Q1 2025 Addus HomeCare Corp Earnings Call
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Good day, and welcome to the Addus Homecare
Speaker Change: First quarter, 2025, earnings conference call. All participants will be in listen only mode. Should you need assistance? Please signal a conference specialist by pressing the star key followed by Zebro.
Speaker Change: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two.
Speaker Change: Please note this event is being recorded. I would now like to turn the conference over to Drew Anderson. Please go ahead.
Drew Anderson: Thank you, good morning, and welcome to the Addus Homecare Corp. 1st quarter, 2025 Earnings Conference Call. Today's call is being recorded.
Drew Anderson: To the extent any non-GAAP financial measure is discussed in today's call, you will also find a reconciliation of that measure to the most directly comparable financial measure calculated according to GAAP by going to the company's website and reviewing yesterday's news release.
Drew Anderson: This conference call may also contain forward-looking statements within the meaning of the private security's litigation reform act of 1995, including statements among others regarding Addus expected quarterly and annual financial performance for 2025 or beyond.
Drew Anderson: For this purpose, any statements made during this call that are not statements of the historical fact may be deemed to be forward-looking statements.
Drew Anderson: without limiting the full-going discussion to forecast, estimates, targets, plans, beliefs, expectations, and the like are intended to identify forward-looking statements.
Drew Anderson: You are here by caution that these statements may be affected by important factors among others. Set forth and add us filings with the Securities and Exchange Commission, and in its first quarter, 2025 news release.
Drew Anderson: Consequently, actual operations and results may differ materially from the results discussed in the
Drew Anderson: The company undertakes no obligation to update any forward-looking statements whether as a result of new information, future events, or otherwise.
Drew Anderson: I would now like to turn the call over to the company's chairman and chief executive officer, Mr. Dirk Allison. Please go ahead, sir.
Dirk Allison: Thank you, Drew. Good morning and welcome to our 2025 first-quarter earnings call. With me today, our Brian Poff, our Chief Financial Officer, and Brad Dickham, our President and Chief Operating Officer.
Dirk Allison: As we do on each of our quarterly earnings call, I will begin with a few overall comments and then Brian will discuss the first quarter results in more detail. Following our comments, the three of us would be happy to respond to any questions.
Dirk Allison: As we announced yesterday afternoon, our total revenue for the first quarter of 2025 was $337.7 million and increase of 20.3% as compared to the $280.7 million for the first quarter of 2024.
Dirk Allison: Our adjusted EBITDA was $40.6 million compared to $32.4 million for the first quarter of 2024, an increase of 25.1%.
Dirk Allison: During the first quarter of 2025, we continued to experience consistent cash flows. As of March 31, 2021-25, we had cash on hand of approximately $97 million.
Dirk Allison: During the first quarter, we reduced our bank debt by $20 million, leaving a balance of $203 million at the end of the quarter.
Dirk Allison: This gives us a conservative net leverage position had under one time suggested he be gone, allowing us the flexibility to continue to evaluate and pursue strategic acquisition opportunities.
Now let me discuss certain areas of our operation.
Dirk Allison: During the first quarter of 2025 we continued to experience solid caregiver hiring success, especially in our personal care segment
Dirk Allison: During the first quarter of 2025, we saw personal care hiring at 79 hires per day, up 1 hire per business day compared to the first quarter of 2024, and up 3 hires per day sequentially.
Dirk Allison: Please note that the hiring numbers include our best New York operations, as well as the recently acquired Geneva PCS operations, which had its first full quarter of operation as a part of Addus.
Dirk Allison: In addition to our strong hiring numbers, we continue to our momentum and starts per business day, which we have seen over the past few quarters.
Dirk Allison: With respect to our clinical service lines, ads had been consistent over the past few quarters.
Dirk Allison: We continue to see improvements in the overall clinical labor environment, although we do believe that for the foreseeable future clinical hiring will remain more challenging and geographically variable than what we see in our PCS segment.
Dirk Allison: As we have over the past few quarters, we continue to utilize the funding we received from the American Rescue Plan Act or ARPA. During the first quarter of 2025, we utilized over $2.5 million, leaving approximately 8.8 million remaining in accessible funds.
Dirk Allison: These funds are continuing to be used to help with caregiver recruitment and retention efforts as well as other opportunities to enhance our caregivers experience and training primarily in our new Mexico market. Brian Tanquilut, Scott Fidel, Matthew Gillmor, Brian Poff, John Ransom, Dru
Dirk Allison: In our personal care segment, our services continue to receive favorable reimbursement support for many of the states in which we operate
Dirk Allison: We are confident that personal care services continue to deliver real value to state Medicare programs.
Dirk Allison: as well as our managed care partners through a reduction in the overall cost of care and put us in a favorable position as changes to the funding and other aspects of various Medicaid programs are considered.
Dirk Allison: As we previously disclosed, effective January 1st, 2025, Illinois are the largest state for personal care services, enacted a 5.5% rate increase for personal care services bringing the rate per hour to $29.63.
Dirk Allison: We continue to appreciate the strong support that home and community-based care services receive from the leadership of that state.
Dirk Allison: Now let me discuss our same store revenue growth of the first quarter of 2025.
Dirk Allison: For our personal care segment, our same-store revenue growth was 7.4% compared to the first quarter of 2024.
Dirk Allison: During the first quarter of 2025, we also saw personal care same-store hours increased by 2% as compared to the same period in 24, our largest year-over-year volume growth over the past few quarters.
Dirk Allison: As we have stated over the past several quarters, we expect volume growth to comprise a greater percentage of our personal care same-store revenue growth going forward.
Dirk Allison: It is also encouraging that we continue to see improvement in our percentage of hours served compared to authorized hours as we show nice improvement over the first quarter of 2024.
Dirk Allison: This continued improvement, along with the completion of the state-led Medicaid re-determination process, should help us achieve and maintain our goal of same-store personal care our growth of at least 2% per year.
Dirk Allison: Turning to our clinical operations, our hospice same-store revenue increased 9.9% when compared to the first quarter of 2024.
Dirk Allison: Our total average daily census increased to 3,515 for the first quarter, up from 3,359 for the same period last year, and increased of 4.6%.
Dirk Allison: Our first quarter, 2025, same-store admissions were up slightly year over year, and were up 12.5% sequentially.
Dirk Allison: For the first quarter of 2025, our hospice medium length of stay was 25 days as compared to 2026 days for the fourth quarter of 2024.
Dirk Allison: Our stated target for this metric is mid-the-high 20s.
Dirk Allison: Overall, we are pleased by the continued improvement in our hospice segment over the past several quarters.
Dirk Allison: Our home health segment, same-store revenue, increased 1.3% when compared to the same quarter of 2024. We are pleased to see this segment of our business return to positive same-store revenue growth.
Dirk Allison: As we have previously discussed, our home health operation provides an important clinical partner to our hospice and personal care segments in the markets where we have these overlapping services which allow us to provide our patients.
with access to the right care at the right time.
Dirk Allison: As demonstrated by the Gentifa Personal Care Transaction, acquisitions continue to be an important part of our gross strategy at Addus.
Dirk Allison: Our targeted minimum annual revenue growth of 10% remains our goal, even with the larger size of our revenue base.
Dirk Allison: Specifically for home health opportunities, we are primarily seeing small transactions coming to market at this point in time.
Dirk Allison: We don't believe this dynamic will change until the industry sees how the new CMS administration will handle both annual home health rates setting and the potential revenue clawback.
Dirk Allison: Despite this uncertainty, we will continue to source and evaluate potential accretive home health transactions that hit our strategy of selectively adding clinical services in our existing personal care markets.
Dirk Allison: Now that we have a strong presence in Texas following our gentima personal care acquisition, our team has started looking for both clinical and non-clinical acquisition opportunities to increase both the density and geographic scope of our personal care service offerings in
Dirk Allison: and to add complimentary clinical services to achieve our goal of broad coverage across the state for all three levels of home care.
Dirk Allison: We are currently looking at certain smaller transactions which fit well with this strategy.
Dirk Allison: While there are indications that a number of larger clinical service acquisition opportunities may be coming to market later in 2025.
Dirk Allison: We remain committed to maintaining a conservative approach to valuation and overall due diligence which we feel has proven to be strategically advantageous over the past several years.
Dirk Allison: Before I turn the call over to Brian , I want to thank the Addus team for the call they are providing to our elderly and disabled consumers and patients.
Speaker Change: We all have come to understand that the majority of the elderly and disabled clients and patients want to receive care at home which remains one of the safest and most cost effective places to receive this care.
Brian Poff: We believe that heightened awareness of the value of home-based care is favorable for our industry and will continue to be a growth opportunity for our company.
Brian Poff: We understand and appreciate that our operations and growth are dependent on both our dedicated caregivers and our other employees who work so hard providing outstanding care and support to our clients, patients and their families.
With that, let me turn the call over to Brian .
Brian Poff: Thank you, Durk, and good morning to everyone. Our first quarter financial results marked a strong start to 2025, as we continue to achieve consistent organic growth and derive additional value from our recent acquisitions.
Brian Poff: We achieved 20.3% top line growth and a 25.1% increase in adjusted EBITDA compared with the first quarter last year.
Brian Poff: These results include the first full quarter of the Geneva Personal Care Operations, our largest acquisition to date, which we completed on December 2, 2024.
Brian Poff: Our personal care services segment was the key driver of our business, with a solid 7.4% organic revenue growth rate over the same period last year above our normal expected range of 3-5%.
Brian Poff: Strong hiring trends and favorable rate support for personal care services and certain of our larger markets were both important to creating this organic growth.
Brian Poff: Raid support included a statewide reimbursement increase in Illinois, our largest market, which was effective January 1, 2025.
Brian Poff: We also saw a 2% increase in same-store volume in our personal care division in line with our long-term expectation.
Brian Poff: We saw steady improvement in our hospice segment in the first quarter, supported by the 2025 hospice reimbursement update that was effective October 1st, 2024, and a 4.6% increase in our average daily census compared with the first quarter of 2024.
Brian Poff: We achieved 9.9% organic revenue growth and higher average daily census, patient days, and revenue per patient day compared with the first quarter last year.
Hospice Care Accountant for 18.2% of our revenue.
Brian Poff: For our home health services, which accounted for 5.3% of our business, we achieved organic revenue growth of 1.3% over the first quarter of last year.
Brian Poff: While this is our smallest segment, we believe Home Health is complementary to our personal care and hospice services, and we continue to look for opportunities to support and expand the service line.
Brian Poff: In addition to organic growth, we have benefited from our recently acquired operations and we remain focused on identifying acquisitions that will be accretive and support our ability to expand our market reach.
Brian Poff: The Geneva acquisition was the largest in our history, adding approximately $280 million in annualized revenues, and significantly expanding our market coverage.
Brian Poff: For 2025, we continue to actively look for additional acquisition opportunities with our primary objective to add density in our existing personal care markets and at clinical services where we have a strong personal care presence.
Brian Poff: We will also look for opportunities to add select new personal tier markets where we can enter at scale.
Brian Poff: With our size and scale and the support of a strong balance sheet, we are well positioned to execute our acquisition strategy.
Dirk Allison: As dirt noted, total net service revenues for the first quarter were $337.7 million [inaudible]
The revenue breakdown is as follows.
Personal Care revenues were $258.3 million, or $76.5% of revenue.
Dirk Allison: Hospicecare revenues were $61.4 million or 18.2% of revenue, and home health revenues were $18 million or $5.3% of revenue.
Brian Tanquilut, John Ransom, Dru
Dirk Allison: Other financial results for the first quarter of 2025 include the following [inaudible]
Dirk Allison: Our gross margin percentage was 31.9%, compared with 31.4% for the first quarter of 2024.
Dirk Allison: As expected, our gross margin was affected in the first quarter by our annual merit increases and the annual reset at payroll taxes.
Dirk Allison: as well as the mix shift toward personal care from our first full quarter of the Jentiva operations.
Dirk Allison: Looking forward, we expect our gross margin to remain relatively stable and consistent with our historical annual pattern.
Dirk Allison: GNA expense was 21.7% of revenue compared with 21.8% of revenue for the first quarter a year ago and it declines sequentially from 24% of revenue in the fourth quarter of 2024.
Dirk Allison: Adjust to GNA expenses for the first quarter were 19.9%, a slight increase from 19.8% in the comparable prior year quarter, but are declined sequentially from 20.5% in the fourth quarter of 2024.
Dirk Allison: The company's adjusted EBITDA increased to $40.6 million, compared with $32.4 million a year ago.
Dirk Allison: Adjusted EBITDA margin was 12%, compared with 11.6% for the first quarter of 2024.
Dirk Allison: For the solid start to 2025, we continue to expect our adjusted EBITDA margin percentage for the full year to remain above 12%.
Adjusted net income per diluted share was $1.42 compared with $1.21 for the first quarter of 2024.
Dirk Allison: The adjusted per share results for the first quarter of 2024 exclude the following
Dirk Allison: Acquisition Expenses of 12 cents and non-cash stock based compensation expense of 12 cents.
Dirk Allison: Our effective tax rate for the first quarter of 2025 was 21.4% and benefited from the excess tax benefit related to our stock compensation.
Dirk Allison: For calendar 2025, we expect our tax rate to be in the mid 20% range.
Dirk Allison: DSOs were 36.9 days at the end of the first quarter of 2025, compared with 38.8 days at the end of the fourth quarter of 2024 or 34.9 days when excluding Jantiva.
Dirk Allison: We continue to experience consistent cash collections for the majority of our pairs. Our DSOs for the Illinois Department of Aging for the first quarter were 47.6 days, compared with 40 days at the end of the fourth quarter last year, primarily as a result of payment timing. [inaudible]
Dirk Allison: To date, in the second quarter of 2025, we have already received $31.3 million in payments from the IDOA.
Dirk Allison: For net cash flow from operations was $18.9 million for the first quarter of 2025. As expected, we saw some negative working capital changes impact our cash flow in the first quarter, primarily due to the normal timing of our annual bonus payments.
Dirk Allison: For the full year 2025, we continue to expect consistent cash flow conversion in line with our historical average
Dirk Allison: We utilized approximately $2.5 million in ARPA funding during the first quarter, and we have approximately $8.8 million in ARPA funds remaining to be utilized.
Dirk Allison: As of March 31st, 2025, the company had cash of $97 million with capacity and availability under our revolving credit facility of $632.9 million and $421.9 million, respectively.
Dirk Allison: We have a capital structure that supports our ability to continue to invest in our business and pursue our strategic growth initiatives, including acquisitions.
Dirk Allison: As mentioned, we will continue to selectively pursue acquisitions in 2025 that complement our organic growth and align with our strategy.
Dirk Allison: At the same time, we will maintain our discipline capital allocation strategy and continue to diligently manage our net leverage ratios through ongoing debt reduction.
Dirk Allison: This concludes our prepared comments this morning, and thank you for being with us. I'll now ask the operator to please open the line for your questions.
We will now begin the question and answer session.
Dirk Allison: To ask a question, you may press star then one on your touchtone phone.
Dirk Allison: If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time we will pause momentarily to assemble a roster.
Speaker Change: The first question comes from Ben Hendrix with RBC Capital Markets. Please go ahead.
Great. Thank you very much.
Speaker Change: I just wanted to start off this morning, actually on the hospice side, given all the attention around cap cushions and Medicare cap limitations.
Speaker Change: this quarter with some of your peers. I just wondered if you could just start us off with just a little bit of commentary about what you're seeing from a cap limitation perspective in
Speaker Change: Yeah, Ben, this is Brad. We really haven't seen, this really hasn't been very material for us. We had a little bit of cat last year, this year going forward, just very material amount. I mean, it really boils down to making sure you've got a balanced.
Speaker Change: You know, it referral mix in each of your markets and so one of the things I think that's really benefited us is we brought in new sales leadership late last year. We've really done some targeted assessments of markets to make sure that we've got that balance mix.
So we're actually managing cap pretty well.
Speaker Change: Great, yeah, the mix was going to be my next question. Also, just along those same lines, wage index regions, just if you could maybe talk about other any particular regions that you guys have to manage particularly carefully due to higher wage index levels. Thanks.
Speaker Change: Yeah, I mean, I think really not from a cap standpoint, we match up pretty well there, just with our going to link to stay in those regions, so really it has not impacted us in those markets.
Great, thank you very much.
Joanna Gadjuk: The next question is from Joanna Gajuk with Bank of America. Please go ahead.
Thank you.
Joanna Gadjuk: Oh hi, good morning. Thanks so much for taking the question.
Same Store, and I want to say that the-
Poser is in Washington.
Joanna Gadjuk: I'm fascinated and bad because my actual question is, how should we think about the growth for the rest of this year because it sounds like you're starting on a pretty strong growth in the Q1?
Speaker Change: Yeah, Joanna. We did have some weather events that hit us in early part of January . We rebounded nicely in February and March. I still expect, you know, kind of the hours to be in that two, two, and a half percent range going forward.
All right, that's great. And also—
Speaker Change: Stay on Values, but the consignment on the hospice by Census Group very nicely. They're accelerated regarding code almost 5%. So is this a good one way to go forward and also sounds like, you know, maybe you do things there differently because, you know, the last two quarters the group continues to accelerate. So kind of walk us through some of the efforts, you know, and the results of that and how we're seeing about the rest of the year.
Speaker Change: Yeah, when we think about hospice, I mean, we look for kind of a revenue on a revenue basis of five to seven percent range I think will be you know kind of at that higher end.
Speaker Change: if it may be slightly above it. We have had good ADC growth, so really pleased with how the first quarter shaped up for us, and we'll see how the rest of the year goes, but a 5-7% on a revenue side with probably towards the upper end of that range.
Speaker Change: And any update on the sounds like you were making some changes in your hospice. We just said in prior question around you just going through the markets. And so is there any additional changes you make in there in the half of the segment?
Speaker Change: Now I'm thinking on the hospital side we're actually in pretty good shape but we made some leadership changes on the cell side and also on the upside, you know at the regional level and I think we're in a really good place so we've got a strong leadership team and they've been doing a very good job.
Thank you so much for taking the questions.
Speaker Change: The next question is from Dow Cho Quig with McCwory. Please go ahead.
Speaker Change: Okay, thank you. Good morning. Congrats for that on the retirement announcement.
Speaker Change: I wanted to ask about margin. I think adjusted margin was, EBDA margin was 12% in the first quarter. And under normal seasonality that would be the low point of the year, I think you mentioned in previous quarters that the gentiva related expenses were more front loaded than typical transaction. I'm wondering if you could comment on the level and cadence of margin expansion we should expect through the rest of the year. Now that you have a full quarter of gentiva under the belt, any additional insight could share as to the cost energy is relative to your expectation.
Speaker Change: Thanks. This is Brian . I think, you know, what we expect to see this year is kind of in line what we've seen historically. Your ride usually Q1 is our watermark from a margin percentage perspective. You know, we usually see 40 to 50 basis points of expansion and the Q2 primarily from just hitting some of those payroll tax caps.
Speaker Change: Usually Q2 to Q3 is pretty, pretty level. No, no events, you sure we don't have any kind of Illinois impacts like mid-year, their physical starts in July 1. So, it should be pretty level Q2 to Q3. So, you'll see another step I think Q4, both from, again, we usually get a little bit of additional benefit from...
Speaker Change: The payroll tax threshold is being hit, but we also get our hospice rate increase October 1 that kicks in and helps us as well. So that normal cadence should continue through this year.
Brian Tanquilut, Brian Poff, John Ransom, Dru Anderson
Okay.
Speaker Change: My second question is on the Medicaid front. I think Dirk, you mentioned...
Speaker Change: The prohibited caps and the FMAT floor work requirements, all these things in pass calls.
Speaker Change: I think the ladies' discussion has been rolling back AC expansion.
Speaker Change: I think there's some Medicaid-figure ruin in Illinois and New Mexico. I think I read somewhere.
Speaker Change: Well, you know, when the ACA was expanded, we really didn't benefit.
Speaker Change: As a company from that, if you think about the type of patient we serve, it's an elderly patient, it's a disabled patient those are the folks that have qualified for Medicaid
Speaker Change: for years. It was not an expansion population that we just added at that point in time. And so now when you look at even some of the things going on, if some of the matching of that population bases reduced, it really has no direct effect on us.
And I would say that about most of the Medicaid
Speaker Change: changes that they're talking about. If you run through most of those, you see that from a standpoint of our patient base.
Again, remember, they're elderly, they're disabled.
Speaker Change: And by the fact that we talked about before, why we think we're in such a good position is because we're a low-cost provider of Medicaid services to this very expensive
Patient Base, so anything we can do to help the states.
Speaker Change: We think those will play very well into the fact that if states are looking to try to make sure that they're...
Speaker Change: Medicaid programs are very efficient. We can be a player with that. So from this standpoint in time, the ACC expansion, most of the others we don't believe will be a direct impact to us.
Appreciate it. Thank you.
Speaker Change: The next question is from Andrew Mok with Barclays. Please go ahead.
Speaker Change: Hi, good morning. This is Evan on Prainger. Can you help us understand the components of 7.4 percent, same-store revenue growth in the context of same-store average available census being down 4.5 percent year-of-year? And is there anything driving what looks to be a particularly strong rate in the quarter? Thanks.
Speaker Change: Yeah, I think when you look at just, we're doing a better job of scheduling in assigning caregivers, so fundamentally a lot of the things that we've done some initiatives that we had in place providing additional tools to our our schedulers, giving them greater insight. Also providing more visibility, frankly, to our caregivers where they might be under serving somebody I think is paid dividends. And so we've seen a, we're doing a better job of increasing our service percentage or fill rate against the authorization. And I'll, I'll.
Speaker Change: When you look at the census space, I think we've mentioned this on a couple of previous calls.
Speaker Change: We went through the states, went through the re-determination process last year. What we have found is it takes almost six months for states to kind of rebound after they've gone through that process. I mean, some of the early states that have gone through it, if I'm thinking about a new Mexico, which was probably about mid-year last year, we're starting to see admission friends outpaced discharges on Q1 in that market.
Speaker Change: Illinois by, you know, kind of on the opposite end of the spectrum. It was late in the year that they went through the re-determination process, really kind of November , December . We started to see, you know, kind of discharge numbers have steadily come down, and they're at kind of a more manageable rate. We're still looking for admission volume. It's...
Speaker Change: picking up that hasn't quite crossed that threshold, whereas out facing discharges, but I'm optimistic, you know, as we get further through the year, the state of Illinois and their case managers, you know, are kind of, you know, complete their pivot to, you know, kind of normal operations that we'll see those numbers pick up. But that's really the kind of driver on the census side is really recovering from the re-determination process, which you
Speaker Change: You can see it in the states that went through it earlier, and then just on the F service percentage, the hours. It's really about some of the things that we've done from an operational perspective.
Speaker Change: I mean, as we talked about before, the Texas market is going to be a little bit lower on Gris margin, but taking New York out, it was actually probably fairly equal. So I think to our expectation, we're probably slightly ahead of our expectation for this year from a Gris margin perspective on PCS.
Great, thanks for the caller.
Speaker Change: The next question is from Jared Haase with William Blair. Please go ahead.
Jared Hoss: Yeah, good morning, and thanks for taking the questions. You appreciate all the color thus far. Maybe I'll take a step back and I'm just curious. Obviously, as is experience some improvement on the workforce retention and hiring over the last couple of years sort of benefiting from the states. You know, if you take a step back and think about the data you're looking at across the industry, do you see that improvement sort of industry wide from a retention perspective? Just curious to hear any color you'd share there. Thank you very much.
Jared Hoss: Most kind of headwinds, if you will. That being said, is much better than it was, you know, a year and a half, two years ago. And I think that's, you know, what I'm reading kind of an industry publications is very summer. I think most people have said, you know, the clinical side. Still challenging, but certainly has improved and continues to improve.
Speaker Change: Got it. That's helpful. And then maybe just as a quick follow up, obviously on the home outside, the small portion of the overall mix here. But just curious, you know, there's been a lot of focus on sort of the broader churn with Medicare Advantage plans at the start of this year, given the disruption they've experienced last couple of years. Did that churn and, you know, patients kind of moving between products, did that have any impact at all on the volume trends in the quarter?
Speaker Change: No, not really. I mean, you know, one thing that we have been tracking forces is just our episodic versus non-epicetic volume and it's been very consistent that we're sitting at kind of 55, 45 and I think we might have been at 56, 44 or a year ago. So really haven't seen much movement there.
Speaker Change: You know, I think our challenge is on the home health side. Honestly, we have one market that we're struggling with, leadership to find the right leader in. The other kind of two big states that were in New Mexico and Tennessee, I think have stabilized and I'm optimistic that we'll see some nice improvement there. We just have one market that we're still focused on to try to find the right leader and I think turn that one around.
Perfect, that's very helpful. Thank you
Speaker Change: The next question is from Matthew Gillmor with Keybank. Please go ahead.
Matthew Gilmore: Hey guys, thanks for the question. I thought I might ask how the gentiva business has been performing against your expectations. Obviously, great to see the same store.
Speaker Change: Patrick Strong on the Addus side, but if you have any comments, either kind of qualitative or quantitative on how the Gen-TV business has been growing in the last couple of months.
Speaker Change: Yeah, I mean, it's interesting on the Geneva Sodom. I can't say enough about the leadership team that we inherited on Geneva from the branch level on up.
Just did the integration process. They've done a phenomenal job.
Speaker Change: of staying focused, really, you know, making it, you know, or I think our corporate teams have done an outstanding job, but I think they've been very pleased with their interactions with the team on the ground, you know, they've been well, very welcoming.
Speaker Change: to move to our systems and our processes. We're still rolling things out to them. We've just recently started implementing our paperless onboarding process for new employees and I think that's done very well.
Speaker Change: from a financial performance. Bottom line has actually been a little stronger than we thought it would be. Top line maybe a little bit lighter than we thought it would be. But again, Texas was coming out of the re-determination process. And again, that was just one of the space that I'd highlight that if you look at where we are admissions and discharges, recently they kind of crossed the threshold and you're starting to see some growth there.
Speaker Change: That's helpful. And then I thought I might ask on the outlook on state budgets and...
Speaker Change: You know, potential rating creases in the future. I know you probably have a couple of states that are towards the tail end of there.
Speaker Change: Legislative Sessions, but in any comments there in terms of how rates may look in terms of what's coming out of these legislative sessions.
Speaker Change: You know, expect to see that going forward. We'll see how things shick out the risk this year, but I think on the right side
Speaker Change: We've got a nice rate support of the last couple of years from Illinois and Mexico to our largest markets. I think the one we're probably watching on the screen.
Speaker Change: Most closely this year is Texas. I think we've talked about that they have been looking at a rate increase to their most recent legislative session. I believe that's slated to come to a conclusion by I think June 2nd. So sometimes in the next 30 days, I think we should have.
Speaker Change: and indication obviously some finality if there's going to be some additional race support coming from there, but that's probably the largest one we're watching for this year.
Got it, thanks a lot.
Speaker Change: The next question is from Brian Tanquilut with Jeffries, please go ahead.
Speaker Change: Good morning, this is Megan Holton for Brian , congrats on the quarter and thanks for taking a question. Just one quick follow-up. Look like your hospice revenue per day was up pretty nicely. And certainly above the Medicare fee for service rate, is there anything to call out there?
Sanford University.
Thank you.
The next question is from Constantine Davides with-
Citizens Bank. Please go ahead.
Speaker Change: Quick housekeeping one for me, just saw you added three locations in personal care from fourth quarter to the first quarter. What was that exactly? Are those the novos or something else?
Speaker Change: Yeah, we did a small acquisition, tuck-in acquisition in Michigan, added those sites.
Got it.
and then-
Speaker Change: Just on the technology front, you mentioned some of the tools you're giving with caregivers and the schedulers. Where are you with that technology initiative? What are you kind of learning from some of the early pilot?
Speaker Change: locations in terms of impact on how that's being used and what some of the benefits have been today.
Speaker Change: Yeah, you know, we rolled it out fully in our largest market, Illinois. And this is a caregiver application that we've developed in house. And what we have found is surprisingly, you know, when we, when we. [inaudible]
We were to think about the application in developing it.
Speaker Change: You know, we're trying to address a couple of things. One is just greater communication with our caregivers, making sure you know it's kind of hard and a decentralized environment to you know make them feel part of the team so part of it was to address them. [inaudible]
Speaker Change: questions that we had on the internal survey, but also to try to get caregivers to provide us with their availability and how many hours they want to work.
Speaker Change: because you know one of the things that we struggle with is you know increasing our service percentage you know staffing new cases and one of the challenges is understanding with our current workforce what is their availability and desire. So that was kind of the premises that we started with and of course one of the things that you're always thinking is you know if we build it will they come and what we did find is really really good adoption. Thank you very much.
Speaker Change: in that market. People downloading the app and consistently utilizing it.
updating their availability. [inaudible]
Speaker Change: What's really I think benefit is once we found that adoption we started tweaking app and adding additional service features and one of which I alluded to is that they have visibility now and is whether they're going to be underserving a particular client and they can work with
Speaker Change: that client and adjust the schedule to pick up those additional hours.
Speaker Change: and they can do it through the application, and what's really nice is without any intervention or involvement of our scheduleers, it's actually the app will adjust their schedule, which will feed over into our system, will feed over into the timekeeping system, so it's been really nice to see that pick up, and I think one area that we actually saw a nice [inaudible]
Speaker Change: Benefit from it is when we had some weather events that caused some underserving that we saw people adjust their schedules at a pretty high rate [inaudible]
Speaker Change: at Reschedule those hours. So really pleased with that. We're in the process of rolling that out in our, I guess, our third largest market since we have Texas, which is New Mexico. And again, same good adoption there. You know, it took us a little while to get it rolled out there. One, we wanted to get a Spanish translation, which we've completed. But then also, you know, kind of the unique feature of being in a Medicaid business is when you've
Speaker Change: One state plan, you've seen one state plan and so you have to tweak the application and some of the rules around that every time you look to roll it out. So we're in the process of when completing the rollout in New Mexico and then we'll look at what other states we are good targets for that technology.
Speaker Change: Great, and then I guess just want to follow up any update on the Homecare Homebase rollout in PCS. Thank you.
Speaker Change: Yeah, continues to move forward. You know, we're still I'd say in the
Speaker Change: to, you know, and part of it is just discovery of things that, you know, for the, you know, the system of still working very closely with home care home base on the development of it. You know, we're not quite to where we're ready to push go on the enterprise-wide rollout, but I think with some of the development features they have, and they're working on currently, you know, we'll be kind of closer to, you know, really working the, maybe, you know, launch in the enterprise-wide rollout maybe in, you know, later this year, later part of this year, early next year.
Ryan Langston: The next question is from Ryan and Langston with TD Cowan. Please go ahead.
Ryan Langston: Hey, thanks. Dirk, I appreciate the updates on the hiring trends, but can you give us a sense on the turnover between the three service lines and maybe the turnover metric edgenteva before the acquisition closed?
Ryan Langston: Yeah, I don't have the Gen-TV number in front of me, but if you look at our personal care of the largest segment, we're running around at 250 and 55% turnover rate on the personal care
Ryan Langston: You know, we were kind of giving kind of an idea of where we were and where the industry was, I think during COVID we were probably at 70-75% and the industry was at close to 90%.
Ryan Langston: You know, on the skilled side, we haven't given those numbers out in the past. I mean, we're doing better. Then we were, you know, kind of varies by, you know, geographies where you may have some challenges, you know, with a little more challenging labor market, but we have seen improvement in the turnover numbers on the skilled side, but really where the skill side has come in is really hiring as improved significantly. [inaudible]
Speaker Change: Got it, and then I know obviously the focus has been on gentiva, but can you give us any updates on how Tennessee quality care and journey care are progressing? Thanks!
Speaker Change: Yeah, happy to. Very pleased with that. We'll start with the one that we acquired first was to Johnny Care. Really, it is performed very well. I think.
You know
Speaker Change: better than expectations, honestly, with that turnaround. It was a challenging one from the standpoint that you're acquiring a nonprofit that took that seriously. They literally were nonprofit. But, you know, instituting some of our processes.
Speaker Change: You know, I'm really working with the team there. They've done a very good job of building senses and really kind of broadening out their referral mix. So very pleased without journey care has performed a Tennessee quality care. The interesting thing there is
Speaker Change: We recently put in our bridge program from Home Health to Hospice this year and we've really seen some really nice traction there the numbers have picked up. Um.
Speaker Change: The percentage of admissions coming from our home health into hospice there has improved significantly in its bound tracking almost where we are in New Mexico. We're 25 30% of the admission volume is coming from our home health. [inaudible]
Speaker Change: Again, if you have a question, please press star then one.
Speaker Change: The next question is from John Ransom with Raymond James. Please go ahead.
Hey, good morning, everybody.
Speaker Change: A couple for me. If we step back and look at hospice over the last five years or so.
Speaker Change: It was a little slower to come out of the COVID slump than maybe some of the stuff so can you just kind of go back in time and?
Speaker Change: to help us understand why that business was challenged for maybe a bit longer than it should have been, and what happened specifically recently to signal our turn around.
Speaker Change: Yeah, you know, Jonathan, that's an interesting question. I think a lot of it had to do with during COVID. There was this, you know, dynamic. I mean, that the elderly population is the population against the hardest. And I think you had
Speaker Change: with some people would consider or call excess deaths, you know, for that demographic that would have either been...
Speaker Change: Colonel Haase's patients were more importantly ones that would be transitioning would have transitioned into Haase's, you know, in that kind of five year period.
Speaker Change: I think that dynamics over with and now you're looking at just kind of the demographics of an ageing population is really providing I think the tailwind there. I think you're also seeing you know you're back up to you know as far as the percentage of Medicare beneficiaries that are electing and dying on hospice is actually you know started getting back to pre-COVID numbers. I think you're right.
Speaker Change: because that had actually dropped as well. So I think you're seeing kind of adoption get back to normal. And then you just got the tailwind of just an aging population.
Speaker Change: Well, I think I seem to remember, too, there was an issue with referrals, you know, from, I think, the Smith Channel, uh, uh, did some COVID rules, um, that finally got changed. Um, we're not part of it.
Speaker Change: I mean, that was about a year and a half ago, two years ago, when the Ph.D. ended, there were rules that allowed Smith to basically skill patients longer and skill patients that otherwise were qualified.
Speaker Change: I got you. And then just going to Home Health, two questions there. Number one, number one,
Speaker Change: Where are we with the challenge of that industry? One of them has obviously been the Medicare Advantage.
Speaker Change: So I'm just curious, I know this and he's on a business for you, but just in your contracting with the MA plans, what's the gap now between an MA rate and a Medicare fee for service rate, if we just looked at it on a per visit basis.
Speaker Change: And then secondly, I mean, do we think the regulatory backdrop now is stable enough to index a little harder on M&A there? Is it still going to be something that's less of a priority?
Speaker Change: Yeah, I'll answer the first part of that. When you look at the kind of progress, I think one on then the mix shift I think it's stabilized a little bit and we're not seeing the movement that we did, you know, two, three years ago you
Speaker Change: and so at least in our book of business is fairly stable, Medicare, or episodic race versus non-episodic volume.
Speaker Change: With respect to rates in general, I think Medicare Advantage plans have started, you know, over the past year, year and a half have started coming to the table in increasing rates even if it's on a per visit basis. And I think you're now where you were at probably almost like a 40% discount is probably more than that.
Speaker Change: 15 to 20% discount. Right, Medicare fee for services. There's still room to go there, but it has improved
Speaker Change: Yeah, I think you shot on the M&A side. I think as they're kind of alluded to in his comments we're seeing you know probably more on the smaller side
Speaker Change: Things coming to market. Feels like there's probably still a little bit of overhang until we get some clarity on.
Speaker Change: kind of where things are headed. I think maybe we'll get a good indication of that here in, you know, a month or two when the proposed rule come out. I think that'll be maybe telling a little bit to see which way maybe this administration is viewing home health. But we'll point and see how that how that shakes out.
Speaker Change: I mean, is the clawback still a big consideration when you're looking at M&A or can you structure transactions to wall that off?
Speaker Change: I mean, I think from our end, I think we're obviously with our business, we're not too concerned about the clawback. We're not as big as some others. I think we think we have ways that we could deal with that if there were willing participants, something that could be boxed in.
Okay. Thank you.
Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to Dirk Ellison for any closing remarks.
Dirk Ellison: Thank you, operator. We want, again, thank each of you for taking the time to join with us today on our earnings call. We hope that you have a great week.
Dirk Ellison: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.