What Management Said

Read the full Q4 2025 transcript ↗

As we do on each of our quarterly earnings call, I'll begin with a few overall comments, and then Brian will discuss the fourth quarter results in more detail. As we announced yesterday afternoon, our total revenue for the fourth quarter of 2025 was $373.1 million, an increase of 25.6% as compared to $297.1 million for the fourth quarter of 2024. This revenue growth resulted in adjusted earnings per share of $1.77, as compared to adjusted earnings per share for the fourth quarter of 2024 of $1.38, an increase of 28.3%. Our adjusted EBITDA was $50.3 million, compared to $37.8 million for the fourth quarter of 2024, an increase of 33.3%.

For 2025, our total revenue was approximately $1.4 billion, which is an increase of 23.2% as compared to approximately $1.1 billion for 2024. This revenue growth resulted in adjusted earnings per share of $6.23, as compared to adjusted earnings per share for 2024 of $5.26, an increase of 18.4%. Our adjusted EBITDA for 2025 was $180 million, as compared to $140.3 million for 2024, an increase of 28.3%. For the fourth quarter of 2025, cash flow from operations was $18.8 million as of December 31, 2025, and we had cash on hand of approximately $81.6 million.

As we mentioned on our last earnings call, both the states of Texas and Illinois have recently increased our rates in Personal Care Services. The Illinois rate increase went into effect on January 1st, 2026, and will be reflected in our 2026 first quarter results. During the fourth quarter of 2025, we continued to experience positive hiring trends in our personal care segment. Let me discuss our same-store revenue growth for the fourth quarter of 2025.

What went well
  • Total fourth-quarter revenue grew 25.6% year-over-year to $373.1 million, with adjusted EPS up 28.3% to $1.77 and adjusted EBITDA up 33.3% to $50.3 million, lifting adjusted EBITDA margin to 13.6% from 12.9%.
  • Full-year 2025 revenue reached approximately $1.4 billion (+23.2%), with adjusted EPS of $6.23 (+18.4%) and adjusted EBITDA of $180 million (+28.3%).
  • Personal Care Services delivered 6.3% same-store revenue growth, above the normal 3%-5% range, supported by stable hiring (101 hires per business day despite the holidays, rising to 107 in early January) and rate support in Texas and Illinois.
  • Hospice grew 16% on a same-store basis, with average daily census up 11.9% to 3,885 and improved median length of stay, aided by the ~3.1% Medicare hospice rate increase effective October 1, 2025.
  • Adjusted G&A expense improved to 19.1% of revenue (from 20.5% a year earlier and 19.8% in Q3), demonstrating continued operating leverage on a higher revenue base.
  • Ended the year with $81.6 million of cash, bank debt reduced to $124.3 million and net leverage under 1x adjusted EBITDA; the CY2026 final Home Health rule came in far more favorable than the proposed 6.4% cut.
What went wrong
  • Home Health same-store revenue declined 7.5% year-over-year, the weakest segment at 4.6% of revenue, prompting new market-president and sales leadership hires to drive a return to growth in the second half of 2026.
  • Personal Care same-store billable census was down slightly (about 1.1% year-over-year and modestly sequentially), reflecting holiday seasonality even as the majority of key states showed census growth.
  • The Illinois Department on Aging DSO rose sharply to 54.7 days (from 32.5 days in Q3) on payment-cycle timing, contributing to a lighter Q4 operating cash flow of $18.8 million and negative working-capital impact.
  • Gross margin (excluding the New York settlement) declined to 32.8% from 33.4% a year earlier, primarily due to a higher mix of lower-margin Personal Care Services from the Gentiva acquisition.
  • Management guided to a sequential gross-margin decline of approximately 120 basis points into Q1 2026 from annual merit increases and the payroll-tax reset, plus two fewer business days and winter-storm impacts.

Guidance Changes

MetricPeriodCurrent guidance
Gross marginQ1 2026Expected to decline ~120 bps sequentially on merit increases and the annual payroll-tax reset
Personal Care same-store revenue growth2026Expected to remain above the normal 3%-5% range
New Mexico Medicaid rateBack half of 2026Estimated 4%-5% increase passed the legislature, awaiting the governor's signature
Effective tax rateFY2026Expected to remain in the mid-20% range
Home Health same-store revenueSecond half of 2026Expected to return to growth as new leadership and sales initiatives take hold

Performance Breakdown

MetricYoYNote
Total revenue +25.6% to $373.1M Consistent organic growth plus the first full year of Gentiva and three 2025 tuck-in acquisitions (Great Lakes, Helping Hands, Del Cielo).
Personal Care revenue $284.1M ex-NY (76.5% of revenue); +6.3% same-store Higher billable hours (+2.4%) and Texas/Illinois rate support; census down slightly on seasonality.
Hospice revenue $70.0M (18.9% of revenue); +16% same-store Higher admissions, average daily census (+11.9% to 3,885) and revenue per patient day, plus the October Medicare rate update.
Home Health revenue $17.1M (4.6% of revenue); -7.5% same-store Volume weakness; valued as a referral source (>25% of Hospice admissions in New Mexico and Tennessee).
Adjusted EBITDA +33.3% to $50.3M (13.6% margin) Revenue growth and G&A leverage (adjusted G&A 19.1%).
Adjusted EPS +28.3% to $1.77 Revenue growth and margin expansion.
Operating cash flow $18.8M in quarter ($111.5M FY) Negative working-capital impact from the higher Illinois Department on Aging DSO (54.7 days).

Earnings Call Themes & Trends

TopicPrevious mentionCurrent periodTrend
Medicaid rate support & OBBBATexas and Illinois increases securedNew Mexico 4%-5% increase passed the legislature awaiting signature; Illinois governor's initial budget again excludes an increase (consistent with the prior-year starting point); management remains confident in home care's value proposition under OBBBA.—
80/20 Medicaid Access RuleMonitoringManagement expects the 80/20 provision to be eliminated in the near future - viewed as a significant positive signal for the industry - though implementation is years away with no current financial impact.—
Home Health turnaroundWeak volumesHired a new market president and sales leaders; admissions ticked up sequentially, with a targeted return to growth in the second half of 2026, aided by a more favorable final CY2026 rate.—
Caregiver app (Addus Connect)Illinois live all yearIllinois service percentage in the upper-80s; rollout underway in New Mexico and beginning in Texas (targeted completion by end of Q2/early Q3 2026), where market dynamics offer the greatest opportunity.—
Acquisition pipelineSmaller tuck-insPipeline comparable to 2025 deals near-term, but management expects some larger personal care assets to come to market mid-to-back-half 2026; the Enhabit go-private and a more favorable Home Health rule are increasing industry deal interest.—
Fraud, waste and abuse focus-Management welcomes heightened scrutiny of Personal Care, arguing its long-standing compliance investment is a competitive advantage that may push smaller operators out of the market.—

Q&A Summary

RBC (Ben Hendrix) asked about the rate backdrop outside Texas and Illinois, notably New Mexico and Tennessee.
Poff said New Mexico appears to have a ~4%-5% increase awaiting the governor's signature, expected to benefit the back half of the year, while Illinois's governor initially excluded an increase - consistent with last year, when one ultimately came through.
Jefferies (Brian Tanquilut) asked about New Mexico margin flow-through and the labor market.
Poff noted New Mexico has no mandatory pass-through rule, so some portion will go to caregiver wages; Dixon said hiring is stable (101/day in Q4, strong February) with no notable difficulties beyond a few urban skilled pockets.
UBS (A.J. Rice) asked about the M&A pipeline and whether the softened final Home Health rule and the Enhabit deal make Addus more active in Home Health.
Allison remained disciplined but encouraged by the final rule, saying Addus will consider larger Home Health transactions that fit strategically, valuation and geography, while awaiting more clarity on the temporary/clawback adjustments.
Barclays (Andrew Mok) asked about the year-over-year census decline and heightened attention to fraud, waste and abuse in personal care.
Dixon expected positive year-over-year census growth in the second half of 2026 as admissions outpace discharges; Allison said Addus welcomes the fraud-and-abuse focus given its heavy compliance investment, which may drive smaller operators out.
KeyBanc (Matthew Gillmor) asked about the Addus Connect rollout and whether Gentiva will be additive to same-store growth.
Dixon said Illinois service percentage is consistently in the upper-80s with strong app adoption and flex-hour usage, and Texas rollout is imminent; Poff said Gentiva is tracking similarly to the rest of the business as it enters the same-store base.
Truist (Clarke Murphy) asked about the shift toward managed care in the personal care payer mix and the bridging program.
Poff attributed the managed-care shift to the Del Cielo acquisition in heavily managed-Medicaid Texas; Dixon detailed continued Bridge Program focus in New Mexico, Tennessee and now Illinois and new Home Health leadership targeting second-half 2026 growth.
TD Cowen (Ryan Langston) asked what gives confidence the 80/20 rule will be repealed.
Allison said the team and its lobbyists have heard encouraging signals from CMS that changes are coming sooner rather than later, though the rule is not effective for years.
Raymond James (John Ransom) asked about longer-term technology and AI opportunities beyond the caregiver app.
Poff pointed to back-office revenue-cycle automation and AI-assisted scheduling/logistics for personal care, overseen by an internal AI committee led by the CIO.

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Q4 2025 call
Reported 2026-02-24 · figures from the Addus HomeCare Corp Q4 2025 earnings call.

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