new states and five markets where it strengthened where we had already operated. We still believe very strongly in our 10% growth target.

We believe that there’s still a number of acquisitions out there that allow us to get there. And it looks like this year with the rate increase we recently received at in Illinois, which happens to be our largest personal care market, that we will be at the top end of that 3% to 5% organic growth. So looking forward to 2025, we believe will be a very strong year. And part of that will be continuing our strong labor that Brad can talk about.

Brad Brickham, President, Addis Homecare: Yes. I mean, the labor environment, particularly when you’re looking at the Personal Care, has really improved pretty dramatically over the past two years after we got through COVID and some of the enhanced benefits that were out there, unemployment benefits and such. Hiring numbers were good in Q4, a little down sequentially, but that’s kind of normal just variation with the holidays. Tends to be a little bit of a seasonality there. But up over the prior year, we’re, you know, in a good spot now.

So having good, solid hiring numbers. So really, our we’ve done a lot of work on the hiring over the past three, four years trying to make it easier for people to apply, make sure we get good candidate flow coming in, and speeding up our response and getting people their first billable case. So it’s been kind of one of the big initiatives we’ve had over the past several years. Now, where we’ve kind of pivoted and really started focusing on is how can we better leverage our existing workforce and which addresses one, just getting more hours out of that workforce, but also addressing one of the core reasons why people may leave us is because they’re not getting all of the hours that they need. And so some of the things that we’re working on from a technology standpoint are really geared to try to address that component of it.

So I think hiring numbers on the PCS side, we’re in a good spot, where I think there’s opportunity for us, honestly, is really trying to work on maximizing our existing workforce that we have on the personal care front. When you look at the clinical side of the business, certainly that’s improved significantly over the past year and a half. There’s still pockets where you have some challenges to find maybe a CNA in a place like Oregon. That can be a little bit of an expensive market, but overall, we’re in a good spot there. I think from a wage standpoint, you know, we’ve pivoted from kind of a 4% to 5% environment.

Now we’re kind of more in a 2% to 3% in some markets, maybe 3% to 4% in a couple of markets. But I would say staffing is not the hindrance to growth on the clinical side. I think we’re in a it’s challenging, but it’s manageable.

Matthew Gilmore, Healthcare Equity Research, KeyBank: Got it. And then, maybe double clicking on that a little bit on the, you know, the personal care, you know, rate environment and, you know, what that means from a a recruitment standpoint. It seems like we’re in an environment right now where the rates you’re getting are maybe a couple bucks above minimum wage and you know that creates a really nice kind of backdrop for you versus you know where we were several years back when minimum wage was increasing and there are some periods of of mismatch. Is that really what, you know, Brad kind of undergirds the stability that you mentioned in terms of your ability to recruit and retain? There’s that sort of differential that currently exists.

Brad Brickham, President, Addis Homecare: It certainly helps. You know, we have been very fortunate over the past three to four years of getting some really good rate support, from our, from The States. And that has translated to, you know, sometimes you’ll catch us say that working with a minimum wage workforce, we really don’t anymore. We’re paying above comfortably, generally above minimum wage in every market, and that’s because of the right support that we’ve had. And certainly, that has helped the hiring numbers.

I mean, I can show you, I mean, a great example is we got a nice rate increase in Ohio. Certainly helped on the top line, but where it really helped, I mean, just straight up just on the billable rate, but just the volume growth in a state like that really helped us on the recruiting front. And we’ve been able to do some pretty have some pretty impressive gains just straight up volume without even factoring in the rate component. But the rate component allowed us to pay the higher wage and certainly made us a lot more competitive vis a vis, you know, other areas that people could have worked at, hospitality, that sort of thing.

Matthew Gilmore, Healthcare Equity Research, KeyBank: I was gonna ask about the durability of that, you know, rate environment at the state level. You know, I’m sure that reflects a lot of things, including, you know, just the value you guys are providing your state partners and your ability to communicate that value. But how are you feeling about the durability in terms of, just getting adequate rate updates from The States at this point?

Brad Brickham, President, Addis Homecare: Yeah. I mean, I think it’ll be a little softer environment going forward, I think, with some of the potential pressures. Now that being said, I think, you know, over the, I think COVID, one of the silver linings, at least for us from a business standpoint, was an increased appreciation of providing care in the home and the value that that brings. And so I think there’s a lot more appetite to for states to make sure that we are in a position that we can hire the caregivers necessary in order to fulfill the demand that’s out there for

Dirk Allison, CEO, Addis Homecare: our services. Let me add to what Brad said. We did just recently receive a rate update from Illinois, our largest state. They’ve been very positively driven towards giving us rate increases the last few years. We don’t see that necessarily changing.

We believe there’ll still be support. We’ll have to wait and see again because it’s a year by year effect. But we have other states like we’re waiting on right now. There’s a couple of our larger states that are in session and some of them have proposals still early, but have proposals that could potentially give us rate increases that would be very nice from a standpoint of our company performance during 2025. So while we do believe that, I’m sorry, while we do believe that it won’t be as strong of environment maybe we saw during the COVID period when people really stepped up with rates, we do believe it’s still gonna be a good environment.

And that certainly some of our larger states that have budget surpluses have shown their willingness to work with us going forward with enhanced rates.

Matthew Gilmore, Healthcare Equity Research, KeyBank: Got it. That’s great. Why don’t, I wanted to ask about, you know, the home care and hospice, but, you know, the clinical side of the business, but sort of from an angle of, you know, give us a sense for how integrated those businesses are at this point into the personal care segment and, you know, maybe one way to attack that would be sort of the proportion of referrals you get from your clinical operations from personal care. I don’t know if that’s something you guys, you know, track internally. And and what are you know, help us kind of think through the app aspirations for driving more of that clinical overlap over the next couple years.

Brad Brickham, President, Addis Homecare: Yeah. I can start out. When you look at, let me start first with home health to hospice. So, which is where we would like to get from a personal care standpoint as far as transition to home health and hospice. We have the benefit on home health to have some software tools that help identify when a home health patient, should probably consider hospice.

And we can introduce the concept of hospice to the patient and the family. In our most mature market, which is New Mexico, where we’ve had the, we have a large home health, large hospice program that overlap nicely in the state, we get about 25% of our admission volume is from our home health into our hospice. Are we ever gonna get to that type of a number? Don’t know. Maybe.

You know, we have a pretty big personal care presence when you look at, you know, New Mexico and Illinois and at Tennessee where we have all three service lines. You know, the challenge there has been until about a year and a half ago is really being able to identify I mean, if you are taking care of 5,000 clients, how do you know which ones are, you know, should be we should consider for services? Well, through our value based arrangements that we’ve had with managed care on the personal care side, through that, we implemented a clinical system that took the changes of condition that we, our caregivers, identify. It also pulls in external resources, hospitalizations, that sort of thing, that feeds into a system that we can now risk score clients, so personal care clients, which helps us take a narrow that focus down to hear the the 50 clients that we need to think about today. 30 of them may be somebody, individuals that home health might be an opportunity, whereas the others might be hospice.

So, I would say right now, we’re still that’s one of the biggest potentials we have out there and one of our key focus areas is really maximizing that continuum of care. So right now, the number of home health and hospice admissions coming from personal care into our skill programs, you know, is not as meaningful as we would want it to be. But I think there’s a tremendous opportunity as we implement these systems, improve the training that we have with caregivers to report changes condition as we modify and improve the algorithms that are looking at that information and identifying here are the individuals that we need to focus on, I think that number can be certainly very meaningful. Because if you just look at the just surely look at the, solely look at the demographics of the population we serve on the personal care, tremendous opportunity. You know, these individuals are, you know, in and out of the hospital, which means they probably have opportunities to have or needs for home health.

And certainly at the age that, hospice is something that is is certainly, down the road something that they would like to get they would access at some point. And so I think with some of the tools that we have in place and that as we continue to expand those, I think it’ll become a very meaningful part of the the referral volume or admission volume that we get into the skill

Matthew Gilmore, Healthcare Equity Research, KeyBank: side. In in in terms of some of the tools and systems you are referencing and then the processes that come along with that, is is that, is that tied to the home care home base rollout that you’ve you’ve talked about? So, you know, as you roll that out, then maybe there’s some knock on benefits, you know, particularly on the on the clinical referral side. Is that a fair way to think about it?

Brad Brickham, President, Addis Homecare: Well, it’s actually this is, outside of Homecare Homebase. However, Homecare Homebase having everybody on one system will certainly enhance that opportunity. So, we view where, you know, we couldn’t wait for the full development of Homecare Homebase, so we went out there and, you know, added some tools, but it’s certainly items that we’ll be able to utilize in Homecare Homebase and expand upon with that software. So certainly an opportunity and one of the things that we’ve talked about, getting everybody on the same system will have some significant benefits and being able to really maximize that continuum of care opportunity.

Matthew Gilmore, Healthcare Equity Research, KeyBank: Got it. I wanted to circle back on the Gentiva acquisition, you know, I think you closed it December 1 and, you know, clearly a noteworthy, you know, deal is probably one of your largest deals to date and you know really gives you a pretty big presence in Texas, which I know has been a priority, but I’d love to hear any observations you have about the business now that you’ve owned it for three or four months? And then if you could share, sort of in particular what the strategy is in Texas and sort of the future opportunity in that geography?

Brian Poff, CFO, Addis Homecare: Yeah. I mean, I can

Brad Brickham, President, Addis Homecare: start. Opportunities?

Dirk Allison, CEO, Addis Homecare: Yes.

Brad Brickham, President, Addis Homecare: So I mean, when you look at the I mean, it was our largest acquisition to date, was one of the most aggressive kind of integration timetables that we’ve had. Normally, we don’t move people to our payroll benefits until thirty to sixty days post closing, and we operate under a transition services agreement. Didn’t have the ability to do that in this particular deal. We were able to successfully move everybody to our payroll and benefits day one, which hats off to our internal team working on that, but also to the leadership on the Gentiva side. It’s really been a very, I hate to jinx it, but knock on wood, smooth transition and integration.

And primarily, I think due to the fact a couple of facts. One, this is an asset that changed hands five or six times previously. A lot of the leadership had been through those integrations. And so this wasn’t something new. And they also were able to kinda help us kinda identify where there might be pain points and we could address those in advance.

Secondly, coming into a predominantly a personal care organization, I think was welcome welcoming to them. They were actually were able to get see some of the tools that we have available on our side of the business on the personal care side, some of the dashboards and business analytics tools that now we’ve been able to provide to them. So, they are now live on our dashboards. They can see some of the same trends that we’re able to see that they didn’t have available to them previously. I think we’re still in the process of looking at, you know, some of the things that they bring to the table is a little unique.

We have private pay, we do a little private pay, we don’t do a lot. They had a much larger private pay business than we do. They have a Salesforce that’s connected to that. So we’re learning a lot from that, and looking at opportunities to be able to expand that to our footprint in other states. So integration has gone very well, very pleased with that and really excited about the opportunities as we look to expand some of the private pay, as we look to give them some of the business analytics tools that we’ve had available to us that I think will really benefit their operations.

Brian Poff, CFO, Addis Homecare: Yeah. I think just, Matt, on the opportunity, I think Texas now with a large personal care presence there, we had a little bit of hospice in, like, at the Central Texas area already. But that puts us in a really good position. Even with us being the largest provider of personal care in the state, we’re still a very small percentage of the overall market. So I think we see a really good opportunity to continue to to do some additional acquisitions in personal care to to kind of enhance our market share in Texas, but also adding some clinical services, so maybe hospice in some other areas, some skilled home health.

You know, it’s managed Medicaid, operates in the state of Texas, which we always prefer. You know, we like to do some things with them, you know, maybe on the value based side. So having kind of that full continuum, I think, will be helpful. Obviously, Texas is a great state right now from a just a budgetary standpoint. Aging demographics, a lot of folks are moving into Texas.

So a really good market for, you know, the population that we serve.

Matthew Gilmore, Healthcare Equity Research, KeyBank: And is the you know, this is sort of an M and A question, but is the market structured in a way where there’s sort of chunky deals to be had in Texas or will it be sort of ones and twosies as you just build it out kind of, you know, in more sort of the mom and pop type of opportunities in terms of the personal care acquisitions you could do in Texas.

Brian Poff, CFO, Addis Homecare: I think we think it could be a combination. I think there are a few things that are, you know, more sizable that, you know, might even have a couple of the different service lines in there, but there is obviously a lot of fragmentation. So a lot of the small opportunities as well. So it could be a combination.

Matthew Gilmore, Healthcare Equity Research, KeyBank: Got it. Well, let me try to tackle policy, for a for a little bit and, you you know, you you all provided, I thought, some really thoughtful, you know comments on the fourth quarter call on policy as it relates to you know what’s being discussed around Medicaid and you know when we look at the actual specific policy proposals, it seems like you all would be pretty well insulated, but I think right now the market still feel somewhat uncertain. So hopefully we get some clarity on you know what actually we’re talking about and then we can sort it out. But I was hoping you could you know, rehash a little bit in terms of either kind of what you’re hearing, in terms of what’s being discussed and how you sort of think about your, your exposure to some of those potential proposals that are out there.

Dirk Allison, CEO, Addis Homecare: Yeah, it has been a very interesting time, Matt, with Medicaid, the discussions around Medicaid and how that might affect not only Addis, but the industry. I think we did try to walk through that at the call. I think what we’re hearing, I think the first two things we talked about on the call were caps from a standpoint of so much dollars per member covered in a state. And then also the potential for the floor of the FMAP to come down. According to our lobbyist in Washington, there’s not a lot of appetite for that.

I think, the president might have even some of his staff has come out. Maybe the speaker said we’re not gonna be touching those two particular issues. That’s off the table. So we’ll wait and see. If you go below that and think about the the remaining items and how they could affect us, we don’t see a lot of issue.

Let me let me talk briefly about those. You know, when you when you there’s a couple of things they’re try they’re gonna take credit for on dollar savings if they get rid of the Medicaid access rule, getting rid of the eightytwenty, that gives them a certain dollar. I think they put about $120,000,000,000 price tag on that. I think if you get rid of the SNF nursing ratio requirement, that’s about 20,000,000,000. And then I think work requirements, where if you think about work requirements used to be, the norm, went away.

Today, if they reinstitute work requirements, if you think about the rules as they were before, people that are over 65 years old and retired are not going to be required to go back to work. The disabled are not gonna be required to go back to work. That’s who we take care of. That’s our population base. So from a standpoint of any of our patients consumers being affected, we feel like there’ll be no real effect there.

What it could actually do, if you think in terms of if younger individuals, maybe they’re single family, single parent families, that parent has to now go back to work for, say, fifteen, eighteen, twenty hours a week. They might have childcare issues, so they’ve got to work around a schedule when grandparents or others might be able to take care of those children. We’re a perfect employer for those particular folks. We can work our schedules around. Our average caregiver is right at twenty hours or less.

So we believe that it could actually help us hire new folks if those are actually implemented. And if you think in terms of that, what we’ve said for the last five years, the real the real top line factor for our internal growth is how many caregivers can we hire. And so if we have a new group of caregivers out there that potentially can come on board, we think that’ll be a positive. The final aspect that they talk about is waste, fraud and abuse. And Addis, along with some of the other big providers of personal care, have been talking to the we encourage implementation of rules and regulations that take care of the fraud, the waste, the abuse, because we have spent a lot of dollars.

We put millions of dollars into building a very strong compliance and quality program here at Addis that we believe helps prove that we want to be a good citizen when it comes to things such as Medicaid dollars being spent. So all of that put together along with one important fact that we’ve been saying for the last forty I guess it’s now forty six years actually, being since being founded in ’seventy nine, is that we’re the low cost provider. If you think about a Medicare program, let’s take the state of Illinois, which which is our longest partner. We’ve been talking to them for years about the fact that we can help these very tenuous patients, these elderly patients that are high cost health care cost patients. We can help keep them out of the emergency rooms.

We can help reduce readmits to the hospital. We can keep them out of SNPs, which are a much more expensive way to take care of these patients as opposed to keeping them in their house would say seventy hours of care a a month. So for us, we believe we’re in the sweet spot. If states receive any pressure from what’s going on as far as their Medicaid program, we think we can be an answer to help them with that. But with what is being spoken about today, we feel like there’ll be very little direct impact to a company like Addis.

Matthew Gilmore, Healthcare Equity Research, KeyBank: Yeah. We we hosted a policy panel earlier today, and they were and and this included even some, you know, conservative policy thinkers and they were they were echoed a lot of what you said in terms of some of those across the board cuts being unlikely in terms of, you know, like across the board changes to FMAP, that sort of thing. And it seemed like, you know, the main focus was on the low hanging fruit that they described was the work requirements and maybe some focus on provider taxes and then, much much less likely as some of those across the board cuts that you mentioned. And some of the silver linings you brought up right, I think are interesting to consider too. You know, one other I was thinking we just had to do with you know let’s say there is some reduction to Medicaid provider taxes, where you know you guys don’t have exposure, but you know folks like skilled nursing facilities do.

And so you had you mentioned silver lining in terms of, you know, potential for labor supply to come. I was curious if if you thought there was any validity in terms of you know, if there’s some pressure on skilled nursing facilities over a couple year period, did that have a bearing on on your business as well?

Dirk Allison, CEO, Addis Homecare: Well, you know, I think any pressure that’s put on the Medicaid program, whether it’s skilled nursing facilities, through this reduction in tax, if that’s what occurs, hospitals, you know, having the Medicaid population coming there. I think anything we can do to help avoid, the need for those higher cost services will be a benefit to the various state Medicaid programs. So, you know, again, not knowing that everybody’s going to have to deal with this, whether they’re SNFs, whether they’re hospitals. I think for us, what we take the approach is this, if we can continue to be the low cost provider, if we can continue to be an avenue for the state to utilize to help take some of their Medicaid patients out of these higher cost services, if we can, if our services can keep them at home, then that’s a real positive for the states. And that’s kinda how we approach that whole scenario.

Matthew Gilmore, Healthcare Equity Research, KeyBank: Yeah. I think that’s that’s probably the the most important kinda high level point in terms of folks that are driving efficiency in in the system will, you know, they’ll be better off on the back end of it, no matter what. Brian, I thought I might ask you the last question in terms of just 2025 seasonality, if you could kind of give us some some pointers there. There’s just there’s a lot of things moving in and out of the P and L, but if you had any kind of quick reminders for us in terms of how we should think about the, you know, the p and l progression over the next couple quarters and, you know, particularly in terms of, like, gross profit and and SG and A, that that’d be great.

Brian Poff, CFO, Addis Homecare: Absolutely. Yeah. I think, you know, just from, the last quarter call, I think thinking about Q4 into Q1, Q1 is typically always our lowest kind of margin quarter just because of the reset of payroll taxes. We give our annual merits to our administrative staff, usually are effective March 1. We are gonna have a little bit of a mix in the business shift, with Nextiva being in for a full quarter being personal care.

So a little lower margin profile than our clinical services. So that’ll happen in q one. So I think my commentary from our call was to expect you know, gross margin compression from q four to q one about 200 basis points. But, again, that’s normal. We see that every year.

So nothing that’s unexpected there. And the way we typically see that kinda play out through the year, just normal seasonality, we usually see some increase going into q two, usually forty, fifty basis points, somewhere in that range as we hit some of those kind of unemployment payroll tax caps. As we get into q three, it’s usually pretty static, not a lot of movement. Q four, usually our highest margin quarter of the year as we get more of those unemployment tax caps, and then we also get our hospice rate increase. So that’s the way that we should think about kind of this year.

A lot of moving pieces we understand, you know, toward the end of last year with New York kind of moving out and Geneva coming in. This year as it stands right now should be pretty straightforward from that respect. So, you know, as we grow top line, we’ve talked about personal care with some of the rate support from Illinois, we expect to be kind of toward the the high end of that three percent to 5% organic revenue growth mark. And then, you know, we expect our hospice and home health to also move into that kind of mid single digit range. We should continue to get leverage on G and A.

So as we see that growth, we should get some additional expansion on the bottom line.

Matthew Gilmore, Healthcare Equity Research, KeyBank: Got it. Guys, I think we’ve got to leave it there. I did before we go, I did want to just congratulate Brad on his retirement. I know he’ll be around for another year, but, you know, certainly an important event to acknowledge. So, Brad, congrats and guys, thanks so much for being here.

We appreciate you spending the day with us.

Dirk Allison, CEO, Addis Homecare: Thank you, Max. Thanks very much.

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