Addus HomeCare (NASDAQ:ADUS) executives used a fireside chat at KeyBanc’s Healthcare Forum to outline operational priorities for 2026, discuss the pace of personal care census recovery after Medicaid redeterminations, and address the policy backdrop around Medicaid funding and oversight.
2025 focus areas: hospice improvements and personal care growth mix
CEO Dirk Allison said a major internal focus early in 2025 was rebuilding performance in the company’s hospice segment. He said Addus made investments beginning in October of the prior year, including leadership changes as well as sales and marketing training, with the goal of returning the hospice business to pre-pandemic performance. Allison said the company saw “really good progress” during 2025 and is encouraged heading into 2026.
Personal care census trends: redetermination disruptions easing in key states
In discussing same-store census trends, management highlighted that Illinois, Texas, and New Mexico make up roughly 70% of Addus’ personal care business, and each experienced operational disruption from the Medicaid redetermination process. Allison explained that the company monitors “starts of care” versus discharges; in a normal environment, starts exceed discharges and drive census growth.
According to Allison, New Mexico and Texas were the first states where the starts-versus-discharges relationship flipped negative, driven not by elevated discharges but by slower authorizations of new clients as states reviewed eligibility and approved hours. He said New Mexico returned to a more normal cadence early last year, with Texas improving a few months later, around mid-year. Illinois took longer, with starts lagging through the end of the fourth quarter, though management said the trend began improving in early 2026.
Allison also cited weather disruption—snow and ice affecting operations for “a week or two” at a number of sites—as a short-term factor early in the year. He said that by mid-February and early March, Illinois starts began “creeping back over” discharges. The company’s expectation, he said, is for sequential census growth to continue, with year-over-year comparisons becoming more favorable in the second half of 2026.
Rate environment and the value proposition: avoiding higher-cost institutional care
Allison said Addus has spent years building relationships with state stakeholders and making an economic case for personal care, arguing that home-based personal care can be materially less expensive than nursing home placement. He described personal care as a way for states and Medicaid payers to care for high-cost populations while conserving limited Medicaid dollars, particularly for patients who need help with activities of daily living and would otherwise require institutional care.
CFO Brian Poff reviewed recent rate activity and expectations:
- Texas: Addus received a rate increase in the most recent legislative cycle; Poff noted the state meets every two years and has provided rate increases in each of the last two cycles.
- Illinois: Poff said Governor J.B. Pritzker’s initial budget proposal in February did not include a personal care rate increase, consistent with the prior year’s initial proposal. While the union in Illinois is described as an active lobbying force, Addus said it is not currently anticipating an increase this year.
- New Mexico: Poff said the state has passed a rate increase that the governor has signed, and Addus expects it to be “around 4%,” effective July 1, though the company is still working through details.
Poff added that after several years of strong support, the company expects the cadence of rate increases to slow over time as some states have reached a point where providers can pay caregivers “nicely ahead of minimum wage” in most markets.
Regulatory scrutiny, compliance, and Medicaid policy issues
Addressing fraud, waste, and abuse headlines, Allison said Addus has invested in a “very strong compliance program,” including a dedicated team and internal auditing. He said the company seeks to bill correctly and, when it finds instances where documentation is not sufficiently supportive for reimbursement, it will proactively contact the state and repay amounts as appropriate. Allison said Addus supports efforts to reduce fraud and abuse, arguing that curbing waste can free up dollars for legitimate Medicaid services.
On audits, he said the company has seen “a few states do a few more reviews” on the personal care side but nothing out of the ordinary. On the clinical side, he said hospice has faced heightened attention on long lengths of stay and appropriate eligibility, though he characterized the level of attention as somewhat higher than the last two to three years but not unusual historically.
Allison also contrasted agency-directed versus self-directed personal care models, citing California’s shift toward self-directed care years ago. He argued self-directed models can be more susceptible to abuse because they lack independent agency oversight to confirm services were delivered, while agency-directed care includes supervisory visits and accountability around the plan of care.
On the “Big Beautiful Bill,” management said it agreed with the framing that there are no direct implications discussed for Addus, though investors have asked about indirect effects. Allison said provider tax changes primarily affect states that expanded Medicaid under the Affordable Care Act and noted Illinois as the key exposure among Addus’ large markets. He added that Illinois has long supported personal care and even operates a state-funded program outside Medicaid for some patients. On work requirements, Allison said the company views them as potentially beneficial for hiring because Addus offers flexible part-time caregiver roles, with an average of 22 hours worked per week.
Labor, technology, and M&A pipeline
Poff said the labor environment in personal care has been “pretty positive” over the last couple of years, supported by inflation-driven demand for additional work and a hiring backdrop that is often favorable when unemployment ticks higher. He said clinical labor conditions have normalized compared to pandemic-era pressures, and wage increases on the clinical side have moderated back toward historical ranges.
On hiring metrics, Poff said the company believes it needs to maintain hires per day “just above 105” to meet growth targets. He noted the company dipped to 101 during the fourth-quarter holidays but expects to return to the 105 level in the first quarter.
Management also discussed Addus’ caregiver app rollout, which enables caregivers to view schedules, review punches, correct issues before paychecks, update availability, and accept additional “flex” shifts. Poff said Illinois fill rates improved from the low 80% range to the upper 80% range over six to eight months and then plateaued. The company is rolling out the app concurrently in New Mexico and Texas, where fill rates have been closer to 80%. Poff said Texas offers a larger opportunity because Addus can use its own electronic visit verification (EVV) system there, while New Mexico requires providers to use a state-selected EVV vendor, limiting some app functionality like pushing flex-hour shifts.
On clinical strategy, Allison reiterated hospice as a focus and described home health as a smaller, complementary service line that supports value-based care relationships and can feed hospice admissions. He said about 25% of hospice admissions in overlap markets such as New Mexico come from home health. Allison said Addus has three markets with personal care, home health, and hospice today and would like to add more, but noted hospice valuations remain challenging given competition from private equity buyers.
Regarding acquisition strategy, Poff said Addus expects early 2026 activity to resemble 2025, focusing primarily on smaller personal care deals—often $10 million to $15 million in revenue—within existing markets to build density. He said those deals tend to price at “mid-single digit” multiples. Poff also said Addus is aware of a few potentially larger, multi-state personal care businesses that could come to market mid-to-late year and said the company is positioned to move quickly if a transaction fits strategically. On the clinical side, the company said it would be interested in smaller hospice deals at reasonable multiples and may also pursue transactions that include multiple service lines.
About Addus HomeCare (NASDAQ:ADUS)
Addus HomeCare (NASDAQ: ADUS) is a leading provider of home and community-based care services for elderly, disabled, and medically complex individuals across the United States. Through a network of company-owned and franchise locations, the company delivers a broad spectrum of non-medical personal care and licensed home health services designed to support clients’ independence and quality of life.
The company’s core offerings include personal care assistance—covering daily living activities, medication reminders, and light housekeeping—and skilled home health services delivered under the supervision of registered nurses and licensed therapists.
