There’s ‘massive’ opportunity as seniors grow old at home — these names should benefit, says William Blair

William Blair highlights a significant investment opportunity driven by the aging population's preference to age at home, projecting that by 2030, 21% of the US population will be over 65. This trend is expected to boost demand for in-home healthcare services and technology solutions, particularly those analyzing social needs data; Addus HomeCare (ADUS) and Phreesia (PHR) are identified as key beneficiaries, with both stocks having a buy rating and significant upside to their price targets, despite year-to-date declines.

Analysis

A significant demographic shift, with all 73.1 million baby boomers projected to be over 65 by 2030 and seniors expected to comprise 21% of the U.S. population, is creating substantial investment opportunities, according to William Blair. This trend is amplified by a strong preference among Americans to age in place, as indicated by a 2024 AARP survey where 75% of adults aged 50 and older expressed this desire, suggesting that the "true wave of growth in the senior population is just beginning to manifest." Consequently, demand for in-home healthcare services and related technology solutions is anticipated to surge. Within home healthcare, Addus HomeCare (ADUS) is highlighted as a key beneficiary, providing personal care, skilled home health, and hospice services; the company recently reported first-quarter adjusted earnings of $1.42 per share, surpassing analyst expectations, and carries a "buy" average analyst rating with a 22% upside to its consensus price target, despite an 11% year-to-date stock decline. In technology, Phreesia (PHR) is identified for its software solutions that analyze social needs' data, conducting over 270,000 such screens monthly to help seniors age safely at home by enabling providers to identify needs and make timely referrals. Phreesia also holds an average "buy" rating from analysts with a 31% upside potential to its consensus price target, even though its stock is down approximately 4% year-to-date. William Blair maintains an "outperform" rating on ADUS and an "overweight" rating on PHR, underscoring the growth outlook for both companies within this expanding market, driven by the imperative for safe, effective, and timely in-home care and the increasing importance of social needs data recognized by health plans.

Key Decisions for Investors

• Investors should consider allocating capital towards the aging-in-place theme, driven by compelling demographic tailwinds, strong consumer preferences for home-based care, and the substantial market opportunity identified by analysts.
• For direct exposure to the home healthcare segment, Addus HomeCare (ADUS) warrants evaluation, considering its recent earnings beat and positive analyst consensus, balanced against its current year-to-date stock decline which may present a strategic entry point.
• In the ancillary technology sector, Phreesia (PHR) offers an avenue to capitalize on the increasing use of data analytics for senior care, particularly its tools for screening social determinants of health, supported by strong analyst conviction and significant projected upside despite its recent stock performance.
• Monitor the adoption rates of in-home care services and related health technologies, alongside the financial performance of key players in this sector, as indicators of the thesis's progression and potential catalysts for the identified equities.