Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒.

As of October ~~30, 2020,~~25, 2021, Addus HomeCare Corporation had ~~15,808,708~~15,927,411 shares of Common Stock outstanding.


	September 30, 2020		December 31, 2019		September 30, 2021		December 31, 2020
Assets
Current assets
Cash	$	170,331	$	111,714	$	152,379	$	145,078
Accounts receivable, net		118,623		149,680		133,814		132,650
Prepaid expenses and other current assets		10,426		7,993		13,514		9,969
Total current assets		299,380		269,387		299,707		287,697
Property and equipment, net of accumulated depreciation and amortization		19,305		12,156		18,614		19,749
Other assets
Goodwill		286,552		275,368		497,919		469,072
Intangibles, net of accumulated amortization		52,873		57,079		66,332		71,549
Deferred tax assets, net		1,479		1,647		5,919		6,524
Operating lease assets, net		35,842		21,111		36,424		37,991
Total other assets		376,746		355,205		606,594		585,136
Total assets	$	695,431	$	636,748	$	924,915	$	892,582
Liabilities and stockholders' equity
Current liabilities
Accounts payable	$	17,270	$	19,641	$	23,167	$	23,705
Accrued payroll		26,315		30,587		31,626		35,815
Accrued expenses		33,395		22,429		35,780		37,564
Government stimulus advances						7,674		32,087
Accrued workers' compensation insurance		14,668		14,143		14,286		13,759
Current portion of long-term debt		2,095		728		—		971
Total current liabilities		93,743		87,528		112,533		143,901
Long-term liabilities
Long-term debt, less current portion, net of debt issuance costs		59,561		59,164		220,707		193,901
Long-term operating lease liabilities		33,977		14,301		33,509		35,516
Other long-term liabilities		550		163		115		588
Total long-term liabilities		94,088		73,628		254,331		230,005
Total liabilities	$	187,831	$	161,156	$	366,864	$	373,906
Stockholders' equity
Common stock—$.001 par value; 40,000 authorized and 15,801 and 15,617 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively	$	16	$	15
Common stock—$.001 par value; 40,000 authorized and 15,913 and 15,826 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively					$	16	$	16
Additional paid-in capital		366,868		359,545		376,802		369,495
Retained earnings		140,716		116,032		181,233		149,165
Total stockholders' equity		507,600		475,592		558,051		518,676
Total liabilities and stockholders' equity	$	695,431	$	636,748	$	924,915	$	892,582

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2020			2019			2020			2019			2021			2020			2021			2020
Net service revenues	$	193,987		$	168,993		$	568,779		$	456,415		$	216,662		$	193,987		$	639,857		$	568,779
Cost of service revenues		137,686			123,817			401,646			334,719			149,616			137,686			442,804			401,646
Gross profit		56,301			45,176			167,133			121,696			67,046			56,301			197,053			167,133
General and administrative expenses		40,733			35,085			125,470			94,109			46,280			40,733			139,881			125,470
Depreciation and amortization		3,045			2,756			8,872			7,365			3,406			3,045			10,594			8,872
Total operating expenses		43,778			37,841			134,342			101,474			49,686			43,778			150,475			134,342
Operating income from continuing operations		12,523			7,335			32,791			20,222
Operating income														17,360			12,523			46,578			32,791
Interest income		(87	)		(786	)		(576	)		(1,096	)		(37	)		(87	)		(90	)		(576	)
Interest expense		680			866			2,309			2,164			1,614			680			4,092			2,309
Total interest expense, net		593			80			1,733			1,068			1,577			593			4,002			1,733
Income from continuing operations before income taxes		11,930			7,255			31,058			19,154
Income before income taxes														15,783			11,930			42,576			31,058
Income tax expense		2,811			1,769			6,374			4,080			4,206			2,811			10,508			6,374
Net income from continuing operations		9,119			5,486			24,684			15,074
Net loss from discontinued operations		—			(574	)		—			(574	)
Net income	$	9,119		$	4,912		$	24,684		$	14,500		$	11,577		$	9,119		$	32,068		$	24,684
Net income per common share
Basic income per share													$	0.74		$	0.58		$	2.04		$	1.59
Continuing operations	$	0.58		$	0.40		$	1.59		$	1.14
Discontinued operations		—			(0.04	)		—			(0.04	)
Basic income per share	$	0.58		$	0.36		$	1.59		$	1.10
Diluted income per share
Continuing operations	$	0.57		$	0.39		$	1.55		$	1.10
Discontinued operations		—			(0.04	)		—			(0.04	)
Diluted income per share	$	0.57		$	0.35		$	1.55		$	1.06		$	0.72		$	0.57		$	2.00		$	1.55
Weighted average number of common shares and potential common shares outstanding:
Basic		15,618			13,766			15,573			13,271			15,748			15,618			15,727			15,573
Diluted		15,957			14,203			15,934			13,687			16,030			15,957			16,060			15,934

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

	For the Three Months Ended September 30, 2020											For the Three Months Ended September 30, 2021
	Common Stock					Additional Paid-in Capital		Retained Earnings		Total Stockholders’ Equity		Common Stock					Additional Paid-in Capital		Retained Earnings		Total Stockholders’ Equity
	Shares			Amount								Shares			Amount
Balance at July 1, 2020		15,665		$	16	$	363,248	$	131,597	$	494,861
Issuance of shares of common stock under restricted stock award agreements		81			—		—		—		—
Balance at July 1, 2021													15,917		$	16	$	374,383	$	169,656	$	544,055
Forfeiture of shares of common stock under restricted stock award agreements													(5	)		—		—		—		—
Stock-based compensation		—			—		1,462		—		1,462		—			—		2,341		—		2,341
Shares issued for exercise of stock options		55			—		2,158		—		2,158		1			—		78		—		78
Net income		—			—		—		9,119		9,119		—			—		—		11,577		11,577
Balance at September 30, 2020		15,801		$	16	$	366,868	$	140,716	$	507,600
Balance at September 30, 2021													15,913		$	16	$	376,802	$	181,233	$	558,051

	For the Nine Months Ended September 30, 2020											For the Nine Months Ended September 30, 2021
	Common Stock					Additional Paid-in Capital		Retained Earnings		Total Stockholders' Equity		Common Stock					Additional Paid-in Capital		Retained Earnings		Total Stockholders’ Equity
Balance at January 1, 2020		15,617		$	15	$	359,545	$	116,032	$	475,592
												Shares			Amount
Balance at January 1, 2021													15,826		$	16	$	369,495	$	149,165	$	518,676
Issuance of shares of common stock under restricted stock award agreements		81			—		—		—		—		88			—		—		—		—
Forfeiture of shares of common stock under restricted stock award agreements		(6	)		—		—		—		—		(5	)		—		—		—		—
Stock-based compensation		—			—		3,987		—		3,987		—			—		7,105		—		7,105
Shares issued for exercise of stock options		109			1		3,336		—		3,337		4			—		202		—		202
Net income		—			—		—		24,684		24,684		—			—		—		32,068		32,068
Balance at September 30, 2020		15,801		$	16	$	366,868	$	140,716	$	507,600

Balance at September 30, 2021													15,913		$	16	$	376,802	$	181,233	$	558,051

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

	For the Three Months Ended September 30, 2019											For the Three Months Ended September 30, 2020
	Common Stock					Additional Paid-in Capital		Retained Earnings		Total Stockholders' Equity		Common Stock					Additional Paid-in Capital		Retained Earnings		Total Stockholders’ Equity
Balance at July 1, 2019		13,219		$	13	$	181,111	$	100,383	$	281,507
												Shares			Amount
Balance at July 1, 2020													15,665		$	16	$	363,248	$	131,597	$	494,861
Issuance of shares of common stock under restricted stock award agreements													81			—		—		—		—
Stock-based compensation													—			—		1,462		—		1,462
Shares issued for exercise of stock options													55			—		2,158		—		2,158
Net income													—			—		—		9,119		9,119
Balance at September 30, 2020													15,801		$	16	$	366,868	$	140,716	$	507,600

												For the Nine Months Ended September 30, 2020
												Common Stock					Additional Paid-in Capital		Retained Earnings		Total Stockholders’ Equity
												Shares			Amount
Balance at January 1, 2020													15,617		$	15	$	359,545	$	116,032	$	475,592
Issuance of shares of common stock under restricted stock award agreements		1			—		—		—		—		81			—		—		—		—
Forfeiture of shares of common stock under restricted stock award agreements		(4	)		—		—		—		—		(6	)		—		—		—		—
Stock-based compensation		—			—		1,470		—		1,470		—			—		3,987		—		3,987
Shares issued for exercise of stock options		43			—		1,365		—		1,365		109			1		3,336		—		3,337
Shares issued in Public Offering, net of offering costs		2,300			2		172,943		—		172,945
Net income		—			—		—		4,912		4,912		—			—		—		24,684		24,684
Balance at September 30, 2019		15,559		$	15	$	356,889	$	105,295	$	462,199

	For the Nine Months Ended September 30, 2019
	Common Stock					Additional Paid-in Capital		Retained Earnings		Total Stockholders' Equity
Balance at January 1, 2019		13,126		$	13	$	177,683	$	90,795	$	268,491
Issuance of shares of common stock under restricted stock award agreements		64			—		—		—		—
Forfeiture of shares of common stock under restricted stock award agreements		(4	)		—		—		—		—
Stock-based compensation		—			—		4,186		—		4,186
Shares issued for exercise of stock options		73			—		2,077		—		2,077
Shares issued in Public Offering, net of offering costs		2,300			2		172,943		—		172,945
Net income		—			—		—		14,500		14,500
Balance at September 30, 2019		15,559		$	15	$	356,889	$	105,295	$	462,199
Balance at September 30, 2020													15,801		$	16	$	366,868	$	140,716	$	507,600

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

	For the Nine Months						For the Nine Months
	Ended September 30,						Ended September 30,
	2020			2019			2021			2020
Cash flows from operating activities:
Net income	$	24,684		$	14,500		$	32,068		$	24,684
Adjustments to reconcile net income to net cash provided by operating activities, net of acquisitions:
Depreciation and amortization		8,872			7,365			10,594			8,872
Deferred income taxes		51			105			605			51
Stock-based compensation		3,987			4,186			7,105			3,987
Amortization of debt issuance costs under the credit facility		554			533			590			554
Provision for doubtful accounts		681			168			744			681
Loss (gain) of disposal of assets and asset impairment		1,242			(90	)		—			1,242
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		30,746			(19,957	)		(1,906	)		30,746
Prepaid expenses and other current assets		(2,592	)		2,822			(3,610	)		(2,592	)
Government stimulus advances								(24,413	)		7,141
Accounts payable		(2,496	)		1,856			(780	)		(2,496	)
Accrued payroll								(4,553	)		(4,567	)
Accrued expenses and other long-term liabilities		7,570			(3,404	)		(2,157	)		4,996
Net cash provided by operating activities		73,299			8,084			14,287			73,299
Cash flows from investing activities:
Purchases of property and equipment		(5,893	)		(3,077	)		(3,214	)		(5,893	)
Acquisitions of businesses, net of cash acquired		(11,869	)		(53,224	)		(29,219	)		(11,869	)
Proceeds from disposal of assets		255			—			—			255
Net cash used in investing activities		(17,507	)		(56,301	)		(32,433	)		(17,507	)
Cash flows from financing activities:
Proceeds from issuance of common stock, net of offering costs		—			172,945
Borrowings on revolver — credit facility		—			23,458			46,395			—
Borrowings on term loan — credit facility		—			19,600
Payments on term loan — credit facility		(490	)		(245	)		(18,130	)		(490	)
Payments for debt issuance costs under the credit facility		—			(361	)
Payments on financing lease obligations		(22	)		(54	)
Payments for debt issuance costs								(3,020	)		—
Cash received from exercise of stock options		3,337			2,077			202			3,337
Other								—			(22	)
Net cash provided by financing activities		2,825			217,420			25,447			2,825
Net change in cash		58,617			169,203			7,301			58,617
Cash, at beginning of period		111,714			70,406			145,078			111,714
Cash, at end of period	$	170,331		$	239,609		$	152,379		$	170,331
Supplemental disclosures of cash flow information:
Cash paid for interest	$	1,869		$	1,594		$	3,648		$	1,869
Cash paid for income taxes		9,119			5,808			14,767			9,119
Supplemental disclosures of non-cash investing and financing activities:
Leasehold improvements acquired through tenant allowances	$	4,871		$	682

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Nature of Operations, Consolidation, and Presentation of Financial Statements

Addus HomeCare Corporation (“Holdings”) and its subsidiaries (together with Holdings, the “Company”, “we”, “us” or “our”) operate as a multi-state provider of 3 distinct but related business segments providing in-home services. In its personal care services segment, the Company provides non-medical assistance with activities of daily living, primarily to persons who are at increased risk of hospitalization or institutionalization, such as the elderly, chronically ill or disabled. In its hospice segment, the Company provides physical, emotional and spiritual care for people who are terminally ill as well as related services for their families. In its home health segment, the Company provides services that are primarily medical in nature to individuals who may require assistance during an illness or after hospitalization and include skilled nursing and physical, occupational and speech therapy. The Company’s payors include federal, state and local governmental agencies, managed care organizations, commercial insurers and private individuals.

The accompanying Unaudited Condensed Consolidated Financial Statements and related notes have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for Quarterly Reports on Form 10-Q. The accompanying balance sheet as of December 31, ~~2019~~2020 has been derived from the Company’s audited financial statements for the year ended December 31, ~~2019~~2020 previously filed with the SEC. Accordingly, these financial statements do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for annual financial statements and should be read in conjunction with our consolidated financial statements and notes thereto for the year ended December 31, ~~2019~~2020 included in our Annual Report on Form 10-K, which includes information and disclosures not included herein.

In the opinion of management, these financial statements reflect all adjustments of a normal, recurring nature necessary for the fair statement of our financial position, results of operations, and cash flows for the interim periods presented in conformity with GAAP. Our results for any interim period are not necessarily indicative of results for a full year or any other interim period.

These Unaudited Condensed Consolidated Financial Statements include the accounts of Addus HomeCare Corporation, and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

The financial statements are prepared by management in conformity with ~~GAAP~~U.S. Generally Accepted Accounting Principles (“GAAP”) and include estimated amounts and certain disclosures based on assumptions about future events. The Company’s critical accounting estimates include the following areas: revenue recognition, allowance for doubtful accounts, ~~receivable~~intangible assets acquired in business combinations and, ~~allowances and~~when required, the quantitative impairment assessment of goodwill and indefinite lived intangible assets. Actual results could differ from those estimates.

Diluted net income per common share, calculated on the treasury stock method, is based on the weighted average number of shares outstanding during the period. The Company’s outstanding securities that may potentially dilute the common stock are stock options and restricted stock awards.

As of September 30, ~~2020~~2021 and ~~2019,~~2020, dilutive stock options outstanding were approximately ~~523,000~~521,000 and ~~650,000,~~523,000, respectively, and dilutive restricted stock awards outstanding were approximately 162,000 and 149,000, respectively.

Included in the Company’s calculation of diluted earnings per share for the three and ~~147,000,~~nine months ended September 30, 2021, dilutive stock options outstanding were approximately 267,000 and 288,000, respectively. In addition, dilutive restricted stock awards outstanding were approximately 16,000 and 44,000 for the three and nine months ended September 30, 2021, respectively.

Included in the Company’s calculation of diluted earnings per share for the three and nine months ended September 30, 2020, dilutive stock options outstanding were approximately 301,000 and 303,000, respectively. In addition, dilutive restricted stock awards outstanding were approximately 38,000 and 58,000 for the three and nine months ended September 30, 2020, respectively.

Included in the Company’s calculation of diluted earnings per share for the three and nine months ended September 30, 2019, were approximately 359,000 and 335,000 dilutive stock options outstanding, respectively. In addition, dilutive restricted stock awards outstanding were approximately 78,000 and 81,000 for the three and nine months ended September 30, 2019, respectively.

~~In June 2016, the FASB issued ASU 2016-13,~~ ~~Financial Instruments—Credit Losses (Topic 326)~~: ~~Measurement of Credit Losses on Financial Instruments.~~ ASU 2016-13 changes the impairment model for most financial assets and certain other instruments. Under the new standard, entities holding financial assets and net investment in leases that are not accounted for at fair value through net income are to be presented at the net amount expected to be collected. An allowance for credit losses will be a valuation account that will be deducted from the amortized cost basis of the financial asset to present the net carrying value at the amount expected to be collected on the financial asset. We have reviewed our provision for doubtful accounts process as required by ASU 2016-13. Management estimates allowances on accounts receivable based upon historical experience and other factors, including an aging of accounts receivable, evaluation of expected adjustments, past adjustments and collection experience in relation to amounts billed, current contract and reimbursement terms, shifts in payors and other current relevant information. The Company recorded a provision for doubtful accounts of $0.2 million and $0.7 million for the three and nine months ended September 30, 2020, respectively. Allowance for doubtful accounts was $0.8 million and $1.0 million as of September 30, 2020 and December 31, 2019, respectively. Adoption of the new standard did not have a significant impact on our results of operations or liquidity.

~~In January 2017, the FASB issued ASU 2017-04,~~ ~~Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.~~ The new guidance eliminates the requirement to calculate the implied fair value of goodwill (i.e., Step 2 of the current goodwill impairment test) to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value (i.e., measure the charge based on the current Step 1). Adoption of the new standard did not have a significant impact on our results of operations or liquidity.

~~In August 2018, the FASB issued ASU 2018-15,~~ ~~Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer~~’~~s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract~~. ASU 2018-15 requires customers in a hosting arrangement that is a service contract to follow the internal-use software guidance in Accounting Standards Codification (“ASC”) 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. Adoption of the new standard did not have a significant impact on our results of operations or liquidity.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 ~~intends to simplify~~simplifies various aspects related to accounting for income taxes and removes certain exceptions to the general guidance in ASC 740. In addition, the ASU clarifies and amends existing guidance to improve consistent application of its requirements. The ASU ~~is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. Adoption~~was adopted as of ~~the new standard is~~January 1, 2021 and did not ~~expected to~~ have an impact on ~~our~~the Company’s results of operations or liquidity.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, and other transactions subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. Therefore, it will be in effect for a limited time through December 31, 2022. The ASU can be adopted no later than December 1, 2022 with early adoption permitted. On July 30, 2021, the Company entered into a Second Amendment (the “Second Amendment”) to its Credit Agreement as discussed further in Note 7. The ~~Company~~Credit Agreement contemplates a transition from LIBOR, specifically identifies the secured overnight financing rate (“SOFR”) as the replacement reference rate and details the mechanism for transition at LIBOR cessation, which is ~~evaluating~~anticipated to occur on June 30, 2023. Adoption of the ~~effect of adopting this~~ new ~~accounting guidance.~~

In connection with management finalizing their financial reporting close process for the year ended December 31, 2019, management identified certain immaterial errors impacting the current period and previous periods dating back to periods prior to 2017, including interim periods within those years. ~~Specifically, management determined there were certain errors in the information utilized to accurately estimate the implicit price concessions necessary to reduce net service revenues to the amount~~standard is not expected to ~~be collected. Accordingly, management determined that our accounts receivable allowance was understated. The correction reflects the~~have a material impact on the Company’s ~~income tax provision and related accounts as a result~~results of ~~correcting for the error as discussed above. Additionally, the Company identified and corrected other immaterial unrelated income tax items impacting deferred tax assets~~ ~~and other immaterial items~~.operations or liquidity.

Management evaluated the impact of the errors on all previously issued financial statements and concluded such previously issued financial statements were not materially misstated; however, to reflect such corrections in the quarter ended December 31, 2019 financial statements would materially misstate the 2019 fiscal year. Accordingly, management revised previously issued financial statements to correct for the impact of the errors. The Company’s consolidated financial statements have been revised from the amounts previously reported to correct these immaterial errors as shown in the tables below and are reflected throughout the financial statements and related notes, as applicable.

~~The Consolidated Statements of Income has been revised to reflect the correction for the three and nine months ended September 30, 2019 as follows (amounts in thousands, except per share data):~~

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

2019

2019

As

As

Previously

As

Previously

As

Reported

Revision

Revised

Reported

Revision

Revised

Net service revenues

$
169,803

$
(810
)

$
168,993

$
458,749

$
(2,334
)

$
456,415

Gross profit

45,986

(810
)

45,176

124,030

(2,334
)

121,696

General and administrative expenses

35,950

(865
)

35,085

95,429

(1,320
)

94,109

Total operating expenses

38,706

(865
)

37,841

102,794

(1,320
)

101,474

Operating income from continuing operations

7,280

55

7,335

21,236

(1,014
)

20,222

Income from continuing operations before income taxes

7,200

55

7,255

20,168

(1,014
)

19,154

Income tax expense

1,759

10

1,769

4,347

(267
)

4,080

Net income from continuing operations

5,441

45

5,486

15,821

(747
)

15,074

Net income

$
4,867

$
45

$
4,912

$
15,247

$
(747
)

$
14,500

Basic income per share

$
0.36

$
—

$
0.36

$
1.15

$
(0.05
)

$
1.10

Diluted income per share

$
0.34

$
0.01

$
0.35

$
1.12

$
(0.06
)

$
1.06

~~Additionally, the Consolidated Statement of Cash Flows has been revised to reflect the correction for the nine months ended September 30, 2019 as follows:~~

We have historically entered into operating leases for local branches, our corporate headquarters and certain equipment. The Company’s current leases have expiration dates through 2031. Certain of our arrangements have free rent periods and/or escalating rent payment provisions. We recognize rent expense on a straight-line basis over the lease term. Certain of the Company’s leases include termination options and renewal options for periods ranging from one to five years. Because we are not reasonably certain to exercise these renewal options, the options generally are not considered in determining the lease term, and payments associated with the option years are excluded from lease payments.

When available, we use the rate implicit in the lease to discount lease payments to present value; however, most of our leases do not provide a readily determinable implicit rate. Therefore, we must estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement.

Amounts reported in the Company’s Unaudited Condensed Consolidated Balance Sheets as of September 30, ~~2020~~2021 and ~~Audited Consolidated Balance Sheets as of~~ December 31, ~~2019~~2020 for ~~our~~ operating leases were as follows:

	September 30, 2020		December 31, 2019		September 30, 2021		December 31, 2020
	(Amounts in Thousands)				(Amounts in Thousands)
Operating lease assets, net	$	35,842	$	21,111	$	36,424	$	37,991

Short-term operating lease liabilities (in accrued expenses)		8,057		7,234		9,713		9,283
Long-term operating lease liabilities		33,977		14,301		33,509		35,516
Total operating lease liabilities	$	42,034	$	21,535	$	43,222	$	44,799

~~The Company signed an~~ ~~eleven-year~~ lease agreement to expand its Frisco corporate headquarters from 31,000 square feet to approximately 75,000 square feet which resulted in an increase in the operating lease asset, net, and operating lease liability by approximately $17.3 million and $22.2 million, respectively, during the three and nine months ended September 30, 2020.

Components of lease ~~cost~~costs were reported in general and administrative expenses in the Company’s Unaudited Condensed Consolidated Statements of Income as follows:

	For the Three Months Ended September 30, (Amounts in Thousands)				For the Nine Months Ended September 30, (Amounts in Thousands)				For the Three Months Ended September 30, (Amounts in Thousands)						For the Nine Months Ended September 30, (Amounts in Thousands)
	2020		2019		2020		2019		2021			2020			2021			2020
Operating lease costs	$	2,285	$	1,897	$	6,524	$	5,101	$	2,789		$	2,285		$	8,341		$	6,524
Short-term lease costs		147		222		575		382		197			147			572			575
Total lease cost	$	2,432	$	2,119	$	7,099	$	5,483
Less: sublease income										(177	)		(74	)		(480	)		(224	)
Total lease costs, net									$	2,809		$	2,358		$	8,433		$	6,875

~~Weighte~~dWeighted average remaining lease terms and discount rates were as follows:

	September 30, 2020			December 31, 2019			September 30, 2021			December 31, 2020
Operating leases:
Weighted average remaining lease term		7.24			3.42			6.55			6.97
Weighted average discount rate		4.33	%		5.14	%		3.95	%		4.18	%

~~A summary of our remaining~~Remaining operating lease payments as of September 30, ~~2020~~2021 were as follows:

	Operating Leases			Operating Leases
	(Amounts in Thousands)			(Amounts in Thousands)
Due in the 12-month period ended September 30,
2021	$	9,176
2022		8,704		$	2,765
2023		6,366			10,717
2024		4,704			8,657
2025		3,549			6,520
2026					3,883
Thereafter		16,783			16,786
Total future minimum rental commitments		49,282			49,328
Less: Imputed interest		(7,248	)		(6,106	)
Total lease liabilities	$	42,034		$	43,222

	For the Nine Months Ended September 30, (Amounts in Thousands)				For the Nine Months Ended September 30, (Amounts in Thousands)
	2020		2019		2021		2020
Supplemental Cash Flows Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	6,472	$	5,393	$	8,237	$	6,472

Right-of-use assets, net obtained in exchange for lease obligations:
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		21,399		5,536		5,706		21,399

The Company’s acquisitions have been accounted for in accordance with ASC Topic 805, Business Combinations, and the resulting goodwill and other intangible assets were accounted for under ASC Topic 350, Goodwill and Other Intangible Assets. Under business combination accounting, the assets and liabilities are generally recognized at their fair values and the difference between the consideration transferred, excluding transaction costs, and the fair values of the assets and liabilities is recognized as goodwill. The results of each business acquisition are included on the Unaudited Condensed Consolidated Statements of Income from the date of the acquisition.

Management’s assessment of qualitative factors affecting goodwill for each acquisition includes estimates of market share at the date of purchase, ability to grow in the market, synergy with existing Company operations and the payor profile in the markets.

On ~~July~~August 1, ~~2020,~~2021, we completed the acquisition of ~~A Plus Health Care, Inc. (“A Plus”~~Armada Skilled Homecare of New Mexico LLC, Armada Hospice of New Mexico LLC and Armada Hospice of Santa Fe LLC (collectively, “Armada”)~~. The purchase price was~~ for approximately ~~$12.2~~$29.8 million, ~~plus~~including the amount of acquired excess cash held by ~~A Plus~~Armada at the closing of the acquisition (approximately ~~$2.8~~$0.7 million). The purchase of ~~A Plus~~Armada was funded with the Company’s ~~available cash.~~revolving credit facility. With the purchase of ~~A Plus,~~Armada, the Company expanded its ~~personal care~~home health and hospice services in the state of ~~Montana.~~New Mexico. The related acquisition and integration costs were ~~$0.3~~$0.3 million and $0.4 million for the three and nine months ended September 30, ~~2020~~.2021, respectively. These costs were included in general and administrative expenses on the Unaudited Condensed Consolidated Statements of Income and were expensed as incurred.

Based upon management’s valuations, which are preliminary and subject to completion of working capital adjustments, the fair values of the assets and liabilities acquired are as follows:

Identifiable intangible assets acquired included ~~$1.4~~$0.6 million ~~in trade names~~of non-competition agreements with an estimated useful ~~life~~lives of ~~fifteen years.~~five years and $0.4 million of indefinite lived state licenses. The preliminary estimated fair value of identifiable intangible assets was determined with the assistance of a valuation specialist, using Level 3 inputs as defined under ASC Topic 820. The fair value analysis and related valuations reflect the conclusions of management. All estimates, key assumptions, and forecasts were either provided by or reviewed by the Company. The goodwill and intangible assets acquired are deductible for tax purposes.

On December 4, 2020, we completed the acquisition of Queen City Hospice, LLC and its affiliate Miracle City Hospice, LLC (together “Queen City Hospice”). The ~~A Plus~~purchase price was approximately $194.8 million, including the amount of acquired excess cash held by Queen City Hospice at the closing of the acquisition ~~accounted~~(approximately $15.4 million). The purchase of Queen City Hospice was funded with the Company’s revolving credit facility and available cash. With the purchase of Queen City Hospice, the Company expanded its hospice services in the state of Ohio. The related acquisition costs were $0.2 million for ~~$2.6~~the nine months ended September 30, 2021 and the integration costs were $0.4 million ~~of net service revenues~~ and ~~$0.5~~$2.1 million ~~of operating income~~ for the three and nine months ended September 30, ~~2020,~~2021, respectively. These costs were included in general and administrative expenses on the Unaudited Condensed Consolidated Statements of Income and were expensed as incurred.

Based upon management’s valuations, which are preliminary and subject to completion of working capital adjustments, the fair values of the assets and liabilities acquired are as follows:

Identifiable intangible assets acquired included $11.0 million in trade names and $1.5 million of non-competition agreements with estimated useful lives of fifteen years and five years, respectively, and $7.5 million of indefinite lived state licenses. The preliminary estimated fair value of identifiable intangible assets was determined with the assistance of a valuation specialist, using Level 3 inputs as defined under ASC Topic 820. The fair value analysis and related valuations reflect the conclusions of management. All estimates, key assumptions, and forecasts were either provided by or reviewed by the Company. The goodwill and intangible assets acquired are deductible for tax purposes.

On ~~October~~November 1, ~~2019, the Company~~2020, we completed the acquisition of ~~the assets of Hospice Partners of America, LLC~~County Homemakers, Inc. (“~~Hospice Partners”~~County Homemakers”). The purchase price was approximately ~~$135.6 million.~~$15.8 million, including the amount of acquired excess cash held by County Homemakers at the closing of the acquisition (approximately $1.1 million). The purchase of ~~Hospice Partners~~County Homemakers was funded ~~through a portion of~~with the ~~net proceeds of our~~ public offering of an aggregate 2,300,000 shares of common stock, par value $0.001 per share, including 300,000 shares of common stock sold pursuant to the exercise in full by the underwriters of their option to purchase additional shares at a public offering price of $79.50 per share, which the Company completed on September 9, 2019 (the “Public Offering”).Company’s available cash. With the purchase of ~~Hospice Partners, we~~County Homemakers, the Company expanded ~~our hospice operations through 21 locations~~its personal care services in ~~Idaho, Kansas, Missouri, Oregon, Texas and Virginia.~~the state of Pennsylvania. The related integration costs were ~~$1.5~~$0.2 million for the nine months ended September 30, ~~2020.~~2021. These costs were included in general and administrative expenses on the Unaudited Condensed Consolidated Statements of Income and were expensed as incurred.

Based upon management’s valuations, which are preliminary and subject to completion of working capital adjustments, the fair values of the assets and liabilities acquired are as follows:

Identifiable intangible assets acquired included approximately $0.3 million in state licenses and $0.1 million in trade names with estimated useful lives of eight years and one year, respectively. The preliminary estimated fair value of identifiable intangible assets was determined with the assistance of a valuation specialist, using Level 3 inputs as defined under ASC Topic 820. The fair value analysis and related valuations reflect the conclusions of management. All estimates, key assumptions, and forecasts were either provided by or reviewed by the Company. The goodwill and intangible assets acquired are deductible for tax purposes.

On July 1, 2020, we completed the acquisition of A Plus Health Care, Inc. (“A Plus”). The purchase price was approximately $14.5 million, including the amount of acquired excess cash held by A Plus at the closing of the acquisition (approximately $2.8 million). The purchase of A Plus was funded with the Company’s available cash. With the purchase of A Plus, the Company expanded its personal care services in the state of Montana. The related integration costs were $0.1 million for the nine months ended September 30, 2021 and acquisition costs were $0.3 million for the three and nine months ended September 30, 2020. These costs were included in general and administrative expenses on the Unaudited Condensed Consolidated Statements of Income and were expensed as incurred.

Based upon management’s final valuations, the fair values of the assets and liabilities acquired are as follows:

	Total (Amounts in Thousands)			Total (Amounts in Thousands)
Goodwill	$	111,674		$	9,732
Identifiable intangible assets		18,090			1,523
Cash		5,489			2,819
Property and equipment		164
Accounts receivable		6,411			1,009
Operating lease assets, net		2,425			180
Other assets		702			26
Accounts payable		(1,737	)		(34	)
Accrued expenses		(3,503	)		(353	)
Accrued payroll		(1,110	)		(275	)
Deferred tax liability		(1,422	)
Long-term operating lease liabilities		(1,615	)		(100	)
Total purchase price	$	135,568		$	14,527

Identifiable intangible assets acquired ~~consist of $9.5~~included $1.4 million in trade names with an estimated useful ~~lives~~life of fifteen ~~years, $2.5 million in non-competition agreements with estimated useful lives of three to five years and $6.1 million of indefinite lived state licenses.~~years. The estimated fair value of identifiable intangible assets was determined with the assistance of a valuation specialist, using Level 3 inputs as defined under ASC Topic 820. The fair value analysis and related valuations reflect the conclusions of management. All estimates, key assumptions, and forecasts were either provided by or reviewed by the Company. The goodwill and intangible assets acquired are deductible for tax purposes.

The Hospice Partners acquisition accounted for $13.0 million and $40.3 million of net service revenues and $3.5 million and $9.5 million of operating income for the three and nine months ended September 30,SunLife Home Care

~~On August 1, 2019, the Company~~we completed the acquisition of ~~all~~SunLife Home Care (“SunLife”) for approximately $1.7 million and recorded goodwill of ~~the assets of Alliance Home Health Care (“Alliance”). The purchase price was approximately $23.5~~$1.6 million. ~~The purchase of Alliance was funded through the Company’s revolving credit facility and available cash.~~ With the purchase of ~~Alliance,~~SunLife, the Company expanded its personal care ~~home health and hospice operations~~services in the state of ~~New Mexico. The related~~Arizona. Goodwill generated from the acquisition ~~costs were $0.3 million for~~is primarily attributable to expected synergies with existing Company operations and the ~~three and nine months ended September 30, 2019. The related integration costs were $0.2 million for the nine months ended September 30, 2020.~~ ~~These costs were included in general and administrative expenses on the Unaudited Condensed Consolidated Statements of Income and were expensed as incurred.~~

~~Based upon management’s final valuations, the fair values of the assets and liabilities are as follows:~~

~~Identifiable intangible assets~~goodwill acquired consist of $1.1 million in state licenses, subject to amortization, with an estimated useful life of ten years and $4.3 million of indefinite lived state licenses. The estimated fair value of identifiable intangible assets was determined with the assistance of a valuation specialist, using Level 3 inputs as defined under ASC Topic 820. The fair value analysis and related valuations reflect the conclusions of management. All estimates, key assumptions, and forecasts were either provided by or reviewed by the Company. The goodwill and intangible assets acquired areis deductible for tax purposes.

The Alliance acquisition accounted for $3.3 million and $3.4 million of net service revenues for the three months ended September 30, 2020 and 2019, respectively, and $12.0 million and $3.4 million for the nine months ended September 30, 2020 and 2019, respectively. Operating income accounted for $0.7 million and $0.8 million for the three months ended September 30, 2020 and 2019, respectively, and $2.7 million and $0.8 million for the nine months ended September 30, 2020 and 2019, respectively.

On June 1, 2019, the Company completed the acquisition of all of the assets of VIP Health Care Services (“VIP”). The purchase price was approximately $29.9 million. The purchase of VIP was funded through a combination of the Company’s delayed draw term loan portion of its credit facility and available cash. With the purchase of VIP, the Company expanded its personal care operations in the state of New York and into the New York City metropolitan area. The related acquisition costs were $0.3 million for the nine months ended September 30, 2019. The related integration costs were $0.2 million for the nine months ended September 30, 2020, and $0.2 million and $0.3 million for the three and nine months ended September 30, 2019, respectively. These costs were included in general and administrative expenses on the Unaudited Condensed Consolidated Statements of Income and were expensed as incurred.

~~Based upon management’s valuations, the fair values of the assets and liabilities are as follows:~~

Identifiable intangible assets acquired consist of $10.7 million in state licenses, subject to amortization, and $4.7 million in customer relationships, with estimated useful lives of six and eight years, respectively. The estimated fair value of identifiable intangible assets was determined ~~with the assistance of a valuation specialist~~, using Level 3 inputs as defined under ASC Topic 820. The fair value analysis and related valuations reflect the conclusions of management. All estimates, key assumptions, and forecasts were either provided by or reviewed by the Company. The goodwill and intangible assets acquired are deductible for tax purposes.

The VIP acquisition accounted for $9.7 million and $13.2 million of net service revenues for the three months ended September 30, 2020 and 2019, respectively, and $30.5 million and $17.6 million for the nine months ended September 30, 2020 and 2019, respectively, and $0.4 million of operating loss for each of the three months ended September 30, 2020 and 2019, and $1.1 million and $0.1 million of operating loss for the nine months ended September 30, 2020 and 2019, respectively.

The following table contains unaudited pro forma condensed consolidated income statement information of the Company for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 as if each of the acquisitions of Armada, Queen City Hospice, ~~Partners, Alliance, VIP~~County Homemakers and A Plus closed on January 1, ~~2019.~~2020.

The pro forma disclosures in the table above include adjustments for amortization of intangible assets, tax expense and acquisition costs to reflect results that are more representative of the combined results of the transactions as if Armada, Queen City, Hospice, ~~Partners, Alliance, VIP~~County Homemakers and A Plus had been acquired effective January 1, ~~2019.~~2020. This pro forma information is presented for illustrative purposes only and may not be indicative of the results of operations that would have actually occurred. In addition, future results may vary significantly from the results reflected in the pro forma information. The unaudited pro forma financial information does not reflect the impact of future events that may occur after the acquisition, such as anticipated cost savings from operating synergies.

The goodwill for the Company was $497.9 million and $469.1 million as of September 30, 2021 and December 31, 2020, respectively.

A summary of the goodwill activity for the nine months ended September 30, ~~2020~~2021 is provided below:

The Company’s identifiable intangible assets consist of customer and referral relationships, trade names and trademarks, non-competition agreements and ~~non-competition agreements.~~state licenses. Amortization is computed using straight-line and accelerated methods based upon the estimated useful lives of the respective assets, which range from ~~three~~one to twenty-five years. Customer and referral relationships are amortized systematically over the periods of expected economic benefit, which range from five to ten years. ~~Goodwill and certain state licenses are not amortized pursuant to ASC Topic 350.~~

~~The~~In connection with the acquisition of Armanda, the Company recognized goodwill in ~~the personal care segment~~its hospice and home health segments of ~~$11.3~~$13.4 million ~~related to the acquisition of A Plus~~and $15.1 million, respectively, during ~~the nine months ended September 30, 2020.For~~ the three and nine months ended September 30, ~~2020, adjustments to previously recorded goodwill are primarily adjustments to accounts receivable based on~~2021. See Note 4 for additional information regarding the final valuations for the acquisitions of Hospice Partners, Alliance and VIP. During the nine months ended September 30, 2020, the Company divested certain branches and their related net assets including $1.2 million of related goodwill. The Company recognized $0.3 million loss on the disposition, reflected as a reduction in general and administrative expense for the nine months ended September 30, 2020.acquisition.

The carrying amount and accumulated amortization of each identifiable intangible asset category consisted of the following as of September 30, ~~2020:~~2021:

	Customer and referral relationships			Trade names and trademarks			Non- competition agreements			State Licenses			Total			Customer and referral relationships			Trade names and trademarks			Non- competition agreements			State Licenses			Total
	(Amounts in Thousands)															(Amounts in Thousands)
Intangible assets with indefinite lives		—			—			—			13,296			13,296		$	—		$	—		$	—		$	21,221		$	21,221
Intangible assets subject to amortization:
Gross carrying amount		48,028			31,946			4,655			12,164			96,793			44,672			42,926			6,785			12,507			106,890
Accumulated amortization		(37,263	)		(14,671	)		(2,716	)		(2,566	)		(57,216	)		(35,866	)		(17,800	)		(3,579	)		(4,534	)		(61,779	)
Intangible assets subject to amortization, net		10,765			17,275			1,939			9,598			39,577			8,806			25,126			3,206			7,973			45,111
Total intangible assets at September 30, 2020	$	10,765		$	17,275		$	1,939		$	22,894		$	52,873
Total intangible assets at September 30, 2021																$	8,806		$	25,126		$	3,206		$	29,194		$	66,332

Amortization expense related to the identifiable intangible assets amounted to $1.9 million and $6.2 million for the three and nine months ended September 30, ~~2020, the Company acquired a trade name of $1.4 million related to the acquisition of A Plus.Amortization expense related to identifiable intangible assets amounted to~~2021, respectively, and $1.7 million and $5.3 million for the three and nine months ended September 30, 2020, ~~respectively, and $1.8 million and $4.4 million for the three and nine months ended September 30, 2019,~~ respectively. The weighted average remaining useful lives of identifiable intangible assets as of September 30, ~~2020~~2021 is ~~8.7~~9.4 years.

	September 30, 2020		December 31, 2019		September 30, 2021		December 31, 2020
	(Amounts in Thousands)				(Amounts in Thousands)
Prepaid payroll taxes					$	2,256	$	—
Prepaid workers' compensation and liability insurance						1,969		2,838
Workers' compensation insurance receivable						1,748		1,860
Income tax receivable	$	2,533	$	—		1,614		—
Workers’ compensation insurance receivable		2,186		1,989
Prepaid workers' compensation and liability insurance		1,792		2,040
Health insurance receivable		426		1,567		565		528
Other		3,489		2,397		5,362		4,743
Total prepaid expenses and other current assets	$	10,426	$	7,993	$	13,514	$	9,969

	September 30, 2020		December 31, 2019		September 30, 2021		December 31, 2020
	(Amounts in Thousands)				(Amounts in Thousands)
Accrued payroll taxes ⁽¹⁾	$	8,448	$	1,843
Current portion of operating lease liabilities		8,057		7,234	$	9,713	$	9,283
Payor advances (1)						6,684		4,206
Accrued health insurance		4,413		4,140		4,380		5,607
Accrued professional fees		3,135		2,517		2,860		4,220
Accrued payroll taxes						1,199		4,543
Other		9,342		6,695		10,944		9,705
Total accrued expenses	$	33,395	$	22,429	$	35,780	$	37,564

In total, the CARES Act and other relief legislation include over $178 billion in funding to be distributed through the Provider Relief Fund to eligible providers, including public entities and Medicare- and/or Medicaid-enrolled providers. In November 2020, the Company received grants in an aggregate principal amount of $13.7 million from the Provider Relief Fund, for which we had previously applied. The Company utilized $0.4 million and $11.7 million of these funds for the three and nine months ended September 30, 2021, respectively, for healthcare related expenses, including retention payments, attributable to COVID-19 that were unreimbursed by other sources. In accordance with the current guidance issued by HHS, the Company expects to utilize additional funds through December 31, 2021, at which point we anticipate any unused funds will be returned. We are required to properly and fully document the use of such funds in reports to HHS, which must be submitted no later than March 31, 2022. The Company’s ability to utilize and retain some or all of such funds will depend on the magnitude, timing and nature of the impact of the COVID-19 pandemic, as well as the terms and conditions of the funds received. Queen City Hospice administered retention payments totaling $1.9 million to caregivers for the nine months ended September 30, 2021, which we believe to be necessary to secure and maintain adequate personnel. Commercial organizations that receive and expend annual total awards of $750,000 or more in federal funding, including payments received through the Provider Relief Fund, are subject to federal audit requirements.

The CARES Act expanded the Medicare Accelerated and Advance Payment Program to increase cash flow to providers impacted by the COVID-19 pandemic. Hospice and home health providers were able to request an advance or accelerated payment of up to 100% of the Medicare payment amount for a three-month period (not including Medicare Advantage payments). The Medicare Accelerated and Advance Payment Program payments are a loan that providers must repay. In April 2020, Queen City Hospice received an amount equal to $10.8 million pursuant to the Medicare Accelerated and Advance Payment Program. Queen City Hospice did 0t repay the funds prior to the completion of our acquisition of Queen City Hospice. However, Queen City Hospice repaid such funds following its acquisition in March 2021, prior to any Centers for Medicare and Medicaid Services (“CMS”) recoupment and before any interest accrual.

The CARES Act also provides for certain federal income and other tax changes, including allowing for the deferral of the employer portion of Social Security payroll taxes through December 31, 2020. The payroll tax deferral requires that the deferred payroll taxes be paid over two years, with half of the amount required to be paid by December 31, 2021 and the other half by December 31, 2022. The Company received a cash benefit of approximately $7.1 million related to the deferral of employer payroll taxes for 2020 under the CARES Act, for the period April 2, 2020 through June 30, 2020. Effective July 1, 2020, the Company began paying its deferred portion of employer Social Security payroll taxes and expects to repay half of the $7.1 million in the fourth quarter of 2021.

	September 30, 2020			December 31, 2019			September 30, 2021			December 31, 2020
	(Amounts in Thousands)						(Amounts in Thousands)
Revolving loan under the credit facility	$	43,458		$	43,458		$	224,853		$	178,458
Term loan under the credit facility		18,375			18,865			—			18,130
Other debt		1,722			—
Financing leases		—			21
Less unamortized issuance costs		(1,899	)		(2,452	)		(4,146	)		(1,716	)
Total	$	61,656		$	59,892		$	220,707		$	194,872
Less current maturities		(2,095	)		(728	)		—			(971	)
Long-term debt	$	59,561		$	59,164		$	220,707		$	193,901

On October 31, 2018, the Company entered into the Amended and Restated Credit Agreement, dated as of October 31, 2018, with certain lenders and Capital One, National Association, as a lender and as agent for all lenders (as amended by the Amendment (as hereinafter defined) and the Second Amendment (as hereinafter defined), the “Credit Agreement”)~~, which amended and restated the Company’s existing credit agreement.~~. This credit facility totaled $269.6 million, inclusive of a $250.0 million revolving loan and a $19.6 million delayed draw term loan, and is evidenced by the Credit Agreement. This credit facility amended and restated the Company’s existing senior secured credit facility totaling $250.0 million. As used throughout this Quarterly Report on Form 10-Q, “credit facility” shall mean the credit facility evidenced by the Credit Agreement. The maturity of this credit facility is May 8, 2023. Interest on the Company’s credit facility may be payable at (x) the sum of (i) an applicable margin ranging from 0.75% to 1.50% based on the applicable senior net leverage ratio plus (ii) a base rate equal to the greatest of (a) the rate of interest last quoted by The Wall Street Journal as the “prime rate,” (b) the sum of the federal funds rate plus a margin of 0.50% and (c) the sum of the adjusted LIBOR that would be applicable to a loan with an interest period of one month advanced on the applicable day (not to be less than 0.00%) plus a margin of 1.00% or (y) the sum of (i) an applicable margin ranging from 1.75% to 2.50% based on the applicable senior net leverage ratio plus (ii) the offered rate per annum for similar dollar deposits for the applicable interest period that appears on Reuters Screen LIBOR01 Page (not to be less than zero). Swing loans may not be LIBOR loans. The availability of additional draws under this credit facility is conditioned, among other things, upon (after giving effect to such draws) the Total Net Leverage Ratio (as defined in the Credit Agreement) not exceeding 3.75:1.00. In certain circumstances, in connection with a Material Acquisition (as defined in the Credit Agreement), the Company can elect to increase its Total Net Leverage Ratio compliance covenant to 4.25:1.00 for the then current fiscal quarter and the three succeeding fiscal quarters. ~~In connection with this amended and restated credit facility, the Company incurred approximately $0.9 million of debt issuance costs.~~

Addus HealthCare, Inc. (“Addus HealthCare”) is the borrower, and its parent, Holdings, and substantially all of Holdings’ subsidiaries are guarantors under this ~~amended and restated~~ credit facility, and it is collateralized by a first priority security interest in all of the Company’s and the other credit parties’ current and future tangible and intangible assets, including the shares of stock of the borrower and subsidiaries. The Credit Agreement contains affirmative and negative covenants customary for credit facilities of this type, including limitations on the Company with respect to liens, indebtedness, guaranties, investments, distributions, mergers and acquisitions and dispositions of assets.

On September 12, 2019, the Company entered into a First Amendment (the “Amendment”) to its Credit Agreement. The Amendment increased the Company’s credit facility by $50.0 million in incremental revolving loans, for an aggregate $300.0 million in revolving loans. The Amendment provides that future incremental loans may be for term loans or an increase to the revolving loan commitments. The Amendment further provides that the proceeds of the incremental revolving loan commitments may be used for, among other things, general corporate purposes. In connection with the modification of this Amendment, the Company incurred approximately $0.4 million of debt issuance costs.

The Company pays a fee ranging from 0.20% to 0.35% based on the applicable senior net leverage ratio times the unused portion of the revolving loan portion of the ~~amended and restated~~ credit facility.

The Credit Agreement contains customary affirmative covenants regarding, among other things, the maintenance of records, compliance with laws, maintenance of permits, maintenance of insurance and property and payment of taxes. The Credit Agreement also contains certain customary financial covenants and negative covenants that, among other things, include a requirement to maintain a minimum Interest Coverage Ratio (as defined in the Credit Agreement), a requirement to stay below a maximum Total Net Leverage Ratio (as defined in the Credit Agreement) and a requirement to stay below a maximum permitted amount of capital ~~expenditures, as well as~~expenditures. The Credit Agreement also contains restrictions on guarantees, indebtedness, liens, investments and loans, subject to customary carve outs, a restriction on dividends (provided that Addus HealthCare may make distributions to the Company in an amount that does not exceed ~~$7.5~~$7.5 million in any year absent of an event of default, plus limited exceptions for tax and administrative distributions), a restriction on the ability to consummate acquisitions (without the consent of the lenders) under its credit facility subject to compliance with the Total Net Leverage Ratio (as defined in the Credit Agreement thresholds), restrictions on mergers, dispositions of assets, and affiliate transactions, and restrictions on fundamental changes and lines of business. As of September 30, ~~2020,~~2021, the Company was in compliance with all financial covenants under the Credit Agreement.

On September 12, 2019, the Company entered into a First Amendment (the “First Amendment”) to its Credit Agreement. The First Amendment increased the Company’s credit facility by $50.0 million in incremental revolving loans, for an aggregate $300.0 million in revolving loans. The First Amendment provides that future incremental loans may be for term loans or an increase to the revolving loan commitments. The First Amendment further provides that the proceeds of such $50.0 million incremental revolving loans may be used for, among other things, general corporate purposes.

On July 30, 2021, the Company entered into the Second Amendment to its Credit Agreement. The Second Amendment, among other things, reallocated and refinanced the Company’s outstanding initial term loans as revolving loans (such that the Company has 0 outstanding initial term loans and no further initial term loans may be borrowed) and increased the Company’s revolving credit facility to an aggregate amount of $600.0 million. Moreover, the Second Amendment increased the Company’s incremental loan facility to an aggregate amount $125.0 million, which incremental loan facility may be for term loans or an increase to the revolving loan commitments. The maturity of the revolving credit facility was also extended from May 8, 2023 to July 30, 2026. Additionally, the Credit Agreement contemplates a transition from LIBOR, specifically identifies SOFR as the replacement reference rate and details the mechanism for transition at LIBOR cessation, which is anticipated to occur on June 30, 2023. The transition to SOFR is not expected to have a material impact on the Company’s results of operations or liquidity. In connection with the Second Amendment, we incurred approximately $3.0 million of debt issuance costs.

During the nine months ended September 30, 2021, the Company drew $29.0 million under its credit facility to fund the acquisition of Armada. During the nine months ended September 30, 2020, the Company had 0 draws under its credit facility.

As of September 30, ~~2020,~~2021, the Company had a total of ~~$43.4~~$224.9 million of revolving loans, with an interest rate of ~~1.89% and $18.4 million of term loans, with an~~2.08% ~~interest rate of 1.89%~~, outstanding on its credit facility. After giving effect to the amount drawn on its credit facility, approximately ~~$9.3~~$8.2 million of outstanding letters of credit and borrowing limits based on an advance multiple of adjusted EBITDA (as defined in the Credit Agreement), the Company had ~~$219.0~~$367.0 million of capacity and $123.8 million available for borrowing under its credit facility.

As of December 31, ~~2019,~~2020, the Company had a total of ~~$43.4~~$178.5 million of revolving loans, with an interest rate of ~~3.44%~~1.90%, and ~~$18.9~~$18.1 million of term loans, with an interest rate of ~~3.45%~~1.90%, outstanding on its credit ~~facility. After giving effect to the amount drawn on its credit~~ facility ~~approximately $10.0 million of outstanding letters of credit and borrowing limits based on an advance multiple of adjusted EBITDA (as defined in the Credit Agreement), the Company had~~ ~~$191.4 million available for borrowing under its credit facility.~~.

The effective income tax rates ~~are~~were 26.6% and 23.6% ~~and 24.4%~~ for the three months ended September 30, 2021 and 2020, respectively. The difference between our federal statutory and ~~2019, respectively. For~~effective income tax rates is principally due to the ~~three~~inclusion of state taxes and non-deductible compensation partially offset by the use of federal employment tax credits.

The effective income tax rates were 24.7% and 20.5% for the nine months ended September 30, 2021 and 2020, ~~and 2019,~~respectively. For the nine months ended September 30, 2021, the difference between our federal statutory and effective income tax rates was principally due to the inclusion of state taxes and non-deductible compensation partially offset by ~~an excess tax benefit and~~ the use of federal employment tax ~~credits.~~

~~The effective income~~credits and excess tax ~~rates are~~ ~~20.5% and 21.3% for the nine months ended September 30, 2020 and 2019, respectively.~~benefit. For the nine months ended September 30, 2020, ~~and 2019,~~ the difference between our federal statutory and effective income tax rates was principally due to the inclusion of an excess tax benefit and the use of federal employment tax credits partially offset by state taxes and non-deductible compensation. For the nine months ended September 30, 2021 and 2020, the effective tax rates were inclusive of an excess tax benefit of 2.1% and 6.8%, respectively. The excess tax benefit is a discrete item, related to the vesting of equity shares, which requires the Company to recognize the benefit fully in the period. An excess tax benefit results if the Company’s income tax deduction exceeds the cumulative costs of the award recognized on the Unaudited Condensed Consolidated Statements of Income.

From time to time, we are subject to legal and/or administrative proceedings incidental to our business. It is the opinion of management that the outcome of pending legal and/or administrative proceedings will not have a material effect on the Company’s Unaudited Condensed Consolidated Balance Sheets and Unaudited Condensed Consolidated Statements of Income.

On January 31, 2020, the Secretary of the U.S. Department of Health and Human Services (“HHS”) declared a national public health emergency due to a novel coronavirus. In March 2020, the World Health Organization declared the outbreak of COVID-19, a disease caused by this novel coronavirus, a pandemic. This disease ~~has spread throughout~~continues to impact the United States and other parts of the world, and COVID-19 cases have recently been increasing in the United States and Europe. It is impossible to predict the effect and ultimate impact of the COVID-19 pandemic as the situation continues to rapidly evolve.

In recognition of the significant threat to the liquidity of financial markets posed by the COVID-19 pandemic, the Federal Reserve and Congress have taken dramatic actions to provide liquidity to businesses and the banking system in the United States. For example, on March 27, 2020, ~~the President signed into law~~ the CARES Act, a sweeping stimulus bill intended to bolster the U.S. ~~economy. On~~economy, was enacted. The PPPHCE Act and the CAA both expansions of the CARES Act, were signed into law on April 24, 2020 ~~the Paycheck Protection Program~~ and ~~Health Care Enhancement Act (“PPPHCE Act”) was enacted, an expansion of the CARES Act. Together,~~December 27, 2020, respectively. In total, the CARES Act, ~~and~~ the PPPHCE Act and CAA authorize ~~$175~~$178 billion in funding to be distributed to health care providers through the Provider Relief Fund. This funding is intended to support healthcare providers by reimbursing them for healthcare-related expenses or lost revenues attributable to COVID-19. On March 11, 2021, the ARPA was signed into law, another COVID-19 relief package with numerous provisions that affect healthcare providers, including additional funding targeted to specified healthcare providers and to improve coronavirus testing and vaccine-related activities.

In addition to ~~relief funding,~~the Provider Relief Fund, the CARES Act ~~includes~~and related laws include temporary changes to Medicare and Medicaid payment rules and relief from certain accounting provisions. For example, the laws temporarily lift the Medicare sequester, which would have otherwise reduced payments to Medicare providers by 2% as required by the Budget Control Act of 2011, from May 1, 2020, through December 31, 2021 (but also extend sequestration through 2030).

In ~~April~~the hospice segment, Medicare sequester relief resulted in an increase in net service revenues of $0.7 million and $0.5 million, for the three months ended September 30, 2021 and 2020, respectively, and $2.1 million and $0.8 million for the nine months ended September 30, 2021 and 2020, respectively. In the home health segment, Medicare sequester relief resulted in an increase in net service revenues of $0.1 million, for both the three months ended September 2021 and 2020, and $0.3 million and $0.2 million, for the nine months ended September 2021 and 2020, respectively.

However, the ARPA increases the federal budget deficit in a manner that triggers an additional statutorily mandated sequestration under the Pay-As-You-Go Act of 2010 (“PAYGO Act”). As a result, absent congressional action, Medicare spending will be reduced by up to 4% in fiscal year 2022, to begin to take effect in January 2022, in addition to the existing sequestration requirements of the Budget Control Act of 2011. We cannot currently determine if, or to what extent, our business, results of operations, financial condition or liquidity will ultimately be impacted by mandated sequestration triggers under the PAYGO Act, or if the mandated sequestration will occur.

While conditions related to the COVID-19 pandemic have improved in the United States as vaccinations have become widely available, during the third quarter of 2021, the number of COVID-19 cases and deaths increased in the United States due in part to the emergence of a new variant of the novel coronavirus that causes COVID-19, as well as low vaccination rates in many parts of the country. In response, various governmental authorities and private businesses in the United States continued to implement, or reinstituted, certain mitigation strategies, such as masking and vaccine requirements. The rate of new cases and deaths in the United States are currently decreasing again but longer-term

trends are unknown. As such, it is impossible to predict the effect and ultimate impact of the COVID-19 pandemic on the Company as conditions related to the COVID-19 pandemic continue to evolve. See Note 6 for additional information regarding government stimulus advances associated with the COVID-19 pandemic that the Company has received.

From time to time, the Company is subject to legal and/or administrative proceedings incidental to its business.

On June 2, 2021, the Company received ~~grants~~a $6.5 million Request for Repayment from Palmetto, GBA, LLC (“Palmetto”), a Medicare administrative contractor, regarding Ambercare Hospice Inc. (“Ambercare”), our subsidiary that provides hospice services in ~~an aggregate principal amount~~New Mexico. In 2018, the Office of ~~$6.9 million,~~Audit Services (“OAS”), under the HHS Office of Inspector General, initiated a clinical review of certain hospice claims billed during a timeframe from January 1, 2016 to December 31, 2017. The OAS review concluded that certain payments to Ambercare for ~~which it did not apply,~~hospice services during the review period were made in error. The Company acquired Ambercare in May 2018 and has a contractual right to full indemnification from any potential losses from the ~~Relief Fund as part~~OAS review through the terms of the ~~automatic general distributions by HHS.~~Ambercare purchase agreement. The Company ~~returned these funds in June 2020. The CARES Act includes provisions relating to refundable payroll tax credits, deferral~~disputes the results of the ~~employer portion~~OAS review and related asserted billing errors and is in the process of ~~certain payroll taxes, net operating loss carrybacks, and other areas. The payroll tax deferral requires~~filing administrative appeals. At this stage, the Company cannot predict the ultimate outcome of the appeal process.

It is the opinion of management that the ~~deferred payroll taxes be paid over two years, with half~~outcome of the amount required to be paid by December 31, 2021 and the other half by December 31, 2022. The Company elected to defer payroll taxes during the quarter ended June 30, 2020 and ceased the deferral election effective June 30, 2020. The Company deferred $7.1 million of payroll taxes, which are included in accrued expenses inpending legal and/or administrative proceedings will not have a material effect on the Company’s Unaudited Condensed Consolidated Balance Sheets ~~at September 30, 2020.~~and Unaudited Condensed Consolidated Statements of Income.

Operating segments are defined as components of a company that engage in business activities from which it may earn revenues and incur expenses, and for which separate financial information is available and is regularly reviewed by the Company’s chief operating decision makers, to assess the performance of the individual segments and make decisions about resources to be allocated to the segments. The Company operates as a multi-state provider of 3 distinct but related business segments providing in-home services.

In its personal care segment, the Company provides non-medical assistance with activities of daily living, primarily to persons who are at increased risk of hospitalization or institutionalization, such as the elderly, chronically ill or disabled. In its hospice segment, the Company provides physical, emotional and spiritual care for people who are terminally ill as well as related services for their families. In its home health segment, the Company provides services that are primarily medical in nature to individuals who may require assistance during an illness or after hospitalization and include skilled nursing and physical, occupational and speech therapy.

The tables below set forth information about the Company’s reportable segments for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020, along with the items necessary to reconcile the segment information to the totals reported in the accompanying ~~consolidated financial statements.~~Unaudited Condensed Consolidated Financial Statements. Segment assets are not reviewed by the Company’s chief operating decision maker function and therefore are not disclosed below.

Segment operating income consists of revenue generated by a segment, less the direct costs of service revenues and general and administrative expenses that are incurred directly by the segment. Unallocated general and administrative costs are those costs for functions performed in a centralized manner and therefore not attributable to a particular segment. These costs include accounting, finance, human resources, legal, information technology, corporate office support and facility costs and overall corporate management.

	For the Three Months Ended September 30, 2020								For the Three Months Ended September 30, 2021
	(Amounts in Thousands)								(Amounts in Thousands)
	Personal Care		Hospice		Home Health		Total		Personal Care		Hospice		Home Health		Total
Net service revenues	$	165,916	$	23,986	$	4,085	$	193,987	$	169,609	$	39,095	$	7,958	$	216,662
Cost of services revenues		124,493		10,508		2,685		137,686		125,647		18,992		4,977		149,616
Gross profit		41,423		13,478		1,400		56,301		43,962		20,103		2,981		67,046
General and administrative expenses		14,837		5,904		925		21,666		15,166		8,880		1,477		25,523
Segment operating income	$	26,586	$	7,574	$	475	$	34,635	$	28,796	$	11,223	$	1,504	$	41,523

	For the Three Months Ended September 30, 2019								For the Three Months Ended September 30, 2020
	(Amounts in Thousands)								(Amounts in Thousands)
	Personal Care		Hospice		Home Health		Total		Personal Care		Hospice		Home Health		Total
Net service revenues	$	153,753	$	10,874	$	4,366	$	168,993	$	165,916	$	23,986	$	4,085	$	193,987
Cost of services revenues		115,504		5,495		2,818		123,817		124,493		10,508		2,685		137,686
Gross profit		38,249		5,379		1,548		45,176		41,423		13,478		1,400		56,301
General and administrative expenses		14,737		1,824		844		17,405		14,837		5,904		925		21,666
Segment operating income	$	23,512	$	3,555	$	704	$	27,771	$	26,586	$	7,574	$	475	$	34,635

	For the Three Months Ended September 30,						For the Three Months Ended September 30,
	2020			2019			2021			2020
	(Amounts in Thousands)						(Amounts in Thousands)
Segment reconciliation:
Total segment operating income	$	34,635		$	27,771		$	41,523		$	34,635

Items not allocated at segment level:
Other general and administrative expenses		19,067			17,680			20,757			19,067
Depreciation and amortization		3,045			2,756			3,406			3,045
Interest income		(87	)		(786	)		(37	)		(87	)
Interest expense		680			866			1,614			680
Income before income taxes	$	11,930		$	7,255		$	15,783		$	11,930

	For the Nine Months Ended September 30,						For the Nine Months Ended September 30,
	2020			2019			2021			2020
	(Amounts in Thousands)						(Amounts in Thousands)
Segment reconciliation:
Total segment operating income	$	100,602		$	74,494		$	120,820		$	100,602

Items not allocated at segment level:
Other general and administrative expenses		58,939			46,907			63,648			58,939
Depreciation and amortization		8,872			7,365			10,594			8,872
Interest income		(576	)		(1,096	)		(90	)		(576	)
Interest expense		2,309			2,164			4,092			2,309
Income before income taxes	$	31,058		$	19,154		$	42,576		$	31,058

For the three and nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, the Company’s revenue by payor type was as follows:

	Personal Care																				Personal Care
	For the Three Months Ended September 30,										For the Nine Months Ended September 30,										For the Three Months Ended September 30,										For the Nine Months Ended September 30,
	2020					2019					2020					2019					2021					2020					2021					2020
	Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues
State, local and other governmental programs	$	85,344		51.5	%	$	75,176		48.9	%	$	242,751		50.3	%	$	221,450		52.8	%	$	83,821		49.5	%	$	85,344		51.5	%	$	253,052		49.5	%	$	242,751		50.3	%
Managed care organizations		71,700		43.2			68,438		44.5			213,087		44.1			170,004		40.6			76,890		45.3			71,700		43.2			231,211		45.3			213,087		44.1
Private pay		5,193		3.1			5,720		3.7			15,449		3.2			15,912		3.8			4,934		2.9			5,193		3.1			14,883		2.9			15,449		3.2
Commercial insurance		2,498		1.5			2,683		1.8			7,468		1.5			6,569		1.6			2,459		1.4			2,498		1.5			7,481		1.5			7,468		1.5
Other		1,181		0.7			1,736		1.1			4,094		0.9			5,189		1.2	%		1,505		0.9			1,181		0.7			4,117		0.8			4,094		0.9
Total personal care segment net service revenues	$	165,916		100.0	%	$	153,753		100.0	%	$	482,849		100.0	%	$	419,124		100.0		$	169,609		100.0	%	$	165,916		100.0	%	$	510,744		100.0	%	$	482,849		100.0	%

	Hospice																				Hospice
	For the Three Months Ended September 30,										For the Nine Months Ended September 30,										For the Three Months Ended September 30,										For the Nine Months Ended September 30,
	2020					2019					2020					2019					2021					2020					2021					2020
	Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues
Medicare	$	22,404		93.4	%	$	10,045		92.4	%	$	68,372		92.8	%	$	25,243		92.7	%	$	36,278		92.8	%	$	22,404		93.4	%	$	104,715		93.4	%	$	68,372		92.8	%
Managed care organizations		1,130		4.7			584		5.4			3,710		5.0			1,419		5.2			1,514		3.9			1,130		4.7			4,396		3.9			3,710		5.0
Other		452		1.9			245		2.2			1,641		2.2			566		2.1			1,303		3.3			452		1.9			2,987		2.7			1,641		2.2
Total hospice segment net service revenues	$	23,986		100.0	%	$	10,874		100.0	%	$	73,723		100.0	%	$	27,228		100.0	%	$	39,095		100.0	%	$	23,986		100.0	%	$	112,098		100.0	%	$	73,723		100.0	%

	Home Health																				Home Health
	For the Three Months Ended September 30,										For the Nine Months Ended September 30,										For the Three Months Ended September 30,										For the Nine Months Ended September 30,
	2020					2019					2020					2019					2021					2020					2021					2020
	Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues
Medicare	$	3,188		78.0	%	$	3,338		76.5	%	$	9,667		79.2	%	$	7,948		79.0	%	$	6,372		80.1	%	$	3,188		78.0	%	$	13,699		80.5	%	$	9,667		79.2	%
Managed care organizations		829		20.3			959		22.0			2,325		19.0			1,872		18.6			1,218		15.3			829		20.3			2,838		16.7			2,325		19.0
Other		68		1.7			69		1.5			215		1.8			243		2.4			368		4.6			68		1.7			478		2.8			215		1.8
Total home health segment net service revenues	$	4,085		100.0	%	$	4,366		100.0	%	$	12,207		100.0	%	$	10,063		100.0	%	$	7,958		100.0	%	$	4,085		100.0	%	$	17,015		100.0	%	$	12,207		100.0	%

The Company derives a significant amount of its revenue from its operations in Illinois, New York and New Mexico. The percentages of segment revenue for each of these significant states for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 were as follows:

	Personal Care																				Personal Care
	For the Three Months Ended September 30,										For the Nine Months Ended September 30,										For the Three Months Ended September 30,										For the Nine Months Ended September 30,
	2020					2019					2020					2019					2021					2020					2021					2020
	Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues
Illinois	$	74,448		44.9	%	$	61,633		40.1	%	$	215,047		44.6	%	$	178,449		42.5	%	$	81,959		48.3	%	$	74,448		44.9	%	$	240,131		47.0	%	$	215,047		44.6	%
New York		28,381		17.1			34,730		22.6			87,463		18.1			75,330		18.0			24,127		14.2			28,381		17.1			77,237		15.1			87,463		18.1
New Mexico		21,878		13.2			19,559		12.7			64,402		13.3			54,701		13.1			24,214		14.3			21,878		13.2			73,291		14.3			64,402		13.3
All other states		41,209		24.8			37,831		24.6			115,937		24.0			110,644		26.4			39,309		23.2			41,209		24.8			120,085		23.6			115,937		24.0
Total personal care segment net service revenues	$	165,916		100.0	%	$	153,753		100.0	%	$	482,849		100.0	%	$	419,124		100.0	%	$	169,609		100.0	%	$	165,916		100.0	%	$	510,744		100.0	%	$	482,849		100.0	%

	Hospice																				Hospice
	For the Three Months Ended September 30,										For the Nine Months Ended September 30,										For the Three Months Ended September 30,										For the Nine Months Ended September 30,
	2020					2019					2020					2019					2021					2020					2021					2020
	Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues
Ohio																					$	15,868		40.6	%	$	—		—	%	$	44,676		39.8	%	$	—		—	%
New Mexico	$	10,979		45.8	%	$	10,874		100.0	%	$	33,431		45.3	%	$	27,228		100.0	%		9,268		23.7			10,979		45.8			27,216		24.3			33,431		45.3
All other states		13,007		54.2			—		—			40,292		54.7			—		—			13,959		35.7			13,007		54.2			40,206		35.9			40,292		54.7
Total hospice segment net service revenues	$	23,986		100.0	%	$	10,874		100.0	%	$	73,723		100.0	%	$	27,228		100.0	%	$	39,095		100.0	%	$	23,986		100.0	%	$	112,098		100.0	%	$	73,723		100.0	%

With the acquisition of Queen City Hospice, the Company expanded our hospice services in the state of Ohio.

A substantial portion of the Company’s revenue and accounts receivable are derived from services performed for federal, state and local governmental agencies. We derive a significant amount of our net service revenues in Illinois, which represented ~~38.5%~~37.8%, and ~~36.4%~~38.5% of our net service revenues for the three months ended September 30, ~~2020,~~2021, and ~~2019,~~2020, respectively, and accounted for ~~37.8%~~37.5% and ~~39.1%~~37.8% of our net service revenues for the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The Illinois Department on Aging, the largest payor program for the Company’s Illinois personal care operations, accounted for ~~22.9%~~21.3% and ~~22.1%~~22.9% of the Company’s net service revenues for the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and accounted for ~~23.1%~~21.4% and ~~26.0%~~23.1% of the Company’s net service revenues for the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively.

The related receivables due from the Illinois Department on Aging represented ~~18.5%~~14.4% and ~~25.1%~~15.9% of the Company’s net accounts receivable at September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

On ~~November~~October 1, ~~2020,~~2021, we completed the acquisition of ~~County Homemakers Incorporated~~Summit Home Health, LLC (“~~County Homemakers”~~Summit”) for approximately ~~$14.6~~$8.1 million, with funding provided by ~~cash on hand.~~available cash. With the purchase of ~~County Homemakers, we expanded our personal care~~Summit, the Company added clinical services to its home health segment in Illinois. The initial accounting is incomplete, therefore the ~~state of Pennsylvania.~~related business combination disclosures cannot be completed. The Company is currently assessing the fair value of identifiable net assets acquired.

You should read the following discussion together with our unaudited condensed consolidated financial statements and the related notes included elsewhere in this quarterly report on Form 10-Q. This discussion contains forward-looking statements about our business and operations. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include words like “believes,” “belief,” “expects,” “plans,” “anticipates,” “intends,” “projects,” “estimates,” “may,” “might,” “would,” “should” and similar expressions are intended to be forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the ~~anticipated~~future impact to our business ~~operations~~ with respect to developments related to the COVID-19 pandemic, including, without limitation, those related to the length and severity of the pandemic, as well as the timing and availability of effective medical treatments and vaccines; the pandemic’s impact on our business operations, reimbursement and our consumer population; measures we are taking to respond to the pandemic; the impact of government regulation and stimulus measures, including the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), Paycheck Protection Program and Health Care Enhancement Act (“PPPHCE Act”), the Consolidated Appropriations Act, 2021 (“CAA”), the COVID-Related Tax Relief Act of 2020, the American Rescue Plan of 2021 (“ARPA”) and other ~~enacted legislation;~~stimulus legislation, as well as the six-point COVID-19 plan announced by the current Presidential administration, along with the related uncertainties regarding the implementation of such stimulus measures and any future stimulus measures related to COVID-19; increased expenses related to personal protective equipment (“PPE”), labor, supply chain, or other expenditures; ~~and~~ workforce disruptions and supply shortages and disruptions; ~~uncertainty regarding the implementation of the CARES Act, the PPPHCE Act, and any other future stimulus measures related to COVID-19;~~ changes in operational and reimbursement processes and payment structures at the state or federal levels; changes in Medicaid, Medicare, other government program and managed care organizations policies and payment rates; changes in, or our failure to comply with, existing, federal and state laws or regulations, or our failure to comply with new government laws or regulations on a timely basis; competition in the healthcare industry; the geographical concentration of our operations; changes in the case mix of consumers and payment methodologies; operational changes resulting from the assumption by managed care organizations of responsibility for managing and paying for our services to consumers; the nature and success of future financial and/or delivery system reforms; changes in estimates and judgments associated with critical accounting policies; our ability to maintain or establish new referral sources; our ability to renew significant agreements or groups of agreements; our ability to attract and retain qualified personnel; federal, city and state minimum wage pressure, including any failure of Illinois or any other governmental entity to enact a minimum wage offset and/or the timing of any such enactment; changes in payments and covered services due to the overall economic conditions,, including economic and business conditions resulting from the COVID-19 pandemic, and deficit spending by federal and state governments; cost containment initiatives undertaken by state and other third-party payors; our ability to access financing through the capital and credit markets; our ability to meet debt service requirements and comply with covenants in debt agreements; business disruptions due to natural disasters, acts of terrorism, pandemics, riots, civil insurrection or social unrest, looting, protests, strikes or street demonstrations; our ability to integrate and manage our information systems; our ability to prevent cyber-attacks or security breaches to protect our computer systems and confidential consumer data; our expectations regarding the size and growth of the market for our services; the acceptance of privatized social services; our expectations regarding changes in reimbursement rates; eligibility standards and limits on services imposed by state governmental agencies; the potential for litigation; discretionary determinations by government officials; our ability to successfully implement our business model to grow our business; our ability to continue identifying, pursuing, consummating and integrating acquisition opportunities and expand into new geographic markets; the impact of acquisitions and dispositions on our business, including the potential inability to realize the benefits of the acquisition of Queen City Hospice, ~~Partners;~~LLC and its affiliate Miracle City Hospice, LLC (together “Queen City Hospice”); the potential impact of the discontinuation or modification of LIBOR; the effectiveness, quality and cost of our services; our ability to successfully execute our growth strategy; changes in tax ~~rates;~~rates, including, without limitation, increases in the corporate tax rate; the impact of public health emergencies; the impact of inclement weather or natural ~~disasters, including the COVID-19 pandemic;~~disasters; and various other matters, many of which are beyond our control. In addition, these forward-looking statements are subject to the risk factors set forth in Part I, Item 1A of our Annual Report on Form 10-K for the period ended December 31, ~~2019,~~2020, filed with the SEC on ~~August 10, 2020 may result in these differences.~~March 1, 2021. You should carefully review all of these factors. Moreover, our business may be materially adversely affected by factors that are not currently known to us, by factors that we currently consider immaterial or by factors that are not specific to us, such as general economic conditions. These forward-looking statements were based on information, plans and estimates at the date of this report, and we assume no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes, except as may be required by law.

The unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2019 have been revised to correct prior period errors as discussed in Note 3, “Revision of Previously Issued Financial Statements” to the Notes to Consolidated Financial Statements and in Note 2, “Revision of Previously Issued Financial Statements” and Note 17, “Unaudited Summarized Quarterly Financial Information” to our consolidated financial statements included in Part II, Item 8—“Financial Statements and Supplementary Data,” of our Annual Report on Form 10-K for the period ended December 31, 2019, filed on August 10, 2020. Accordingly, this MD&A reflects the impact of those revisions.

We are a home care services provider operating in three segments: personal care, hospice and home health. Our services are principally provided in-home under agreements with federal, state and local government agencies, managed care organizations, commercial insurers and private individuals. Our consumers are predominantly “dual eligible,” meaning they are eligible to receive both Medicare and Medicaid benefits. Managed care revenues accounted for ~~38.0%~~36.7% and ~~41.4%~~38.0% of our ~~revenue~~net service revenues during the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~38.5%~~37.3% and ~~38.0%~~38.5% of our ~~revenue~~net service revenues during the nine months ended September 30, 2021 and 2020, ~~and 2019,~~ respectively.

A summary of our financial results for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 is provided in the table below.

As of September 30, ~~2020,~~2021, we provided our services in 2422 states through ~~193~~207 offices. For the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, we served approximately ~~59,000~~64,000 and ~~57,000~~59,000 discrete individuals, respectively. Our personal care segment also includes staffing services, with clients including assisted living facilities, nursing homes and hospice facilities.

~~On January 31, 2020, the HHS Secretary declared a national public health emergency due to a novel coronavirus. In March 2020, the World Health Organization declared the outbreak of~~ COVID-19, the disease caused by ~~this~~a novel coronavirus, ~~a pandemic. This disease has spread~~continues to be widespread throughout the United States and other parts of the ~~world, with a recent increase in cases in the United States~~world. Governments and ~~Europe. State and local governments, together with~~ public health officials ~~have recommended~~continue to recommend and ~~mandated~~mandate certain precautions to mitigate the spread of the ~~virus, including closures~~virus. The number of cases of COVID-19 decreased in the United States as vaccines became widely available, and ~~limitations on public facilities, parks, schools, restaurants, many businesses~~a significant number of restrictions related to the COVID-19 pandemic in the United States have been eliminated or relaxed as the result of such decrease. In connection with the decrease in the number of COVID-19 cases and ~~other locations~~the change of ~~public assembly. As a result, COVID-19 has significantly affected overall~~restrictions in the United States, economic conditions in the United ~~States. Although many~~States have significantly improved during 2021. However, during the third quarter of 2021, the number of COVID-19 case and deaths increased in the United States due in part to the emergence of a new variant of the restrictions have eased across the country, some areas are re-imposing closures and other restrictions as a result of increasing rates of COVID-19 infection. The FDA continues to facilitate the development of therapeutics to combatnovel coronavirus that causes COVID-19, as well as ~~provide oversight~~low vaccination rates in many parts of the country. In response, various governmental authorities and private businesses in the United States continued to implement, or reinstituted, certain mitigation strategies, such as masking and vaccine requirements. The rate of new cases and deaths in the United States are currently decreasing again but longer-term trends are unknown.

In September 2021, President Biden announced a six-point plan for responding to the ~~development~~COVID-19 pandemic. Part of this plan provides that the Occupational Safety and Health Administration (“OSHA”) will develop a ~~vaccine. There are no reliable estimates of how long the pandemic~~rule which will ~~last, how many people are likely~~require all employers with 100 or more employees to require their workforce to be ~~affected by it~~fully vaccinated against COVID-19 (or, alternatively, to provide a negative COVID-19 test result on a weekly basis). The employer mandate has not yet gone into effect and further details, including any proposed OSHA rules, have not been released. Some states have also imposed or have plans to impose vaccine mandates, particularly in healthcare settings. In addition, CMS is expected to issue an emergency regulation requiring COVID-19 vaccination of staff within all Medicare and Medicaid-certified facilities. CMS has indicated that compliance with the ~~duration or types of restrictions that~~vaccine mandate will be ~~imposed~~a condition of participation in the Medicare and Medicaid programs. The exact scope and other details of the OSHA and CMS mandates are not yet known, but we expect that these rules will impact our home health and hospice segments.

We are monitoring developments related to these plans as information becomes available to assess how these plans, including any national or ~~re-imposed~~state vaccine mandates, may impact our workforce in personal care, home health, hospice and our corporate support centers. While the Company has not mandated vaccines for our employees, we have developed a multistep program in order to strongly encourage our employees to get the COVID-19 vaccine, which includes offering a vaccine stipend and prizes as ~~the situation~~well as creating educational and motivational leadership communication. We are actively engaged in an effort to track vaccination rates among caregivers and to continue to improve those rates. However, it is ~~continuously evolving. For that reason, we are unable~~difficult to predict the ~~long-term~~future impact of the pandemic or the six-point COVID-19 plan and state vaccine mandates on economic conditions in the United States and our business at this time.

We continue to monitor the impacts on our operations, and have taken precautions intended to minimize the risk to our employees and patients. We have created a COVID-19 Response Team that is responsible for creating and communicating policy, training and the latest COVID-19 updates to all employees. Most employees in our headquarters in Frisco, TX, and in Downers’ Grove, IL, continue to work remotely, and do not believe this arrangement has had a material impact on our ability to maintain business operations.23

For the three and nine months ended September 30, ~~2020, COVID-19 related costs~~2021, COVID-19-related expenses in our personal care segment were approximately ~~$2.5~~$1.3 million and ~~$4.8~~$14.6 million, respectively, which were ~~mostly~~ offset by $0.4 million and $11.7 million, respectively, related to the utilization of a portion of the funds received from the Provider Relief Fund in November 2020 and are included in cost of service revenues on the Condensed Consolidated Statements of Income. As of September 30, 2021, the Company deferred the recognition of the remaining Provider Relief Fund of approximately $0.5 million, which will be recognized as we incur specific expenses related to the pandemic, or we anticipate will be returned, to the extent COVID-19-related expenses are not incurred, by December 31, 2021. Additionally, we recognized revenue of $1.3 million and $6.1 million attributable to temporary rate increases from certain payors in our personal care segment ~~of $1.8 million and $3.6 million during~~for the three and nine months ended September 30, ~~2020.~~ 2021, respectively.

For the nine months ended September 30, 2021, COVID-19-related expenses in our hospice segment were approximately $1.9 million, which were offset by $1.9 million, related to the utilization of a portion of the funds received from the Queen City Hospice Provider Relief Fund and included in cost of service revenues on the Condensed Consolidated Statements of Income.

As of September 30, ~~2020, $3.0~~2021, the Company deferred the recognition of $6.7 million of payments received from payors for COVID-19 ~~reimbursements have been recorded as deferred revenue and~~reimbursement, included within accrued expenses, which will be recognized as we incur specific expenses related ~~expenses on behalf of the payor. Three of our primary markets, New Mexico, New York and Illinois, have been significantly affected by~~to the pandemic, with high numbers of cases reported. However, relevant authorities have universally designated our services as “essential services,” exempting our services and service providers from many of the restrictions described above. In addition, the impact of the restrictions on the Company’s operations for our consumer population has been minimal. For example, in our personal care services segment, we provide non-medical assistance with activities of daily living, primarily to persons who are at increased risk of hospitalization or institutionalization, such as expenses related to acquiring additional PPE, or will be returned to the ~~elderly, chronically ill or disabled. Most of these consumers~~extent COVID-19-related expenses are largely confined to their homes, and a significant number of our caregivers provide services to only one consumer, often a family member. We have implemented several new procedures to further reduce the risk of COVID-19 transmission, including a new screening process for both the caregiver and the consumer and the expansion of the use of personal protective equipment from our hospice and home health segments to include our personal care segment.not incurred. We are not able to reasonably predict the total ~~amount of~~ costs we will incur related to the COVID-19 pandemic, and such costs could be substantial. ~~According~~

As the labor market continues to be tight and unemployment has declined in comparison to earlier levels, the ~~Centers~~competition for ~~Disease Control~~new caregivers has increased, which will continue to impact our ability to attract and ~~Prevention, older adults~~retain new caregivers. In addition, the competition for skilled healthcare staff has increased significantly, which continues to impact our ability to attract and ~~people with certain underlying medical conditions are at a higher risk for serious illness from COVID-19.~~

~~Prior~~retain qualified skilled healthcare staff. To the extent that we continue to have lower unemployment levels in the ~~widespread impacts~~United States and shortages of ~~COVID-19, the primary limitation on~~caregivers and skilled healthcare staff, it may continue to hinder our ~~growth had been the difficulty~~ability to attract and retain sufficient caregivers and skilled healthcare staff to meet the continuing demand for both our non-clinical and clinical services. The increased staffing challenges may also result in ~~an environment of very low unemployment rates. Under the CARES Act, all states provide 13 additional weeks of federally funded Pandemic Emergency Unemployment Assistance benefits~~increased labor cost to ~~people who exhaust their regular~~satisfy our staffing requirements.

Federal and state ~~benefits, followed by additional weeks of federally funded unemployment benefits in states with high unemployment (up~~agencies continue to ~~13 or 20 weeks depending on state laws). With the widespread adverse impacts of~~issue regulations and guidance related to the COVID-19 pandemic, onand the hospitality and other labor-intensive industries, we believe we will have an opportunity to increase our hiring of new caregivers. However, in the near term, the enhanced unemployment benefits offered by several states have suppressed the opportunity to tap into this new pool of potential caregivers in these states. For example in September 2020, the state of New York announced the Lost Wages Assistance (“LWA”) program, which provides an additional $300 in weekly benefits to unemployed individuals.

For the three and nine months ended September 30, 2020, the COVID-19 pandemic had limited impact on our reimbursements. Although we experienced some consumers suspending their personal care services due topublic health concerns, many of these consumers resumed our services within weeks. This reduction was partially offset by an increase in demand for our services by patients recovering from COVID-19 who have been released from the hospital but are still suffering lingering effects of the virus.

The economic slowdown caused by the COVID-19 pandemic pose significant risks to states’ budgets for the 2021 fiscal year, which began July 1 in most states. Depending on the severity and length of a downturn, sales tax collections and income tax withholdings could continue to be depressed in fiscal 2021 and, potentially, future fiscal years. States could face significant fiscal challenges and may have no choice but to revise

their revenue forecasts and adjust their budgets for fiscal 2021 and, potentially, future fiscal years, accordingly. Indeed, Illinois, New York and New Mexico, our top three markets, have revised revenue estimates down for the 2021 fiscal year. In New York, which started its fiscal year April 1, the state comptroller recently estimated that the state would collect at least $10 billion less than originally forecasted, the first year-to-year cut since 2011. The current New York fiscal plan authorizes the state of New York to issue up to $8 billion in short-term bonds to provide funds in case of reduced revenues during the fiscal year. The state issued $1.1 billion of bonds on October 28, 2020. The New York fiscal plan also allows two state authorities to provide the state with a $3 billion line of credit in the new fiscal year. Congress could provide additional relief with additional stimulus and relief legislation, including extension of unemployment benefits and relief for states. We cannot determine the impact that COVID-19 may have on states budgets for 2021 or beyond, however, such impacts could have a material adverse effect on our financial condition, results of operations and cash flows.

At September 30, 2020, we had $170.3 million of cash on hand and $219.0 million of available, unused committed capacity under our credit facility. Our credit facility requires us to maintain a total net leverage ratio not exceeding 3.75:1.00. As of September 30, 2020, our total net leverage ratio was zero. Although we believe our liquidity position remains strong, we can provide no assurance that we will remain in compliance with the covenants in our Credit Agreement, and in the future, it may prove necessary to seek an amendment with the bank lending group under our credit facility. The COVID-19 pandemic has resulted in, and may continue to result in, significant disruption of financial and capital markets, and there can be no assurance that we will be able to raise additional funds on terms acceptable to us, if at all.

~~The impact of the COVID-19 pandemic is fluid and~~situation continues to evolve, and, therefore, we cannot currently predict with certainty the extent to which our business, results of operations, financial condition or liquidity will ultimately be impacted. We will continue to assess the impact and consequences of COVID-19 and government responses to the pandemic, including the enactment and implementation of the CARES Act, the PPPHCE Act, the CAA, the ARPA and other stimulus legislation, as well as the implementation of the President’s six-point COVID-19 plan and any federal and state vaccine mandates, on our business, results of operations, financial condition and cash flows. Given the dynamic nature of these circumstances, the related financial effect cannot be reasonably estimated at this time but is not expected to materially adversely impact our business. See ~~“Part~~Part I, Item 1A 1A—“Risk ~~Factors—~~Factors — The COVID-19 pandemic could negatively affect our operations, business and financial condition, and our liquidity could also be negatively impacted, particularly if the U.S. economy remains unstable for a significant amount of time” of our Annual Report on Form 10-Kfor the period ended December 31, ~~2019,~~2020, filed ~~on August 10, 2020.~~

~~In recognition of~~with the significant threat to the liquidity of financial markets posed by the COVID-19 pandemic, the Federal Reserve and Congress have taken dramatic actions to provide liquidity to businesses and the banking system in the U.S. For example,SEC on March ~~27, 2020, the President signed into law the CARES Act, a sweeping stimulus bill intended~~1, 2021.

See “Liquidity and Capital Resources” below for additional information regarding funds received related to bolster the U.S. economy. On April 24, 2020, the Paycheck Protection Program and Health Care Enhancement Act (“PPPHCE Act”) was enacted, an expansion of the CARES Act. Together, the CARES Act and the PPPHCE Act authorize $175 billion in funding to be distributed to health care providers through the Relief Fund. This ~~funding is intended to support healthcare providers by reimbursing them for healthcare-related expenses or lost revenues attributable to COVID-19.~~ ~~In addition to relief funding, the CARES Act includes temporary changes to~~ ~~Medicare and Medicaid payment rules and relief from certain accounting provisions~~. There can be no assurance that these governmental interventions will ultimately be successful or that any future interventions will prove successful, and the financial markets may experience significant contractions in available liquidity. In April 2020, we received grants in an aggregate principal amount of $6.9 million, for which we did not apply, from the Relief Fund as part of the automatic general distributions by HHS. The Company returned these funds in June 2020. While we may receive further financial, tax or other relief and other benefits under and as a result of the CARES Act, the PPPHCE Act and other stimulus measures, it is not possible to estimate at this time the need, availability, extent or impact of any suchCOVID-19 relief.

In addition to our organic growth, we have grown through acquisitions that have expanded our presence in current markets, with the goal of having all three levels of home care in additional markets, or ~~facilitated~~facilitating our entry into new markets where in-home care has been moving to managed care organizations.

On June 1, 2019, we completed the acquisition of VIP for approximately $29.9 million. With the purchase of VIP, we expanded our personal care services in the state of New York and into the New York City metropolitan area. We funded this acquisition through the delayed draw term loan portion of our credit facility and cash on hand.

On August 1, 2019, we completed the acquisition of Alliance for approximately $23.5 million. Additionally, we acquired the assets of Foremost Home Care (“Foremost”) for approximately $1.4 million. We funded these acquisitions through a combination of our revolving credit facility and available cash. With the purchase of Alliance, we expanded our personal care, home health and hospice operations in the state of New Mexico. The addition of Foremost will support our growth strategy in the New York City market area.

On October 1, 2019, we completed the acquisition of Hospice Partners for approximately $135.6 million. We funded the acquisition with a portion of the net proceeds of our Public Offering. With the purchase of Hospice Partners, we expanded our hospice operations through 21 locations in Idaho, Kansas, Missouri, Oregon, Texas and Virginia. Hospice Partners also launched a palliative care program in Texas in 2018.

On July 1, 2020, we completed the acquisition of A Plus Health Care, Inc. (“A Plus”) for approximately ~~$12.2~~$14.5 million,~~plus~~ including the amount of excess cash held by A Plus at the closing of the acquisition (approximately $2.8 million), with funding provided by ~~cash on hand.~~available cash. With the purchase of A Plus, we expanded our personal care services in the state of Montana.

On November 1, 2020, we completed the acquisition of County Homemakers, Inc. (“County Homemakers”) for approximately ~~$14.6~~$15.8 million, including the amount of acquired excess cash held by County Homemakers at the closing of the acquisition (approximately $1.1 million), with funding provided by available cash ~~on hand.~~. With the purchase of County Homemakers, we expanded our personal care services in the state of Pennsylvania. ~~The Company is currently assessing~~

On December 4, 2020, we completed the ~~fair value~~acquisition of ~~identifiable net assets acquired.~~Queen City Hospice for approximately $194.8 million, including the amount of acquired excess cash held by Queen City Hospice at the closing of the acquisition (approximately $15.4 million). With the purchase of Queen City Hospice, we expanded our hospice services in the state of Ohio. Additionally, on December 1, 2020, we completed the acquisition of SunLife Home Care (“SunLife”) for approximately $1.7 million. With the purchase of SunLife, we expanded our personal care services in the state of Arizona. We funded these acquisitions through a combination of our revolving credit facility and available cash.

On August 1, 2021, we completed the acquisition of Armada Skilled Homecare of New Mexico LLC, Armada Hospice of New Mexico LLC and Armada Hospice of Santa Fe LLC (collectively, “Armada”) for approximately $29.8 million, including the amount of acquired excess

cash held by Armada at the closing of the acquisition (approximately $0.7 million), with funding provided by our revolving credit facility. With the purchase of Armada, we expanded our home health and hospice services in the state of New Mexico.

On October 1, 2021, we completed the acquisition of Summit Home Health, LLC (“Summit”) for approximately $8.1 million, with funding provided by available cash. With the purchase of Summit, we added clinical services to our home health segment in Illinois.

Our payor clients are principally federal, state and local governmental agencies and managed care organizations. The federal, state and local programs under which the agencies operate are subject to legislative, budgetary and other risks that can influence reimbursement rates. We are experiencing a transition of business from government payors to managed care organizations, which we believe aligns with our emphasis on coordinated care and the reduction of the need for acute care.

For the three and nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, our revenue by payor and significant states by segment were as follows:

	Hospice																					Personal Care
	For the Three Months Ended September 30,											For the Nine Months Ended September 30,										For the Three Months Ended September 30,										For the Nine Months Ended September 30,
	2020					2019						2020					2019					2021					2020					2021					2020
	Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)			% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues
Medicare	$	22,404		93.4	%	$	10,045			92.4	%	$	68,372		92.8	%	$	25,243		92.7	%
State, local and other government programs																						$	83,821		49.5	%	$	85,344		51.5	%	$	253,052		49.5	%	$	242,751		50.3	%
Managed care organizations		1,130		4.7			584	��		5.4			3,710		5.0			1,419		5.2			76,890		45.3			71,700		43.2			231,211		45.3			213,087		44.1
Private pay																							4,934		2.9			5,193		3.1			14,883		2.9			15,449		3.2
Commercial insurance																							2,459		1.4			2,498		1.5			7,481		1.5			7,468		1.5
Other		452		1.9			245			2.2			1,641		2.2			566		2.1			1,505		0.9			1,181		0.7			4,117		0.8			4,094		0.9
Total hospice segment net service revenues	$	23,986		100.0	%	$	10,874			100.0	%	$	73,723		100.0	%	$	27,228		100.0	%
Total personal care segment net service revenues																						$	169,609		100.0	%	$	165,916		100.0	%	$	510,744		100.0	%	$	482,849		100.0	%
Illinois																						$	81,959		48.3	%	$	74,448		44.9	%	$	240,131		47.0	%	$	215,047		44.6	%
New York																							24,127		14.2			28,381		17.1			77,237		15.1			87,463		18.1
New Mexico	$	10,979		45.8	%	$	10,874			100.0	%	$	33,431		45.3	%	$	27,228		100.0	%		24,214		14.3			21,878		13.2			73,291		14.3			64,402		13.3
All other states		13,007		54.2			—			—			40,292		54.7			—		—			39,309		23.2			41,209		24.8			120,085		23.6			115,937		24.0
Total hospice segment net service revenues	$	23,986		100.0	%	$	10,874			100.0	%	$	73,723		100.0	%	$	27,228		100.0	%
Total personal care segment net service revenues																						$	169,609		100.0	%	$	165,916		100.0	%	$	510,744		100.0	%	$	482,849		100.0	%

	Home Health																				Hospice
	For the Three Months Ended September 30,										For the Nine Months Ended September 30,										For the Three Months Ended September 30,										For the Nine Months Ended September 30,
	2020					2019					2020					2019					2021					2020					2021					2020
	Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues
Medicare	$	3,188		78.0	%	$	3,338		76.5	%	$	9,667		79.2	%	$	7,948		79.0	%	$	36,278		92.8	%	$	22,404		93.4	%	$	104,715		93.4	%	$	68,372		92.8	%
Managed care organizations		829		20.3			959		22.0			2,325		19.0			1,872		18.6			1,514		3.9			1,130		4.7			4,396		3.9			3,710		5.0
Other		68		1.7			69		1.5			215		1.8			243		2.4			1,303		3.3			452		1.9			2,987		2.7			1,641		2.2
Total Home Health segment net service revenues	$	4,085		100.0	%	$	4,366		100.0	%	$	12,207		100.0	%	$	10,063		100.0	%
Total hospice segment net service revenues																					$	39,095		100.0	%	$	23,986		100.0	%	$	112,098		100.0	%	$	73,723		100.0	%
Ohio																					$	15,868		40.6	%	$	—		—	%	$	44,676		39.8	%	$	—		—	%
New Mexico	$	4,085		100.0	%	$	4,366		100.0	%	$	12,207		100.0	%	$	10,063		100.0	%		9,268		23.7			10,979		45.8			27,216		24.3			33,431		45.3
Total Home Health segment net service revenues	$	4,085		100.0	%	$	4,366		100.0	%	$	12,207		100.0	%	$	10,063		100.0	%
All other states																						13,959		35.7			13,007		54.2			40,206		35.9			40,292		54.7
Total hospice segment net service revenues																					$	39,095		100.0	%	$	23,986		100.0	%	$	112,098		100.0	%	$	73,723		100.0	%

With the acquisition of Queen City Hospice, the Company expanded our hospice services in the state of Ohio.

Personal Care

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

2020

2019

2020

2019

Amount
(in Thousands)

% of
Segment
Net Service
Revenues

Amount
(in Thousands)

% of
Segment
Net Service
Revenues

Amount
(in Thousands)

% of
Segment
Net Service
Revenues

Amount
(in Thousands)

% of
Segment
Net Service
Revenues

Illinois

$
74,448

44.9

%

$
61,633

40.1

%

$
215,047

44.6

%

$
178,449

42.5

%
New York

28,381

17.1

34,730

22.6

87,463

18.1

75,330

18.0

New Mexico

21,878

13.2

19,559

12.7

64,402

13.3

54,701

13.1

All other states

41,209

24.8

37,831

24.6

115,937

24.0

110,644

26.4

Total personal care segment
net service revenues

$
165,916

100.0

%

$
153,753

100.0

%

$
482,849

100.0

%

$
419,124

100.0

%

	Home Health
	For the Three Months Ended September 30,										For the Nine Months Ended September 30,
	2021					2020					2021					2020
	Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues			Amount (in Thousands)		% of Segment Net Service Revenues
Medicare	$	6,372		80.1	%	$	3,188		78.0	%	$	13,699		80.5	%	$	9,667		79.2	%
Managed care organizations		1,218		15.3			829		20.3			2,838		16.7			2,325		19.0
Other		368		4.6			68		1.7			478		2.8			215		1.8
Total home health segment net service revenues	$	7,958		100.0	%	$	4,085		100.0	%	$	17,015		100.0	%	$	12,207		100.0	%
New Mexico	$	7,958		100.0	%	$	4,085		100.0	%	$	17,015		100.0	%	$	12,207		100.0	%
Total home health segment net service revenues	$	7,958		100.0	%	$	4,085		100.0	%	$	17,015		100.0	%	$	12,207		100.0	%

We derive a significant amount of our net service revenues in Illinois, which represented ~~38.5%~~37.8% and ~~36.4%~~38.5% of our net service revenues for the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and accounted for ~~37.8%~~37.5% and ~~39.1%~~37.8% of our net service revenues for the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively.

A significant amount of our ~~revenue is~~net service revenues are derived from one payor client, the Illinois Department on Aging, the largest payor program for our Illinois personal care operations, which accounted for ~~22.9%~~21.3% and ~~22.1%~~22.9% of our net service revenues for the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and accounted for ~~23.1%~~21.4% and ~~26.0%~~23.1% of the Company’s net service revenues for the nine months ended September 30, 2021 and 2020, ~~and 2019,~~ respectively.The Illinois Department on Aging’s payments for non-Medicaid consumers have been delayed in the past and may continue to be delayed in the future due to budget disputes. The state of Illinois did not adopt comprehensive budgets for fiscal years 2016 or 2017, ended June 30, 2016 and June 30, 2017, respectively. On July 6, 2017, the state of Illinois passed a budget for the state fiscal year 2018, which began on July 1, 2017, authorizing the Illinois Department on Aging to pay for our services rendered to non-Medicaid consumers provided in prior fiscal years. On June 4, 2018, the state of Illinois passed a budget for state fiscal year 2019, which began on July 1, 2018.On June 6, 2019, the state of Illinois passed a budget for state fiscal year 2020, which began on July 1, 2019. On June 10, 2020, the state of Illinois passed a budget for the state fiscal year 2021, which will take effect July 1, 2020. In December 2014, the Chicago City Council passed an ordinance that, over a period of years, raised the minimum wage for Chicago workers, resulting in an increase ~~equal to $13 per hour on July 1, 2019, with increases adjusted based on the Consumer Price Index in subsequent years.~~

On November 26, 2019, the ~~Chicago~~ City ~~Council~~of Chicago voted to approve additional increases in the Chicago minimum wage to $14 per hour beginning July 1, 2020 and to $15 per hour beginning July 1, 2021.

~~The State~~Effective January 1, 2021, the state of Illinois ~~finalized its~~ fiscal year ~~2020~~2021 budget ~~with the inclusion of an appropriation to raise~~increased in-home care rates through the Community Care Program by 7.1%, to ~~offset~~$23.40 from $21.84. However, the ~~costs~~rate increase was delayed and did not take effect until April 1, 2021, as a result of ~~previous minimum wage increases in Chicago~~on-going state revenue declines due to COVID-19 and ~~other areas~~the failure of the ~~state that were imposed beginning on July 1, 2018. These rates were originally set~~November 2020 referendum to ~~be effective July 1, 2019, with in-home care rates~~revise the Illinois income tax code. On June 29, 2021, the Governor announced the authorization of bonus payments to ~~be initially increased by 10.9%~~providers in an amount equivalent to ~~$20.28~~the rate increase for services delivered from ~~$18.29 to partially offset the costs of the minimum wage hikes. Rates were then further increased on~~ January 1, ~~2020 by an additional 7.7%~~2021 to ~~$21.84, providing full funding~~March 31, 2021 for ~~both the Chicago minimum wage increases and a statewide raise for all current in-home caregivers.~~

~~On November 15, 2019, the State~~state reimbursed hours of Illinois received and announced official CMS approval for both rate increases, with the first increase to be effective on December 1, 2019, and the second increase to be effective on January 1, 2020. In addition, the Illinois Department on Aging, in conjunction with Illinois’ Health Care and Family Services, announced that the new rates would become effective retroactive to July 1, 2019 for services covered by managed care organizations. On January 15, 2020, the Department on Aging announced confirmation that a one-time bonus payment would be paid to providers who have provided services to clients not enrolled in a ~~managed care organization, for the time period of July 1, 2019 through November 30, 2019 using an updated hourly rate of $20.28.~~care. The bonus payment of ~~$6.8~~$3.0 million was recognized as net service revenues ~~as of December 31, 2019.~~

during the three months ended June 30, 2021, and was received in September 2021. On June ~~10, 2020,~~17, 2021, the Governor of Illinois signed the fiscal year 2022 budget, which funds an increase of in-home care rates to $24.96 effective January 1, 2022. On July 12, 2021, the State of Illinois ~~finalized~~submitted its ~~fiscal year 2021 budget, with in-home care rates~~Initial Illinois Spending Plan and Narrative for Home and Community Based Services investments as part of the ARPA. Included in that plan is the acceleration of the rate increase to ~~be increased by 7.1% to $23.40~~$24.96 from ~~$21.84, effective~~ January 1, 2022, to November 1, 2021, ~~contingent upon federal CMS approval.~~for which the state appears confident that it will receive approval during the fourth quarter of 2021.

Our business will benefit from the rate increases noted above as planned for 2022, but there is no assurance that additional offsetting rate increases will be adopted in Illinois for fiscal years beyond fiscal year ~~2020,~~2022, and our financial performance will be adversely impacted for any periods in which an additional offsetting reimbursement rate increase is not in effect.

In June 2019, CMS began the Review Choice Demonstration for Home Health Services demonstration in Illinois to identify and prevent fraud, reduce the number of Medicare appeals, and improve provider compliance with Medicare program requirements. The Review Choice Demonstration began phasing in home health agencies in Ohio and Texas in August 2018 and January 2020, respectively. Home health agencies may initially select from the following claims review and approval processes: pre-claim review, post-payment review, or a minimal post-payment review with a 25% payment reduction. Home health agencies that maintain high compliance levels will be eligible for additional, less burdensome options. In March 2020, CMS paused certain claims processing requirements for the Review Choice Demonstration due to the COVID-19 pandemic. CMS announced that it would discontinue exercising enforcement discretion beginning in August 2020, regardless of the status of the public health emergency, and also began phasing in home health agencies in North Carolina and Florida. Following the resumption of the demonstration, MACs will conduct post-payment review on claims that were submitted and paid during the pause. We are currently unable to predict what impact, if any, this program may have on our result of operations or financial position.

Home health services provided to Medicare beneficiaries are paid under the Medicare Home Health Prospective Payment System (“HHPPS”). Historically, the HHPPS was based on 60-day episodes of care and used a case-mix system that relied on the number of visits to determine payment. Effective January 1, 2020, CMS began using a 30-day episode of care for home health payments and implemented the Patient-Driven Groupings Model (“PDGM”) as part of the shift toward value-based care. The PDGM classifies patients based on clinical characteristics and other patient information into payment categories and eliminates the use of therapy service thresholds. Also effective January 1, 2020, CMS finalized a policy allowing therapy assistants to provide maintenance therapy services in the home and modified certain requirements relating to the home health plan of care.

CMS updates the HHPPS payment rates each calendar year. Effective ~~January 1, 2020,~~calendar year 2021, HHPPS rates increased by ~~1.3%~~2.0%, which reflects a ~~1.5% payment~~2.3% market basket update, ~~as mandated by the Bipartisan Budget Act of 2018, offset~~reduced by a ~~0.2~~multifactor productivity adjustment of 0.3 percentage points. CMS expects Medicare payments to home health agencies in 2021 to increase in the aggregate by 1.9% after accounting for a 0.1 percentage point decrease in payments to home health agencies due to changes in the rural add-on percentages ~~also~~ mandated by the Bipartisan Budget Act of ~~2018, among other adjustments. CMS requires both home health and hospice providers to submit quality reporting data each year.~~2018. Home health providers that do not comply with quality data reporting requirements are subject to a 2 percentage point reduction to their market basket update.

Historically, CMS ~~has~~ paid home health providers 50% to 60% of anticipated payment at the beginning of a patient’s care episode through a request for anticipated payment (“RAP”). However, to address potential program integrity risks, CMS ~~is currently phasing~~has phased out RAP payments. ~~For calendar year 2020, CMS reduced RAP payments to 20% of the anticipated payment and limited those payments to existing home health providers.~~ In calendar year 2021, CMS will not provide any up-front payments in response to a RAP but will continue to require home health providers to submit streamlined RAPs as notice that a beneficiary is under a home health period of care. ~~CMS will further reduce the administrative burden on providers in~~In calendar year 2022, ~~replacing~~CMS will replace the RAP with a “Notice of Admission.”

Hospice services provided to Medicare beneficiaries are paid under the Medicare Hospice Prospective Payment System, under which CMS sets a daily rate for each day a patient is enrolled in the hospice benefit. CMS updates these rates each federal fiscal year. Effective October 1, ~~2020,~~2021, CMS increased hospice payment rates by ~~2.4%~~2.0%. This ~~reflected~~reflects a ~~2.4%~~2.7% market basket increase reduced by ~~the multifactor~~a productivity adjustment of ~~0.04~~0.7 percentage ~~points as required by the ACA.~~points. Additionally, the aggregate cap, which limits the total Medicare reimbursement that a hospice may receive based on an annual per-beneficiary cap amount and the number of Medicare patients served, was updated to ~~$30,683.93~~$31,297.61 for federal fiscal year ~~2021. This amount reflects the hospice payment update of 2.4%.~~2022. If a hospice’s Medicare payments exceed its aggregate cap, it must repay Medicare the excess amount. Hospices that do not satisfy quality reporting requirements are subject to a 2 percentage point reduction to the market basket update.

AsOn February 11, 2021, the state of New York announced its initial selection of parties to enter into contracts as a ~~result~~Lead Fiscal Intermediary under its previously announced Request for Offer (“RFO”) process related to its Consumer Directed Personal Assistance Program (“CDPAP”), in which the Company currently participates as a provider. The Company was not one of the ~~COVID-19 pandemic, federal and state governments have passed legislation, promulgated regulations, and taken other administrative actions intended to assist healthcare providers~~selected entities in ~~providing care to COVID-19 patients and other patients during~~ the public health emergency. These temporary measures include relief from Medicare conditions of participation requirements for healthcare providers, relaxation of licensure requirements for healthcare professionals, relaxation of privacy restrictions for telehealth remote communications, promoting use of telehealth by expanding the scope of services for which Medicare reimbursement is available, and limited waivers of fraud and abuse laws for activities related to COVID-19 during the emergency period.initial RFO process. The ~~current federal public health emergency declaration expires January 21, 2021.~~announcement followed an extended RFO process first begun in 2019, with responses originally due in February 2020. The HHS Secretary may renew the declaration for successive 90-day periods for as long as the emergency continues to exist and may terminate the declaration whenever he determines that the emergency no longer exists.

One of the primary sources of relief for healthcare providers is the CARES Act, which was expanded by the PPPHCE Act. Together, the CARES Act and the PPPHCE Act include $175 billion in funding to be distributed through the Relief Fund to eligible providers, including public entities and Medicare- and/or Medicaid-enrolled providers. Relief Fund payments are intended to compensate healthcare providers for lost revenues and health care related expenses incurredCompany has submitted a formal protest in response to the ~~COVID-19 pandemic~~selection process, which was filed and ~~are~~accepted on March 19, 2021. The Company has not yet received a response to the formal protest. Based on its current run rate, the Company estimates it will receive $44 million and $3 million in revenue and operating income, respectively, from the program for the year ended December 31, 2021. The Company continues to explore its options, including appeals, other arrangements under which the Company may continue to provide these services, and expense reductions to minimize any potential final impact of the RFO process.

The New York fiscal year 2022 state budget included a provision to add additional fiscal intermediaries (one or two entities per county with specified population sizes, plus entities that meet various other requirements) to those awarded contracts as a Lead Fiscal Intermediary under the initial RFO process, based on the scoring of the original RFO. As scoring of RFOs was not publicly released, it is unknown at this time if the Company’s score ranked high enough to qualify for these additional awards. The Company has submitted a response to the survey issued by the New York Department of Health to determine the additional contract awards. The New York Department of Health has published an anticipated contract start date for all awards to be no earlier than November 1, 2021. No later than the contract start date, we will be required to ~~be repaid, provided~~transition patients within the CDPAP to a fiscal intermediary that ~~recipients attest~~has been awarded a contract and cease providing services to and comply with certain terms and conditions, including limitations on balance billing and not using funds received from the Relief Fund to reimburse expenses or losses that other sources are obligated to reimburse. In April 2020, the Company received grants in an aggregate principal amount of $6.9 million, for which it did not apply, from the Relief Fund as part of the automatic general distributions by HHS. The Company returned these funds in June 2020.

In addition, the CARES Act expands the Medicare Accelerated and Advance Payment Program to increase cash flow to providers impacted by the COVID-19 pandemic. Hospice and home health providers were able to request an advance or accelerated payment of up to 100% of the Medicare payment amount for a three-month period (not including Medicare Advantage payments). Effective October 8, 2020, CMS is no longer accepting applications for accelerated or advance payments. The Medicare Accelerated and Advanced Payment Program payments are a loan that providers must pay back. Recoupment of these payments was due to begin in August, but CMS has delayed the recoupment process for these payments, based on amended repayment terms imposed by the Continuing Appropriations Act, 2021 and Others Extension Act, enacted October 1, 2020, until one year after payment was issued. Beginning one year from the date payment was issued and continuing for eleven months, Medicare payments owed to providers and suppliers will be recouped at a rate of 25%. After the eleven months end, Medicare payments owed to providers and suppliers will be recouped at a rate of 50% for another six months. After the six months end, a letter for any remaining balance will be issued. If the remaining balance is not paid within thirty days, interest will accrue at a rate of 4%.

The CARES Act also includes other provisions offering financial relief, for example temporarily lifting the Medicare sequester from May 1 through December 31, 2020, which would have otherwise reduced payments to Medicare providers by 2% ~~(but also extending sequestration through 2030)~~. ~~The Medicare sequester relief resulted in an increase of $0.1 million and $0.2 million, respectively, to home health net service~~

~~revenues and $0.5 million and $0.8 million to hospice net service revenues, respectively, for the three and nine months ended September��30, 2020.~~

Due to the recent enactment of the CARES Act, the PPPHCE Act and other enacted legislation, there is still a high degree of uncertainty surrounding their implementation. Further, the federal government is considering additional stimulus measures, federal agencies continue to issue related regulations and guidance, and the public health emergency continues to evolve.those patients. We continue to ~~assess the potential impact~~consider other arrangements and to pursue our protest of the ~~CARES Act,~~award. Given the ~~PPPHCE Act and other laws, regulations, and guidance related to COVID-19 on our business, results~~uncertainty surrounding the program, the Company has suspended materially all of ~~operations, financial condition and cash flows.~~its new patient admissions under the New York CDPAP program.

We generate net service revenues by providing our services directly to consumers and primarily on an hourly ~~basis.~~basis in our personal care segment, on a daily basis in our hospice segment and on an episodic basis in our home health segment. We receive payment for providing such services from our payor clients, including federal, state and local governmental agencies, managed care organizations, commercial insurers and private pay consumers. ~~Net~~

In our personal care segment, net service revenues are principally provided based on authorized hours, determined by the relevant agency, at an hourly rate, which is either contractual or fixed by legislation, and are recognized at the time services are rendered. In our hospice segment, net service revenues are provided based on daily rates for each of the levels of care and are recognized as services are provided. In our home health segment, net service revenues are based on an episodic basis at a stated rate and recognized based on the number of days elapsed during a period of care within the reporting period. We also record estimated implicit price concessions (based primarily on historical collection experience) related to uninsured accounts to record ~~self-pay revenues at the estimated amounts we expect to collect.~~revenues.

We incur direct care wages, payroll taxes and benefit-related costs in connection with providing our services. We also provide workers’ compensation and general liability coverage for our employees.

Employees are also reimbursed for their travel time and related travel costs in certain instances.

Our general and administrative expenses include our costs for operating our network of local agencies and our administrative offices. Our agency expenses consist of costs for supervisory personnel, our community care supervisors and office administrative costs. Personnel costs include wages, payroll taxes and employee benefits. Facility costs include rents, utilities, and postage, telephone and office expenses. Our corporate and support center expenses include costs for accounting, information systems, human resources, billing and collections, contracting, marketing and executive leadership. These expenses consist of compensation, including stock-based compensation, payroll taxes, employee benefits, legal, accounting and other professional fees, travel, general insurance, rents, provision for doubtful accounts and related facility costs. Expenses related to streamlining our operations such as costs related to terminated employees, termination of professional services relationships, other contract termination costs and asset write-offs are also included in general and administrative expenses.

Depreciable assets consist principally of furniture and equipment, network administration and telephone equipment, and operating system software. Depreciable and leasehold assets are depreciated or amortized on a straight-line method over their useful lives or, if less and if applicable, their lease terms. We amortize our intangible assets with finite lives, consisting of customer and referral relationships, trade names, trademarks and non-competition agreements, ~~principally~~ using straight line or accelerated methods based upon their estimated useful lives.

Interest expense is reported ~~in the Unaudited Condensed Consolidated Statements of Income~~ when incurred and principally consists of ~~(i)~~ interest and unused credit line fees on ~~our~~the credit ~~facility and (ii) interest on our financing lease obligations.~~facility.

All of our income is from domestic sources. We incur state and local taxes in states in which we operate. For the three and nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, the federal statutory rate was 21.0%. The effective income tax rate was ~~23.6%~~26.6% and ~~24.4%~~23.6% for the three months ended September 30, 2021 and 2020, respectively. The effective income tax rate was 24.7% and ~~2019,~~20.5% for the nine months ended September 30, 2021 and 2020, respectively. ~~For~~The difference between our federal statutory and effective income tax rates is due to the inclusion of state taxes, non-deductible compensation, excess tax benefit and the use of federal employment tax credits.

Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

The following table sets forth, for the periods indicated, our unaudited condensed consolidated results of operations.

	For the Three Months Ended September 30,
	2021						2020						Change
				% Of						% Of
				Net Service						Net Service
	Amount			Revenues			Amount			Revenues			Amount		%
	(Amounts in Thousands, Except Percentages)
Net service revenues	$	216,662			100.0	%	$	193,987			100.0	%	$	22,675		11.7		%
Cost of service revenues		149,616			69.1			137,686			71.0			11,930		8.7
Gross profit		67,046			30.9			56,301			29.0			10,745		19.1
General and administrative expenses		46,280			21.4			40,733			21.0			5,547		13.6
Depreciation and amortization		3,406			1.6			3,045			1.6			361		11.9
Total operating expenses		49,686			23.0			43,778			22.6			5,908		13.5
Operating income		17,360			7.9			12,523			6.4			4,837		38.6
Interest income		(37	)		—			(87	)		—			50		(57.5	)
Interest expense		1,614			0.7			680			0.4			934		137.4
Total interest expense, net		1,577			0.7			593			0.4			984		165.9
Income before income taxes		15,783			7.2			11,930			6.0			3,853		32.3
Income tax expense		4,206			1.9			2,811			1.4			1,395		49.6
Net income	$	11,577			5.3	%	$	9,119			4.6	%	$	2,458		27.0		%

Net service revenues increased by 11.7% to $216.7 million for the three months ended September 30, 2021 compared to $194.0 million for the three months ended September 30, 2020. This increase was primarily due to an increase of $15.1 million from our hospice segment during the three months ended September 30, 2021, compared to the same period in 2020. The increase in our hospice segment revenue was primarily due to an increase in average daily census and revenue per patient day, mainly attributed to the acquisition of Queen City Hospice on December 4, 2020.

Gross profit, expressed as a percentage of net service revenues, increased to 30.9% for the three months ended September 30, 2021, compared to 29.0% for the same period in 2020. The increase was mainly attributed to the full-quarter effect in 2021 of the acquisition of a relatively higher margin hospice segment business in 2020.

General and administrative expenses increased to $46.3 million for the three months ended September 30, 2021, as compared to $40.7 million for the three months ended September 30, 2020. The increase in general and administrative expenses was primarily due to acquisitions that resulted in an increase in administrative employee wages, taxes and benefit costs of $3.3 million and an increase in data processing of $0.4 million. In addition, stock-based compensation increased by $0.9 million for the three months ended September 30, 2021 compared to the three months ended September 30, 2020. General and administrative expenses, expressed as a percentage of net service revenues increased to 21.4% for the three months ended September 30, 2021, from 21.0% for the three months ended September 30, 2020.

Depreciation and amortization expense increased to $3.4 million from $3.0 million for the three months ended September 30, 2021 and 2020, respectively, primarily due to the intangible assets and ~~2019,~~property and equipment acquired in the fiscal year 2020 acquisitions.

Interest expense increased to $1.6 million for the three months ended September 30, 2021 from $0.6 million for the three months ended September 30, 2020. The increase in interest expense was primarily due to higher outstanding borrowings under our credit facility for the three months ended September 30, 2021 compared to the three months ended September 30, 2020.

All of our income is from domestic sources. We incur state and local taxes in states in which we operate. The effective income tax rate was 26.6% and 23.6% for the three months ended September 30, 2021 and 2020, respectively. The difference between the federal statutory and our effective income tax rates was principally due to the inclusion of state taxes and non-deductible compensation partially offset by the use of federal employment tax credits.

Nine months Ended September 30, 2021 Compared to Nine months Ended September 30, 2020

The following table sets forth, for the periods indicated, our consolidated results of operations.

	For the Nine Months Ended September 30,
	2021						2020							Change
				% Of						% Of
				Net Service						Net Service
	Amount			Revenues			Amount			Revenues				Amount		%
	(Amounts in Thousands, Except Percentages)
Net service revenues	$	639,857			100.0	%	$	568,779			100.0		%	$	71,078		12.5		%
Cost of service revenues		442,804			69.2			401,646			70.6				41,158		10.2
Gross profit		197,053			30.8			167,133			29.4				29,920		17.9
General and administrative expenses		139,881			21.9			125,470			22.1				14,411		11.5
Depreciation and amortization		10,594			1.7			8,872			1.6				1,722		19.4
Total operating expenses		150,475			23.6			134,342			23.7				16,133		12.0
Operating income		46,578			7.2			32,791			5.7				13,787		42.0
Interest income		(90	)		—			(576	)		(0.1	)			486		(84.4	)
Interest expense		4,092			0.6			2,309			0.4				1,783		77.2
Total interest expense, net		4,002			0.6			1,733			0.3				2,269		130.9
Income before income taxes		42,576			6.6			31,058			5.4				11,518		37.1
Income tax expense		10,508			1.6			6,374			1.1				4,134		64.9
Net income	$	32,068			5.0	%	$	24,684			4.3		%	$	7,384		29.9		%

Net service revenues increased by 12.5% to $639.9 million for the nine months ended September 30, 2021 compared to $568.8 million for the nine months ended September 30, 2020. This increase was primarily due to an increase in revenue of $38.4 million from our hospice segment during the nine months ended September 30, 2021, compared to the same period in 2020. The increase in our hospice segment revenue was primarily due to an increase in average daily census and revenue per patient day, mainly attributed to the acquisition of Queen City Hospice on December 4, 2020. Additionally, net service revenue increased due to a 6.3% increase in revenues per billable hour for the nine months ended September 30, 2021 in our personal care segment.

Gross profit, expressed as a percentage of net service revenues, increased to 30.8% for the nine months ended September 30, 2021, compared to 29.4% for the same period in 2020. The increase was mainly attributed to the acquisition of a relatively higher margin hospice business in 2020.

General and administrative expenses increased to $139.9 million for the nine months ended September 30, 2021 as compared to $125.5 million for the nine months ended September 30, 2020. The increase in general and administrative expenses was primarily due to acquisitions that resulted in an increase in administrative employee wages, taxes and benefit costs of $8.6 million and an increase in rent expense of $0.6 million. In addition, stock-based compensation increased by $3.1 million for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. General and administrative expenses, expressed as a percentage of net service revenues decreased to 21.9% for the nine months ended September 30, 2021, from 22.1% for the nine months ended September 30, 2020.

Depreciation and amortization expense increased to $10.6 million from $8.9 million for the nine months ended September 30, 2021 and 2020, respectively, primarily due to the intangible assets and property and equipment acquired in the fiscal year 2020 acquisitions.

Interest expense increased to $4.1 million from $2.3 million for the nine months ended September 30, 2021, as compared to the nine months ended September 30, 2020. The increase in interest expense was primarily due to higher outstanding borrowings under our credit facility for the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020.

All of our income is from domestic sources. We incur state and local taxes in states in which we operate. The effective income tax rate was 24.7% and 20.5% for the nine months ended September 30, 2021 and 2020, respectively. For the nine months ended September 30, 2021, the difference between our federal statutory and effective income tax rates was principally due to the inclusion of state taxes and non-deductible compensation partially offset by ~~an excess tax benefit and~~ the use of federal employment tax ~~credits.~~

~~The effective income~~credits and excess tax ~~rates are 20.5% and 21.3% for the nine months ended September 30, 2020 and 2019, respectively.~~benefit. For the nine months ended September 30, 2020, ~~and 2019,~~ the difference between our federal statutory and effective income tax rates was principally due to the inclusion of an excess tax benefit and the use of federal employment tax credits partially offset by state taxes and non-deductible compensation. For the nine months ended September 30, 2021 and 2020, the effective tax rates were inclusive of an excess tax benefit of 2.1% and 6.8%, respectively. The excess tax benefit is a discrete item, related to the vesting of equity shares, which requires ~~us to recognize~~ the ~~benefit fully in the period.~~ ~~An excess tax benefit results if the Company’s income tax deduction exceeds the cumulative costs of the award recognized on the Unaudited Condensed Consolidated Statements of Income.~~

~~Three Months Ended September 30, 2020 Compared to Three Months Ended September 30, 2019~~

~~The following table sets forth, for the periods indicated, our unaudited condensed consolidated results of operations.~~

For the Three Months Ended September 30,

2020

2019

Change

% Of

% Of

Net Service

Net Service

Amount

Revenues

Amount

Revenues

Amount

%

(Amounts in Thousands, Except Percentages)

Net service revenues

$
193,987

100.0

%

$
168,993

100.0

%

$
24,994

14.8

%
Cost of service revenues

137,686

71.0

123,817

73.3

13,869

11.2

Gross profit

56,301

29.0

45,176

26.7

11,125

24.6

General and administrative expenses

40,733

21.0

35,085

20.8

5,648

16.1

Depreciation and amortization

3,045

1.6

2,756

1.6

289

10.5

Total operating expenses

43,778

22.6

37,841

22.4

5,937

15.7

Operating income from continuing operations

12,523

6.4

7,335

4.3

5,188

70.7

Interest income

(87
)

—

(786
)

(0.5
)

699

(88.9
)

Interest expense

680

0.3

866

0.5

(186
)

(21.5
)

Total interest expense, net

593

0.3

80

—

513

641.3

Income from continuing operations before income taxes

11,930

6.1

7,255

4.3

4,675

64.4

Income tax expense

2,811

1.4

1,769

1.1

1,042

58.9

Net income from continuing operations

9,119

4.7

5,486

3.2

3,633

66.2

Net loss from discontinued operations

—

—

(574
)

(0.3
)

574

(100.0
)

Net income

$
9,119

4.7

%

$
4,912

2.9

%

$
4,207

85.6

%

Net service revenues increased by 14.8% to $194.0 million for the three months ended September 30, 2020 compared to $169.0 million for the three months ended September 30, 2019. The increase was due to an increase in same store growth of 4.8% and ~~a 7.7% increase in revenues per billable hour~~ for the three months ended September 30, 2020, partially offset by a decrease in average billable census of 1.9% in our personal care segment. In addition, revenue increased by $13.1 million from our hospice segment during the three months ended September 30, 2020, compared to the same period in 2019, partially attributed to the fiscal year 2019 acquisitions of Hospice Partners and Alliance.

Gross profit, expressed as a percentage of net service revenues, increased to 29.0% for the three months ended September 30, 2020, compared to 26.7% for the same period in 2019. The increase was mainly attributed to the acquisition of the relatively higher margin businesses in 2019.

General and administrative expenses increased to $40.7 million for the three months ended September 30, 2020 as compared to $35.1 million for the three months ended September 30, 2019. The increase in general and administrative expenses was primarily due to acquisitions that resulted in an increase in administrative employee wages, taxes and benefit costs of $5.3 million, an increase in data processing of $0.4 million and an increase in rent expense of $0.3 million. In addition, professional fees increased by $1.0 million for the three months ended September 30, 2020 compared to the three months ended September 30, 2019, partially offset by a decrease in acquisition related costs of $1.6 million for the three months ended September 30, 2020 compared to the three months ended September 30, 2019. General and administrative expenses, expressed as a percentage of net service revenues increased to 21.0% for the three months ended September 30, 2020, from 20.8% for the three months ended September 30, 2019.

Depreciation and amortization expense increased to $3.0 million from $2.8 million for the three months ended September 30, 2020 and 2019, respectively, primarily due to the increase of intangible assets related to the fiscal year 2019 acquisitions.

All of our income is from domestic sources. We incur state and local taxes in states in which we operate. For the three months ended September 30, 2020 and 2019, the federal statutory rate was 21.0%. The effective income tax rate was 23.6% and 24.4% for the three months ended September 30, 2020 and 2019, respectively. For the three months ended September 30, 2020 and 2019, the difference between our federal statutory and effective income tax rates was principally due to the inclusion of state taxes and non-deductible compensation, partially offset by an excess tax benefit and the use of federal employment tax credits.

~~Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019~~

~~The following table sets forth, for the periods indicated, our consolidated results of operations.~~

For the Nine Months Ended September 30,

2020

2019

Change

% Of

% Of

Net Service

Net Service

Amount

Revenues

Amount

Revenues

Amount

%

(Amounts in Thousands, Except Percentages)

Net service revenues

$
568,779

100.0

%

$
456,415

100.0

%

$
112,364

24.6

%
Cost of service revenues

401,646

70.6

334,719

73.3

66,927

20.0

Gross profit

167,133

29.4

121,696

26.7

45,437

37.3

General and administrative expenses

125,470

22.0

94,109

20.7

31,361

33.3

Depreciation and amortization

8,872

1.6

7,365

1.6

1,507

20.5

Total operating expenses

134,342

23.6

101,474

22.3

32,868

32.4

Operating income from continuing operations

32,791

5.8

20,222

4.4

12,569

62.2

Interest income

(576
)

(0.1
)

(1,096
)

(0.2
)

520

(47.4
)

Interest expense

2,309

0.4

2,164

0.4

145

6.7

Total interest expense, net

1,733

0.3

1,068

0.2

665

62.3

Income from continuing operations before income taxes

31,058

5.5

19,154

4.2

11,904

62.1

Income tax expense

6,374

1.2

4,080

0.9

2,294

56.2

Net income from continuing operations

24,684

4.3

15,074

3.3

9,610

63.8

Net loss from discontinued operations

—

—

(574
)

(0.1
)

574

(100.0
)

Net income

$
24,684

4.3

%

$
14,500

3.2

$
10,184

70.2

%

Net service revenues increased by 24.6% to $568.8 million for the nine months ended September 30, 2020 compared to $456.4 million for the nine months ended September 30, 2019. The increase was due to an increase in same store growth of 8.8% and ~~a 10.4 % increase in revenues per billable hour~~ for the nine months ended September 30, 2020, partially offset by a decrease in average billable census of 2.1% in our personal care segment. In addition, revenue increased by $46.5 million from our hospice segment during the nine months ended September 30, 2020, compared to the same period in 2019, attributed to the fiscal year 2019 acquisitions of Hospice Partners and Alliance.

Gross profit, expressed as a percentage of net service revenues, increased to 29.4% for the nine months ended September 30, 2020, compared to 26.7% for the same period in 2019. The increase was mainly attributed to the acquisition of the relatively higher margin businesses in 2019.

General and administrative expenses increased to $125.5 million for the nine months ended September 30, 2020 as compared to $94.1 million for the nine months ended September 30, 2019. The increase in general and administrative expenses was primarily due to acquisitions that resulted in an increase in administrative employee wages, taxes and benefit costs of $21.5 million, an increase in data processing of $1.7 million and an increase in rent expense of $1.6 million. In addition, professional fees increased by $3.4 million for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019. General and administrative expenses, expressed as a percentage of net service revenues increased to 22.0% for the nine months ended September 30, 2020, from 20.7% for the nine months ended September 30, 2019.

Depreciation and amortization expense increased to $8.9 million from $7.4 million for the nine months ended September 30, 2020 and 2019, respectively, primarily due to the increase of intangible assets related to the fiscal year 2019 acquisitions.

All of our income is from domestic sources. We incur state and local taxes in states in which we operate. For the nine months ended September 30, 2020 and 2019, the federal statutory rate was 21.0%. The effective income tax rate was 20.5% and 21.3% for the nine months ended September 30, 2020 and 2019, respectively.

For the nine months ended September 30, 2020 and 2019, the difference between our federal statutory and effective income tax rates was principally due to the inclusion of an excess tax benefit and the use of federal employment tax credits, partially offset by state taxes and non-deductible compensation. The excess tax benefit is a discrete item, ~~related to the vesting of equity shares,~~ ~~which requires us~~Company to recognize the benefit fully in the period.

The following tables and related analysis summarize our operating results and business metrics by segment:

	For the Three Months Ended September 30,																			For the Nine Months Ended September 30,																			For the Three Months Ended September 30,																	For the Nine Months Ended September 30,
	2020						2019						Change							2020						2019						Change							2021					2020					Change							2021					2020					Change
Personal Care Segment	Amount			% of Segment Net Service Revenues			Amount			% of Segment Net Service Revenues			Amount			%				Amount			% of Segment Net Service Revenues			Amount			% of Segment Net Service Revenues			Amount			%				Amount		% of Segment Net Service Revenues			Amount		% of Segment Net Service Revenues			Amount			%				Amount		% of Segment Net Service Revenues			Amount		% of Segment Net Service Revenues			Amount			%
	(Amounts in Thousands, Except Percentages)																			(Amounts in Thousands, Except Percentages)																			(Amounts in Thousands, Except Percentages)																	(Amounts in Thousands, Except Percentages)
Operating Results
Net service revenues	$	165,916			100.0	%	$	153,753			100.0	%	$	12,163			7.9		%	$	482,849			100.0	%	$	419,124			100.0	%	$	63,725			15.2		%	$	169,609		100.0	%	$	165,916		100.0	%	$	3,693			2.2		%	$	510,744		100.0	%	$	482,849		100.0	%	$	27,895			5.8		%
Cost of services revenues		124,493			75.0			115,504			75.1			8,989			7.8				359,344			74.4			314,329			75.0			45,015			14.3				125,647		74.1			124,493		75.0			1,154			0.9				375,744		73.6			359,344		74.4			16,400			4.6
Gross profit		41,423			25.0			38,249			24.9			3,174			8.3				123,505			25.6			104,795			25.0			18,710			17.9				43,962		25.9			41,423		25.0			2,539			6.1				135,000		26.4			123,505		25.6			11,495			9.3
General and administrative expenses		14,837			8.9			14,737			9.6			100			0.7				45,042			9.3			40,053			9.6			4,989			12.5				15,166		8.9			14,837		8.9			329			2.2				46,807		9.2			45,042		9.3			1,765			3.9
Segment operating income	$	26,586			16.0	%	$	23,512			15.3	%	$	3,074			13.1		%	$	78,463			16.3	%	$	64,742			15.4	%	$	13,721			21.2		%	$	28,796		17.0	%	$	26,586		16.0	%	$	2,210			8.3		%	$	88,193		17.3	%	$	78,463		16.3	%	$	9,730			12.4		%
Business Metrics (Actual Numbers, Except Billable Hours in Thousands)
Location at period end																					153						153																														162					153
Average billable census * ⁽¹⁾		38,589						39,342						(753	)		(1.9	)	%		38,443						39,279						(836	)		(2.1	)	%		37,979					38,589					(610	)		(1.6	)	%		38,266					38,443					(177	)		(0.5	)	%
Billable hours * ⁽²⁾		7,778						7,785						(7.0	)		(0.1	)			22,825						21,918						907			4.1				7,537					7,778					(241	)		(3.1	)			22,712					22,825					(113	)		(0.5	)
Average billable hours per census per month * ⁽²⁾		66.9						65.5						1.4			2.1				65.6						61.5						4.1			6.7				65.8					66.9					(1.1	)		(1.6	)			65.7					65.6					0.1			0.2
Billable hours per business day * ⁽²⁾		117,841						117,956						(115	)		(0.1	)			116,454						112,400						4,054			3.6				114,195					117,841					(3,646	)		(3.1	)			116,472					116,454					18			-
Revenues per billable hour * ⁽²⁾	$	21.29					$	19.76					$	1.53			7.7		%	$	21.11					$	19.13					$	1.98			10.4		%	$	22.47				$	21.29				$	1.18			5.5		%	$	22.45				$	21.11				$	1.34			6.3		%
Same store growth revenue % * ⁽³⁾		4.8	%					7.2	%												8.8	%				6.3		%
Same store revenue growth % * ⁽³⁾																																								4.0					4.8												6.6				8.8

~~Net~~We derive a significant amount of our net service revenues from ~~state, local~~operations in Illinois, which represented 37.8% and ~~other governmental programs~~38.5% of our net service revenues for the three months ended September 30, 2021 and 2020, respectively, and accounted for ~~51.5%~~37.5% and ~~48.9%~~37.8% of our net service revenues for the nine months ended September 30, 2021 and 2020, respectively. One payor client, the Illinois Department on Aging, accounted for 21.3% and 22.9% of net service revenues for the three months ended September 30, 2021 and 2020, respectively, and ~~2019, respectively,~~accounted for 21.4% and ~~50.3% and 52.8%~~23.1% of net service revenues for the nine months ended September 30, 2021 and 2020, respectively.

Net service revenues from state, local and ~~2019, respectively. Managed care organizations~~other governmental payors accounted for ~~43.2%~~49.5% and ~~44.5%~~51.5% of net service revenues for the three months ended September 30, 2021 and 2020, respectively. Managed care organizations accounted for 45.3% and ~~2019,~~ ~~and 44.1% and 40.6%~~43.2% of net service revenues for the ~~nine~~three months ended September 30, 2021 and 2020, ~~and 2019,~~ respectively, with commercial insurance, private pay and other payors accounting for the remainder of net service revenues. ~~One payor client, the Illinois Department on Aging,~~Net service revenues from state, local and other governmental payors accounted for ~~22.9%~~49.5% and ~~22.1% of net service revenues for the three months ended September 30, 2020 and 2019, respectively,~~ ~~and accounted for 23.1% and 26.0%~~50.3% of net service revenues for the nine months ended September 30, 2021 and 2020, respectively. Managed care organizations accounted for 45.3% and ~~2019, respectively~~44.1.

~~Net~~% of net service revenues increased by 7.9% for the three months ended September 30, 2020 compared to the three months ended September 30, 2019. Net service revenues increased primarily as a result of an increase in same store growth of 4.8% and an ~~increase in revenues per billable hour of 7.7%,~~ ~~partially offset by a decrease in average billable census of 1.9%for the three months ended September 30, 2020 as compared to the three months ended September 30, 2019.~~ ~~Net service revenues increased by 15.2%~~ for the nine months ended September 30, 2021 and 2020, ~~compared to~~respectively with commercial insurance, private pay and other payors accounting for the ~~nine months ended September 30, 2019.~~ remainder of net service revenues.

Net service revenues increased ~~primarily due to a~~ ~~result of an increase in same store growth of 8.8%, an~~ ~~increase in billable hours of 4.1% and a 10.4% increase in revenues per billable hour,~~ ~~partially offset~~ by ~~a decrease in average billable census of 2.1%~~ ~~for the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019.~~2.2% and 5.8% ~~Revenue per billable hours increased~~ for the three and nine months ended September 30, ~~2020~~2021, respectively, compared to the three and nine months ended September 30, ~~2019,~~2020. Net service revenues included a 5.5% and 6.3% increase in revenues per billable hour for the three and nine months ended September 30, 2021, respectively, mainly attributed to rate increases discussed ~~above.~~above, as compared to the three and nine months ended September 30, 2020. The Company experienced a decrease in New York net service revenues of $4.3 million and $10.2

million for the three and nine months ended September 30, 2021, respectively, driven by a decrease in the New York CDPAP program as discussed above, compared to the three and nine months ended September 30, 2020.

Gross profit, expressed as a percentage of net service revenues, increased to 25.9% for the three months ended September 30, 2021 from 25.0% for the three months ended September 30, 2020 ~~from 24.9%~~and to 26.4% for the ~~three~~nine months ended September 30, ~~2019~~ ~~and~~2021 from 25.6% for the nine months ended September 30, 2020 ~~to 25.0% for the nine months ended September 30, 2019~~. This increase was primarily due to a decrease in direct ~~employee wages, taxes and benefit costs~~payroll as a percentage of net service revenues of ~~0.1%~~0.5% and ~~0.9%~~0.6%, for the three and nine months ended September 30, ~~2020~~2021, respectively, as compared to the three months ended September 30, ~~2019.~~2020.

~~General and administrative expenses increased by approximately $0.1 million and $5.0 million for~~For the three ~~and nine~~ months ended September 30, 2021 and 2020, ~~respectively. Administrative employee wages, taxes~~general and ~~benefit costs~~administrative expenses, expressed as a percentage of net service revenues, remained flat at 8.9% for each period, and 9.2% and 9.3% for the nine months ended September 30, 2021 and 2020, ~~increased $5.1 million primarily due to acquisitions.~~respectively.

	For the Three Months Ended September 30,																	For the Nine Months Ended September 30,																	For the Three Months Ended September 30,																					For the Nine Months Ended September 30,
	2020					2019					Change							2020					2019					Change							2021							2020							Change							2021							2020						Change
Hospice Segment	Amount		% of Segment Net Service Revenues			Amount		% of Segment Net Service Revenues			Amount			%				Amount		% of Segment Net Service Revenues			Amount		% of Segment Net Service Revenues			Amount			%				Amount				% of Segment Net Service Revenues			Amount				% of Segment Net Service Revenues			Amount			%				Amount				% of Segment Net Service Revenues			Amount			% of Segment Net Service Revenues			Amount			%
	(Amounts in Thousands, Except Percentages)																	(Amounts in Thousands, Except Percentages)																	(Amounts in Thousands, Except Percentages)																					(Amounts in Thousands, Except Percentages)
Operating Results
Net service revenues	$	23,986		100.0	%	$	10,874		100.0	%	$	13,112			120.6		%	$	73,723		100.0	%	$	27,228		100.0	%	$	46,495			170.8		%	$	39,095				100.0	%	$	23,986				100.0	%	$	15,109			63.0		%	$	112,098				100.0	%	$	73,723			100.0	%	$	38,375			52.1		%
Cost of services revenues		10,508		43.8			5,495		50.5			5,013			91.2				33,749		45.8			13,587		49.9			20,162			148.4				18,992				48.6			10,508				43.8			8,484			80.7				56,500				50.4			33,749			45.8			22,751			67.4
Gross profit		13,478		56.2			5,379		49.5			8,099			150.6				39,974		54.2			13,641		50.1			26,333			193.0				20,103				51.4			13,478				56.2			6,625			49.2				55,598				49.6			39,974			54.2			15,624			39.1
General and administrative expenses		5,904		24.6			1,824		16.8			4,080			223.7				18,658		25.3			4,962		18.2			13,696			276.0				8,880				22.7			5,904				24.6			2,976			50.4				26,016				23.2			18,658			25.3			7,358			39.4
Segment operating income	$	7,574		31.6	%	$	3,555		32.7	%	$	4,019			113.1		%	$	21,316		28.9	%	$	8,679		31.9	%	$	12,637			145.6		%	$	11,223				28.7	%	$	7,574				31.6	%	$	3,649			48.2		%	$	29,582				26.4	%	$	21,316			29.0	%	$	8,266			38.8		%
Business Metrics (Actual Numbers)
Locations at period end																			30					14																																	34							30
Admissions * ⁽¹⁾		1,399					563					836			148.5		%		4,393					1,548					2,845			183.8		%		2,565							1,339							1,226			91.6		%		7,211							4,393						2,818			64.1		%
Average daily census * ⁽²⁾		1,681					791					890			112.5				1,762					659					1,103			167.4				2,629							1,681							948			56.4				2,523							1,762						761			43.2
Average length of stay * ⁽³⁾		109					121					(12	)		(9.9	)			103					122					(19	)		(15.6	)
Average discharge length of stay * ⁽³⁾																																				95							109							(14	)		(12.7	)			95							103						(8	)		(7.4	)
Patient days * ⁽⁴⁾		154,609					72,261					82,348			114.0				482,765					178,792					303,973			170.0				240,692							154,609							86,083			55.7				680,600							482,765						197,835			41.0
Revenue per patient day * ⁽⁵⁾	$	155.14				$	150.48				$	4.66			3.1		%	$	152.71				$	152.29				$	0.42			0.3		%	$	162.43						$	155.14						$	7.29			4.7		%	$	164.71						$	152.71					$	12.00			7.9		%
Organic growth *
- Revenue * ⁽⁶⁾																																				(4.8	)	%					(5.6	)	%												(7.2	)	%					—	%
- Average daily census * ⁽⁶⁾																																				(7.6	)	%					(6.2	)	%												(24.6	)	%					3.9	%

Hospice generates net service revenues by providing care to patients with a life expectancy of six months or less, as well as related services for their families. Hospice offers four levels of care, as defined by Medicare, to meet the varying needs of patients and their families. The four levels of hospice include routine care, continuous care, general inpatient care and respite care. Our Hospice segment principally provides routine care, but with the acquisition of Queen City Hospice, the Company expanded continuous care services.

Net service revenues from Medicare accounted for 92.8% and 93.4% and managed care organizations accounted for 3.9% and 4.7% for the three months ended September 30, 2021 and 2020, respectively. Net service revenues from Medicare accounted for 93.4% and ~~92.4%~~92.8% and managed care organizations accounted for ~~4.7%~~3.9% and ~~5.4% for the three months ended September 30, 2020 and 2019, respectively.Net service revenues from Medicare accounted for 92.8% and 92.7% and managed care organizations accounted for~~ 5.0% ~~and 5.2%~~ for the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively.

Net service revenues increased by ~~$13.1~~$15.1 million and ~~$46.5~~$38.4 for the three and nine months ended September 30, ~~2020~~2021, compared to the three and nine months ended September 30, ~~2019.~~2020. For the three and nine months ended September 30, ~~2020,~~2021, net service revenues increased primarily due to ~~an increase~~increases in average daily census ~~partially~~and revenue per patient day mainly attributed to the ~~acquisitions~~acquisition of ~~Alliance~~Queen City Hospice on ~~August 1, 2019~~December 4, 2020, partially offset by a decrease in organic growth, compared to the three and ~~Hospice Partners on October 1, 2019.~~nine months ended September 30, 2020.

Gross profit, expressed as a percentage of net service revenues was ~~56.2%~~51.4% and ~~49.5%~~56.2% for the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~54.2%~~49.6% and ~~50.1%~~54.2%, for the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively. For the three and nine months ended September 30, ~~2020,~~2021, the ~~increase of gross profit~~decrease as a percentage of net service revenues was mainly attributed to ~~a decrease~~an increase of direct employee wages, taxes and benefit costs of ~~1.8%~~4.7% and 4.5%, pharmacy costs of 1.2%, medical equipment of 1.1% and direct service supply costs of 0.7%. For the nine months ended September 30, 2020, the increase of gross profit as a percentage of net service revenues was mainly attributed to a decrease in pharmacy costs of 1.0% and medical equipment of 1.0%.respectively.

The hospice segment’s general and administrative expenses primarily consist of administrative employee wages, taxes and benefit costs, rent, information technology and office expenses. General and administrative expenses, expressed as a percentage of net service revenues was ~~24.6%~~22.7% and ~~16.8%~~24.6% for the three months ended September 30, 2021 and 2020, ~~and 2019,~~ respectively, and ~~25.3%~~23.2% and ~~18.2%~~25.3% for the nine months ended September 30, 2021 and 2020, respectively. These decreases for the three and ~~2019, respectively~~.nine months ended September 30, 2021 compared to corresponding periods in 2020 are primarily due to acquisitions synergies. The increase in general and administrative expenses was primarily due to acquisitions that resulted in a $3.4 million and $11.4 million increase in administrative employee wages, taxes and benefit costs and a $0.3 million and $0.9 million increase in rent expenses for the three and nine months ended September 30, ~~2020. The hospice segment’s operating income~~2021, was ~~$7.6~~primarily due to acquisitions that resulted in a $2.3 million and ~~$3.6~~$5.5 million ~~for the three months ended September 30, 2020~~increase in administrative employee wages, taxes and ~~2019, respectively,~~ ~~and $21.3 million and $8.7 million for the nine months ended September 30, 2020 and 2019, respectively~~.benefit costs.

	For the Three Months Ended September 30,																	For the Nine Months Ended September 30,																	For the Three Months Ended September 30,																		For the Nine Months Ended September 30,
	2020					2019					Change							2020					2019					Change							2021						2020							Change					2021						2020							Change
Home Health Segment	Amount		% of Segment Net Service Revenues			Amount		% of Segment Net Service Revenues			Amount			%				Amount		% of Segment Net Service Revenues			Amount		% of Segment Net Service Revenues			Amount			%				Amount			% of Segment Net Service Revenues			Amount				% of Segment Net Service Revenues			Amount		%			Amount			% of Segment Net Service Revenues			Amount				% of Segment Net Service Revenues			Amount		%
	(Amounts in Thousands, Except Percentages)																	(Amounts in Thousands, Except Percentages)																	(Amounts in Thousands, Except Percentages)																		(Amounts in Thousands, Except Percentages)
Operating Results
Net service revenues	$	4,085		100.0	%	$	4,366		100.0	%	$	(281	)		(6.4	)	%	$	12,207		100.0	%	$	10,063		100.0	%	$	2,144			21.3		%	$	7,958			100.0	%	$	4,085				100.0	%	$	3,873		94.8	%	$	17,015			100.0	%	$	12,207				100.0	%	$	4,808		39.4	%
Cost of services revenues		2,685		65.7			2,818		64.5			(133	)		(4.7	)			8,553		70.1			6,803		67.6			1,750			25.7				4,977			62.5			2,685				65.7			2,292		85.4			10,560			62.1			8,553				70.1			2,007		23.5
Gross profit		1,400		34.3			1,548		35.5			(148	)		(9.6	)			3,654		29.9			3,260		32.4			394			12.1				2,981			37.5			1,400				34.3			1,581		112.9			6,455			37.9			3,654				29.9			2,801		76.7
General and administrative expenses		925		22.6			844		19.3			81			9.6				2,831		23.2			2,187		21.7			644			29.4				1,477			18.6			925				22.6			552		59.7			3,410			20.0			2,831				23.2			579		20.5
Segment operating income	$	475		11.6	%	$	704		16.1	%	$	(229	)		(32.5	)	%	$	823		6.7	%	$	1,073		10.7	%	$	(250	)		(23.3	)	%	$	1,504			18.9	%	$	475				11.6	%	$	1,029		216.6	%	$	3,045			17.9	%	$	823				6.7	%	$	2,222		270.0	%
Business Metrics (Actual Numbers)
Locations at period end																			10					12																														11						10
New admissions * ⁽¹⁾		1,096					910					186			20.4		%		3,186					2,325					861			37.0		%		2,608						1,096							1,512		138.0	%		4,962						3,186							1,776		55.7	%
Recertifications * ⁽²⁾		607					764					(157	)		(20.5	)			2,006					1,949					57			2.9				1,081						607							474		78.1			2,476						2,006							470		23.4
Total volume * ⁽³⁾		1,703					1,674					29			1.7				5,192					4,274					918			21.5				3,689						1,703							1,986		116.6			7,438						5,192							2,246		43.3
Visits * ⁽⁴⁾		28,073					31,477					(3,404	)		(10.8	)	%		91,580					75,188					16,392			21.8		%		55,963						28,073							27,890		99.3	%		115,210						91,580							23,630		25.8	%
Organic growth *
- Revenue * ⁽⁵⁾																																				24.8	%					(8.9	)	%										15.9	%					(0.6	)	%
- New Admissions * ⁽⁵⁾																																				27.9	%					42.6		%										23.8	%					23.0		%

Home health generates net service revenues by providing home health services on a short-term, intermittent or episodic basis to individuals, generally to treat an illness or injury. Net service revenues from Medicare accounted for ~~78.0%~~80.1% and ~~76.5%~~78.0%, managed care organizations accounted for ~~20.3%~~15.3% and ~~22.0%~~20.3% and other accounted for ~~1.7%~~4.6% and ~~1.5%~~1.7% for the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively. Net service revenues from Medicare accounted for ~~79.2%~~80.5% and ~~79.0%~~79.2%, managed care organizations accounted for ~~19.0%~~16.7% and ~~18.6%~~19.0% and other accounted for ~~1.8%~~2.8% and ~~2.4%~~1.8% for the nine months ended September 30, 2021 and 2020, respectively. Home health services provided to Medicare beneficiaries are paid under the Medicare Home Health Prospective Payment System (“HHPPS”). Effective January 1, 2020, CMS began using a 30-day episode of care for home health payments and ~~2019, respectively.~~implemented the Patient-Driven Groupings Model (“PDGM”)

as part of the shift toward value-based care. The PDGM classifies patients based on clinical characteristics and other patient information into payment categories and eliminates the use of therapy service thresholds for determination of payments. Also effective January 1, 2020, CMS finalized a policy allowing therapy assistants to provide maintenance therapy services in the home and modified certain requirements relating to the home health plan of care.

Net service revenues ~~decreased~~increased by ~~$0.3~~$3.9 million ~~primarily due to a decrease of recertifications~~ and ~~visits of 20.5%~~$4.8 million for the three and ~~10.8% respectively, related to COVID-19 restrictions in New Mexico. For the~~ nine months ended September 30, ~~2020, net service revenues~~2021 compared to the three and nine months ended September 30, 2020. Total visits increased ~~primarily due~~for the three and nine months ended September 30, 2021, mainly attributed to ~~an increase in total visits partially related to~~organic growth and the acquisition of ~~Alliance~~Armada on August 1, ~~2019.~~2021.

Gross profit, expressed as a percentage of net service revenues was ~~34.3%~~37.5% and ~~35.5%~~34.3% for the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~29.9%~~37.9% and ~~32.4%~~29.9%, for the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively. For the three and nine months ended September 30, ~~2020,~~2021, the ~~decrease of gross profit as a percentage of net service revenues~~increase was due to ~~an increase~~a decrease of direct employee wages, taxes and benefit costs of ~~1.4%~~2.7% and ~~2.7%~~6.9%, respectively, as a percentage of net service revenues. Gross profit, expressed as a percentage of net service revenues, ~~respectively.~~for the three and nine months ended September 30, 2021 improved compared to the corresponding periods in 2020, due to PDGM case mix and improvements as restrictions related to COVID-19 ease.

The home health segment’s general and administrative expenses consist of administrative employee wages, taxes and benefit costs, rent, information technology and office expenses. General and administrative expenses, expressed as a percentage of net service revenues was ~~22.6%~~18.6% and ~~19.3%, respectively,~~22.6% for the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~23.2%~~20.0% and ~~21.7%~~23.2% for the nine months ended September 30, ~~2020~~2021 and ~~2019, respectively. For the nine months ended September 30,~~ 2020, the increase in general and administrative expenses was primarily due to increases in administrative employee wages, taxes and benefit costs of $0.6 million. The home health segment’s operating income was $0.5 million and $0.7 million for the three months ended September 30, 2020 and 2019, respectively, ~~and $0.8 million and $1.1 million for the nine months ended September 30, 2020 and 2019,~~ respectively.

Our primary sources of liquidity are cash on hand, ~~and~~ cash from ~~operations.~~operations and borrowings under our credit facility. At September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, we had cash balances of ~~$170.3~~$152.4 million and ~~$111.7~~$145.1 million, respectively.

~~During the three and nine months ended September 30, 2020, we did not draw on the term loan.~~As of September 30, 2020, we had a total of $43.4 million in revolving loans, with an interest rate of 1.89% and $18.4 million of term loans, with an interest rate of 1.89%, outstanding on our credit facility. After giving effect to the amount drawn on our credit facility, approximately $9.3 million of outstanding letters of credit and borrowing limits based on an advance multiple of adjusted EBITDA, we had $219.0 million available for borrowing under our revolving credit loan facility.

~~At December 31, 2019, we had a total of $43.4 million revolving credit loans, with an interest rate of 3.44%, and $18.9 million term loans, with an interest rate of 3.45%, outstanding on our credit facility.~~ After giving effect to the amount drawn on our credit facility, approximately $10.0 million of outstanding letters of credit and borrowing limits based on an advance multiple of adjusted EBITDA, we had $191.4 million available for borrowing under our revolving credit loan facility.

Cash flows from operating activities represent the inflow of cash from our payor clients and the outflow of cash for payroll and payroll taxes, operating expenses, interest and taxes. Due to its revenue deficiencies as well as budget and financing issues, from time to time the state of Illinois has reimbursed us on a delayed basis with respect to our various agreements including with our largest payor, the Illinois Department on Aging.The open receivable balance from the Illinois Department on Aging, the largest payor program for the Company’s Illinois personal care operation, decreased by ~~$15.8~~$1.7 million from ~~$37.6~~$21.2 million as of December 31, ~~2019~~2020 to ~~$21.8~~$18.1 million as of September 30, 2021. The state of Illinois fiscal year 2021 budget included an appropriation to raise in-home care rates to offset previous minimum wage increases by the City of Chicago. However the rate increase was delayed and did not take effect until April 1, 2021, as a result of on-going state revenue declines due to COVID-19 and the failure of the November 2020 referendum to revise the Illinois income tax code. On June 29, 2021, the Governor announced the authorization of bonus payments to providers in an amount equivalent to the rate increase for services delivered from January 1, 2021 to March 31, 2021 for state reimbursed hours of care. The bonus payment of $3.0 million was recognized as net service revenues during the three months ended June 30, 2021, and was received in September 2021.

During the three and nine months ended September 30, 2021, we drew $29.0 million under credit facility to fund the acquisition of Armada. Additionally, we reallocated and refinanced $17.4 million of our outstanding initial term loans as revolving loans, as discussed below. During the nine months ended September 30, 2020, we did not draw on the term loan.As of September 30, 2021, we had a total of $224.9 million in revolving loans, with an interest rate of 2.08%. After giving effect to the amount drawn on our credit facility, approximately $8.2 million of outstanding letters of credit and borrowing limits based on an advance multiple of adjusted EBITDA, we had $367.0 million of capacity and $123.8 million available for borrowing under our revolving credit loan facility. At December 31, 2020, we had a total of $178.5 million revolving credit loans, with an interest rate of 1.90%, and $18.1 million term loans, with an interest rate of 1.90%.

Our credit facility requires us to maintain a total net leverage ratio not exceeding 3.75:1.00. At September 30, 2021, we were in compliance with our financial covenants under the Credit Agreement. Although we believe our liquidity position remains strong, we can provide no assurance that we will remain in compliance with the covenants in our Credit Agreement, and in the future, it may prove necessary to seek an amendment with the bank lending group under our credit facility. Additionally, there can be no assurance that we will be able to raise additional funds on terms acceptable to us, if at all.

Any deterioration in economic conditions in the United States, including as the result of the COVID-19 pandemic, would pose a risk to states’ budgets, which in turn could affect our collections. Depending on the severity and length of any potential economic downturn, states could face significant fiscal challenges and revise their revenue forecasts and adjust their budgets, and sales tax collections and income tax withholdings could be depressed in fiscal 2021 (which began July 1 in most states), and, potentially, future fiscal years. In this regard, Illinois, New York and New Mexico, our top three markets, previously revised revenue estimates downward for the 2021 fiscal year as the result of earlier negative economic conditions arising from the pandemic. Also in response to reduced revenues, the state of New York authorized the issuance of short-term bonds and implemented uniform reductions to Medicaid payments. Effective for dates of service on or after April 2, 2020, the uniform reduction rate is 1.5%. The reduction applies to home health services but hospice services are exempt. We cannot determine

the impact that COVID-19 may have on states’ budgets for 2022 or beyond, or if additional federal stimulus measures will be provided. However, such impacts could have a material adverse effect on our financial condition, results of operations and cash flows.

As a result of the COVID-19 pandemic, federal and state governments have passed legislation, promulgated regulations, and taken other administrative actions intended to assist healthcare providers in providing care to COVID-19 patients and other patients during the public health emergency. These temporary measures include relief from Medicare conditions of participation requirements for healthcare providers, relaxation of licensure requirements for healthcare professionals, relaxation of privacy restrictions for telehealth remote communications, promoting use of telehealth by expanding the scope of services for which Medicare reimbursement is available, and limited waivers of fraud and abuse laws for activities related to COVID-19 during the emergency period. The current federal public health emergency declaration expires January 16, 2022, but HHS has indicated it will provide states with 60 days’ notice prior to termination of the declaration.

The ARPA, which became law on March 11, 2021, provides for $350 billion in relief funding for eligible state, local, territorial, and Tribal governments to mitigate the fiscal effects of the COVID-19 public health emergency. Additionally, the law provides for a 10 percentage point increase in federal matching funds for Medicaid home and community based services (“HCBS”) from April 1, 2021, through March 30, 2022, provided the state satisfies certain conditions. States must use the funds attributable to this matching fund increase to supplement existing state funds expended for Medicaid HCBS in effect as of April 1, 2021, and must use the state funds equivalent to the matching fund increase to implement or supplement the implementation of activities to enhance HCBS under the Medicaid program. States will be permitted to use the state funds equivalent to the additional federal funds through March 31, 2024. The additional federal funds and other federal stimulus measures may help to ease state-level budget constraints due to COVID-19.

One of the primary sources of relief for healthcare providers is the Provider Relief Fund, which was established by the CARES Act, which was expanded by the PPPHCE Act and the CAA. Provider Relief Fund payments are intended to compensate healthcare providers for lost revenues and health care related expenses incurred in response to the COVID-19 pandemic and are not required to be repaid, provided that recipients attest to and comply with certain terms and conditions, including limitations on balance billing and not using funds received from the Provider Relief Fund to reimburse expenses or losses that other sources are obligated to reimburse.

In November 2020, the Company received grants in an aggregate principal amount of $13.7 million from the Provider Relief Fund, for which we had previously applied. The Company utilized $0.4 million and $11.7 million of these funds for the three and nine months ended September 30, 2021, respectively, for healthcare related expenses, including retention payments, attributable to COVID-19 that were unreimbursed by other sources. In accordance with the current guidance issued by HHS, the Company expects to utilize additional funds through December 31, 2021, at which point we anticipate any unused funds will be returned. We are required to properly and fully document the use of such funds in reports to HHS, which must be submitted no later than March 31, 2022. The Company’s ability to utilize and retain some or all of such funds will depend on the terms and conditions of the funds received. Queen City Hospice administered retention payments totaling $1.9 million to caregivers for the nine months ended September 30, 2021, which we believed to be necessary to secure and maintain adequate personnel. Commercial organizations that receive and expend annual total awards of $750,000 or more in federal funding, including payments received through the Provider Relief Fund, are subject to federal audit requirements.

The CARES Act and related legislation also include other provisions offering financial relief, for example temporarily lifting the Medicare sequester, which would have otherwise reduced payments to Medicare providers by 2% as required by the Budget Control Act of 2011, from May 1, 2020, through December 31, 2021 (but also extending sequestration through 2030).

In our hospice segment, Medicare sequester relief resulted in an increase in net service revenues of $0.7 million and $0.5 million, for the three months ended September 30, 2021 and 2020, respectively, and $2.1 million and $0.8 million for the nine months ended September 30, 2021 and 2020, respectively. In our home health net segment, Medicare sequester relief resulted in an increase in net service revenues of $0.1 million, for both the three months ended September 2021 and 2020, and $0.3 million and $0.2 million, for the nine months ended September 2021 and 2020, respectively.

However, the ARPA increases the federal budget deficit in a manner that triggers an additional statutorily mandated sequestration under the PAYGO Act. As a result, absent congressional action, Medicare spending will be reduced by up to 4% in fiscal year 2022, to begin to take effect in January 2022, in addition to the existing sequestration requirements of the Budget Control Act of 2011. We cannot currently determine if, or to what extent, our business, results of operations, financial condition or liquidity will ultimately be impacted by mandated sequestration triggers under the PAYGO Act, or if the mandated sequestration will occur.

OnWe entered into the Amended and Restated Credit Agreement, dated as of October 31, 2018, ~~we amended and restated our Existing Credit Agreement,~~ with certain lenders and Capital One, National Association, as a lender and ~~swing line lender and~~ as agent for all ~~lenders.~~lenders (as amended by the Amendment (as hereinafter defined) and the Second Amendment (as hereinafter defined), the “Credit Agreement”). This ~~amended and restated~~ credit facility ~~totals~~totaled $269.6 million, inclusive of a $250.0 million revolving loan and a $19.6 million delayed draw term loan and is evidenced by the Credit Agreement. This ~~amended and restated~~ credit facility amended and restated our existing senior secured credit facility totaling $250.0 million. As used throughout this Annual Report on Form 10-K, “credit facility” shall mean the credit facility evidenced by the Credit Agreement.

The maturity of this ~~amended and restated~~ credit facility is May 8, 2023, with borrowing under the delayed draw term loan available until June 30, 2019, as extended pursuant to the consent letter, dated January 30, 2019, executed by the Required Lenders (as defined in the Credit Agreement).2023. Interest on ~~our amended and restated~~this credit facility may be payable at (x) the sum of (i) an applicable margin ranging from 0.75% to 1.50% based on the applicable senior net leverage ratio plus (ii) a base rate equal to the greatest of (a) the rate of interest last quoted by The Wall Street Journal as the “prime rate,” (b) the sum of the federal funds rate plus a margin of 0.50% and (c) the sum of the adjusted LIBOR that would be applicable to a loan with an interest period of one month advanced on the applicable day (not to be less than 0.00%) plus a margin of 1.00% or (y) the sum of (i) an applicable margin ranging from 1.75% to 2.50% based on the applicable senior net leverage ratio plus (ii) the offered rate per annum for similar dollar deposits for the applicable interest period that appears on Reuters Screen LIBOR01 Page (not to be less than zero). Swing loans may not be LIBOR loans. The availability of additional draws under this ~~amended and restated~~ credit facility is conditioned, among other things, upon (after giving effect to such draws) the Total Net Leverage Ratio (as defined in the Credit Agreement) not exceeding 3.75:1.00. In certain circumstances, in connection with a Material Acquisition (as defined in the Credit Agreement), we can elect to increase our Total Net Leverage Ratio compliance covenant to 4.25:1.00 for the then current fiscal quarter and the three succeeding fiscal quarters. ~~In connection with this amended and restated credit facility, we incurred approximately $0.9 million of debt issuance costs.~~

Addus HealthCare, Inc. (“Addus HealthCare”) is the borrower, and its parent, Holdings, and substantially all of Holdings’ subsidiaries are guarantors under this ~~amended and restated~~ credit facility, and it is ~~secured~~collateralized by a first priority security interest in all of our and the other credit parties’ current and future tangible and intangible assets, including the shares of stock of the borrower and subsidiaries. The Credit Agreement contains affirmative and negative covenants customary for credit facilities of this type, including ~~the timely delivery of audited financial statements,~~ limitations on us with respect to liens, indebtedness, guaranties, investments, distributions, mergers and acquisitions and dispositions of assets.

We pay a fee ranging from 0.20% to 0.35% based on the applicable senior net leverage ratio times the unused portion of the revolving loan portion of the ~~amended and restated~~ credit facility.

The Credit Agreement contains customary affirmative covenants regarding, among other things, the maintenance of records, compliance with laws, maintenance of permits, maintenance of insurance and property and payment of taxes. The Credit Agreement also contains certain customary financial covenants and negative covenants that, among other things, include a requirement to maintain a minimum Interest Coverage Ratio (as defined in the Credit Agreement), a requirement to stay below a maximum Total Net Leverage Ratio (as defined in the Credit Agreement) and a requirement to stay below a maximum permitted amount of capital expenditures, as well as restrictions on guarantees, indebtedness, liens, investments and loans, subject to customary carve outs, a restriction on dividends (provided that Addus HealthCare may make distributions to us in an amount that does not exceed $7.5 million in any year absent of an event of default, plus limited exceptions for tax and administrative distributions), a restriction on the ability to consummate acquisitions (without the consent of the lenders) under our credit facility subject to compliance with the Total Net Leverage Ratio (as defined in the Credit Agreement), thresholds, restrictions on mergers, dispositions of assets, and affiliate transactions, and restrictions on fundamental changes and lines of business.

34On September 12, 2019, we entered into a First Amendment (the “First Amendment”) to our Credit Agreement. The First Amendment increased our credit facility by $50.0 million in incremental revolving loans, for an aggregate $300.0 million in revolving loans. The First Amendment provides that future incremental loans may be for term loans or an increase to the revolving loan commitments. The First Amendment further provides that the proceeds of such $50.0 million incremental revolving loan may be used for, among other things, general corporate purposes.

On July 30, 2021, the Company entered into a Second Amendment (the “Second Amendment”) to our Credit Agreement. The Second Amendment, among other things, reallocated and refinanced the Company’s outstanding initial term loans as revolving loans (such that the Company has no outstanding initial term loans and no further initial term loans may be borrowed) and increased the Company’s revolving credit facility to an aggregate amount of $600.0 million. Moreover, the Second Amendment increased the Company’s incremental loan facility to an aggregate amount $125.0 million, which incremental loan facility may be for term loans or an increase to the revolving loan commitments. The maturity of the revolving credit facility was also extended from May 8, 2023 to July 30, 2026. Additionally, the Credit

Agreement contemplates a transition from LIBOR, specifically identifies SOFR as the replacement reference rate and details the mechanism for transition at LIBOR cessation, which is anticipated to occur on June 30, 2023. The transition to SOFR is not expected to have a material impact on the Company’s results of operations or liquidity. In connection with the Second Amendment, we incurred approximately $3.0 million of debt issuance costs.

At September 30, ~~2020,~~2021, we were in compliance with our financial covenants under the Credit ~~Agreement.~~Agreement.

The following table summarizes changes in our cash flows for the nine months ended September 30, ~~2020~~2021 and ~~2019:~~2020:

	For the Nine Months Ended September 30,						For the Nine Months Ended September 30,
	2020			2019			2021			2020
	(Amounts in Thousands)						(Amounts in Thousands)
Net cash provided by operating activities	$	73,299		$	8,084		$	14,287		$	73,299
Net cash used in investing activities		(17,507	)		(56,301	)		(32,433	)		(17,507	)
Net cash provided by financing activities		2,825			217,420			25,447			2,825

Nine ~~Months~~months Ended September 30, ~~2020~~2021 Compared to Nine ~~Months~~months Ended September 30, ~~2019~~2020

Net cash provided by operating activities was ~~$73.3~~$14.3 million for the nine months ended September 30, ~~2020,~~2021, compared to ~~$8.1~~$73.3 million for the same period in ~~2019.~~2020. The ~~increase~~decrease for the nine months ended September 30, 2021, in cash provided by operations compared to the same period in 2020, was ~~primarily~~ due to ~~decreases in~~the timing of accounts receivable ~~for~~of $32.6 million, and the ~~state~~timing of ~~New York, Illinois Department~~$31.5 million of ~~Aging and a decrease in days sales outstanding (“DSO”) as discussed below, combined with organic growth and acquisition activity.~~government stimulus funds.

Net cash used in investing activities was $32.4 million for the nine months ended September 30, 2021 compared to $17.5 million for the nine months ended September 30, ~~2020 compared to cash used in investing activities of $56.3 million for the nine months ended September 30, 2019.~~2020. Our investing activities for the nine months ended September 30, ~~2020~~2021 consisted of ~~$6.0 million in purchases of property and equipment primarily related to investments in our technology infrastructure.~~ ~~Our investing activities for the nine months ended September 30, 2019 consisted of $29.9~~$29.1 million primarily for the acquisition of ~~VIP,$23.5 million for the acquisition of Alliance,~~Armada and ~~$3.1~~$3.2 million in purchases of property and equipment primarily related to our ongoing investments in our technology infrastructure.

~~Net cash provided by financing~~ Our investing activities ~~was related to~~ ~~cash received from the exercise of stock options~~ ~~of $3.3 million~~ for the nine months ended September 30, ~~2020.~~2020 consisted of $11.7 million primarily for the acquisition of A Plus and $5.9 million in purchases of property and equipment primarily related to investments in our technology infrastructure.

Our financing activities for the nine months ended September 30, ~~2019 were primarily related to net proceeds from our Public Offering of $172.9 million,~~2021 included borrowings of ~~approximately $23.5~~$29.0 million on the revolver portion of our credit facility to fund the ~~Alliance~~Armada acquisition, ~~borrowings~~the reallocation and refinancing of ~~$19.6~~$17.4 million ~~on the delayed draw~~of our outstanding initial term loans as revolving loans, cash paid for debt issuance costs of $3.0 million and term loan ~~portion~~payments of ~~our credit facility~~$0.7 million. Net cash provided by financing activities was related to ~~fund, in part, the VIP acquisition and $2.1 million in~~ cash received from the exercise of stock ~~options.~~options of $3.3 million for the nine months ended September 30, 2020.

Gross accounts receivable as of September 30, ~~2020~~2021 and December 31, ~~2019~~2020 were approximately ~~$118.5~~$135.6 million and ~~$150.6~~$133.4 million, respectively. Outstanding accounts receivable, net of allowance, ~~decreased~~increased by ~~$31.1~~$1.2 million as of September 30, ~~2020~~2021 as compared to December 31, ~~2019.~~2020. Accounts receivable for the Illinois Department on Aging decreased approximately ~~$15.8~~$1.7 million during the quarter ended September 30, ~~2020.~~2021. We received a bonus payment of $3.0 million from the Illinois Department on Aging in September of 2021. Our collection procedures include review of account aging and direct contact with our payors. We have historically not used collection agencies. An uncollectible amount is written off to the allowance account after reasonable collection efforts have been exhausted.~~We received a bonus payment of $6.8 million in May of 2020.~~

We calculate our DSO by taking the trade accounts receivable outstanding, net of allowance for doubtful accounts, divided by the net service revenues for the last quarter, multiplied by the number of days in that quarter. Our DSOs were 5653 days and 7261 days at September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. The DSOs for our largest payor, the Illinois Department on Aging, at September 30, ~~2020~~2021 and December 31, ~~2019~~2020 were 4836 days and 7846 days, respectively. We may not receive payments on a consistent basis in the near term and our DSOs and the DSO for the Illinois Department on Aging may increase despite the state of Illinois’s enactment of state budgets for fiscal years ~~2020~~2021 and ~~2021.~~2022.

~~The~~Any deterioration in economic ~~slowdown caused by~~conditions in the United States, including as the result of the COVID-19 pandemic, ~~poses significant risks~~would pose a risk to states’ budgets, ~~for the 2021 fiscal year,~~ which ~~began July 1~~ in ~~most states.~~turn could affect our collections. Depending on the severity and length of aany potential economic downturn, states could face significant fiscal challenges and revise their revenue forecasts and adjust their budgets, and sales tax collections and income tax withholdings could ~~continue to~~ be depressed in fiscal 2021 (which began July 1 in most states), and, potentially, future fiscal years. ~~States could face significant fiscal challenges~~The ARPA provided $350 billion dollars in emergency funding for state, local, territorial, and ~~may have no choice but~~Tribal governments to ~~revise their revenue forecasts~~remedy the mismatch between increasing costs and adjust their budgets for fiscal 2021 and, potentially, future fiscal years, accordingly. In New York, which started its fiscal year April 1, the state comptroller recently estimated that the state would collect at least $10 billion less than originally forecasted, the first year-to-year cut since 2011. The current New York fiscal plan authorizes the state to issue up to $8 billion in short-term bonds to provide funds in case of reduced revenues during the fiscal year. The state issued $1.1 billion of bonds on October 28, 2020. It also allows two state authorities to provide the state with a $3 billion line of credit in the new fiscal year. As the state continues to deal with lower levels of funding due to the COVID-19 virus, the state implemented a 1% reduction to all Medicaid providers effective January 1, 2020. The recently passed budget included an additional 0.5% reduction to the Medicaid rate, which also allows the governor to make any additional changes needed as the budget year progresses.

decreasing revenues. We cannot determine if Congress ~~could~~will provide additional relief with additional stimulus and relief legislation, including extension of unemployment benefits and relief for states. These and other federal stimulus measures may help to ease state-level budget constraints due to the COVID-19 pandemic. We cannot determine the impact that the economic slowdown caused by the COVID-19 pandemic may have on ~~states~~states’ budgets for ~~2021~~2022 or beyond, ~~however,~~or if additional federal stimulus measures will be provided. However, such impacts could have a material adverse effect on our financial condition, results of operations and cash flows.

As of September 30, ~~2020,~~2021, we did not have any off-balance sheet guarantees or arrangements with unconsolidated entities.

There have been no material changes to our critical accounting policies and estimates previously disclosed under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates” set forth in Part II, Item 7 of our Annual Report on Form 10-K for the period ended December 31, ~~2019,~~2020, filed on ~~August 10, 2020.~~March 1, 2021.

Refer to Note 2 to the Notes to Condensed Consolidated Financial Statements (Unaudited) for further discussion.

We are exposed to market risk associated with changes in interest rates on our variable rate long-term debt. As of September 30, ~~2020,~~2021, we had outstanding borrowings of approximately ~~$61.8~~$224.9 million on our credit facility, all of such borrowings were subject to variable interest rates. If the variable rates on this debt were 100 basis points higher than the rate applicable to the borrowing during the three and nine months ~~period~~ ended September 30, ~~2020,~~2021, our net income would have decreased by ~~$0.1~~$0.4 million, or ~~$0.01~~$0.03 per diluted share, and ~~$0.4~~$1.2 million, or ~~$0.02~~$0.07 per diluted share, ~~for the respective periods.~~respectively. We do not currently have any derivative or hedging arrangements, or other known exposures, to changes in interest rates.

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, ~~2020.~~2021. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on the evaluation of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were ~~not~~ effective as of September 30, ~~2020 due to the material weaknesses in internal control over financial reporting that were disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.~~2021.

~~During the quarter ended September 30, 2020, we continued to implement the following~~There were no changes toin our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the fiscal quarter ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

As previously described in Part II, Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, our management began a remediation plan to address the material weaknesses. We have identified dedicated internal resources, supplemented with third-party specialists, to assist with formalizing a robust and detailed remediation plan and updated risk assessment, including identifying and assessing those risks commensurate with the significant changes within our company.

Because the reliability of the internal control process requires repeatable execution, the successful remediation of these material weaknesses will require review and evidence of operating effectiveness prior to concluding that the controls are effective. Although significant progress has been made, the previously identified material weaknesses continue to exist as of September 30, 2020, and will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Investing in our common stock involves a high degree of risk. You should carefully consider the risk factors discussed under the caption “Risk Factors” set forth in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, ~~2019, as~~2020, filed on ~~August 10, 2020.~~March 1, 2021. There have been no material changes to the risk factors previously disclosed under the caption “Risk Factors” in our Annual Report on Form 10-K. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or operating results.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



Delaware		20-5340172
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

6303 Cowboys Way, Suite 600 Frisco, TX		75034
(Address of principal executive offices)		(Zip Code)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	ADUS	The Nasdaq Global Market


PART I. FINANCIAL INFORMATION	3

Item 1. Financial Statements (Unaudited)	3

Condensed Consolidated Balance Sheets as of September 30, ~~2020~~2021 and December 31, ~~2019~~2020	3

Condensed Consolidated Statements of Income For the Three and Nine Months Ended September 30, ~~2020~~2021 and ~~2019~~2020	4

Condensed Consolidated Statement of Stockholders’ Equity For the Three and Nine Months Ended September 30, ~~2020~~2021 and ~~2019~~2020	5

Condensed Consolidated Statements of Cash Flows For the Nine Months Ended September 30, ~~2020~~2021 and ~~2019~~2020	7

Notes to Condensed Consolidated Financial Statements	8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3. Quantitative and Qualitative Disclosures About Market Risk	3739

Item 4. Controls and Procedures	3739

PART II. OTHER INFORMATION	3840

Item 1. Legal Proceedings	3840

Item 1A. Risk Factors	3840

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	3840

Item 3. Defaults Upon Senior Securities	3840

Item 4. Mine Safety Disclosures	3840

Item 5. Other Information	3840

Item 6. Exhibits	3941

	For the Three Months Ended September 30, (Amounts in Thousands)				For the Nine Months Ended September 30, (Amounts in Thousands)
	2020		2019		2020		2019
Net service revenues	$	193,987	$	187,846	$	573,917	$	541,646
Operating income from continuing operations		12,269		9,291		32,136		26,328
Net income from continuing operations		9,458		6,922		25,663		20,518
Net income per common share from continuing operations
Basic income per share	$	0.61	$	0.50	$	1.65	$	1.55

	For the Three Months Ended September 30, (Amounts in Thousands)				For the Nine Months Ended September 30, (Amounts in Thousands)
	2021		2020		2021		2020
Net service revenues	$	218,474	$	216,479	$	652,908	$	637,695
Operating income		17,613		14,458		48,135		39,331
Net income		11,832		10,586		33,341		29,930
Net income per common share
Basic income per share	$	0.75	$	0.68	$	2.12	$	1.92
Diluted income per share	$	0.74	$	0.66	$	2.08	$	1.88


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the Nine Months Ended September 30, (Amounts in Thousands)
	2019
	As
	Previously						As
	Reported			Revision			Revised
Net income	$	15,247		$	(747	)	$	14,500
Deferred income taxes		372			(267	)		105
Accounts receivable		(22,291	)		2,334			(19,957	)
Accrued expenses and other long-term liabilities		(2,084	)		(1,320	)		(3,404	)
Net cash provided by operating activities	$	8,084		$	—		$	8,084

	Total (Amounts in Thousands)
Goodwill	$	11,252
Identifiable intangible assets		1,523
Cash		2,819
Accounts receivable		1,075
Operating lease assets, net		180
Other assets		23
Accounts payable		(18	)
Accrued expenses		(202	)
Accrued payroll		(303	)
Current portion of long-term debt		(577	)
Long-term debt		(1,145	)
Long-term operating lease liabilities		(100	)
Total purchase price	$	14,527

	Total (Amounts in Thousands)
Goodwill	$	28,479
Identifiable intangible assets		990
Cash		653
Property and equipment		40
Other assets		29
Accrued payroll		(400	)
Total purchase price	$	29,791

	Total (Amounts in Thousands)
Goodwill	$	169,302
Identifiable intangible assets		20,015
Cash		15,444
Accounts receivable		5,922
Property and equipment		759
Operating lease assets, net		3,028
Other assets		85
Accounts payable		(2,281	)
Accrued payroll		(1,555	)
Accrued expenses		(503	)
Government stimulus advances		(12,694	)
Long-term operating lease liabilities		(2,765	)
Total purchase price	$	194,757

	Total (Amounts in Thousands)
Goodwill	$	13,475
Identifiable intangible assets		474
Cash		1,104
Accounts receivable		1,395
Property and equipment		52
Operating lease assets, net		485
Other assets		40
Accounts payable		(96	)
Accrued payroll		(586	)
Accrued expenses		(37	)
Long-term operating lease liabilities		(485	)
Total purchase price	$	15,821

	Total (Amounts in Thousands)
Goodwill	$	17,062
Identifiable intangible assets		5,422
Cash		177
Accounts receivable		1,754
Accounts payable		(316	)
Other liabilities		(641	)
Total purchase price	$	23,458

	Total (Amounts in Thousands)
Goodwill	$	11,936
Identifiable intangible assets		15,370
Cash		130
Accounts receivable		4,730
Operating lease assets, net		2,278
Other assets		30
Property and equipment		27
Accounts payable		(540	)
Accrued expenses		(770	)
Accrued payroll		(1,742	)
Long-term operating lease liabilities		(1,531	)
Total purchase price	$	29,918

	Goodwill
	Personal Care		Hospice			Home Health			Total
	(Amounts in Thousands)
Goodwill as of December 31, 2019	$	126,577	$	146,983		$	1,808		$	275,368
Additions for acquisition		11,252		—			—			11,252
Divestiture		—		(1,167	)		—			(1,167	)
Adjustments to previously recorded goodwill		1,438		(322	)		(17	)		1,099
Goodwill as of September 30, 2020	$	139,267	$	145,494		$	1,791		$	286,552


3.1		Amended and Restated Certificate of Incorporation of the Company dated as of October 27, 2009 (filed on November 20, 2009 as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q (File No. 001-34504) and incorporated by reference herein).

3.2		Amended and Restated Bylaws of the Company, as amended by the First Amendment to the Amended and Restated Bylaws (filed on May 9, 2013 as Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q (File No. 001-34504) and incorporated by reference herein).

4.1		Form of Common Stock Certificate (filed on October 2, 2009 as Exhibit 4.1 to Amendment No. 4 to the Company’s Registration Statement on Form S-1 (File No. 333-160634) and incorporated by reference herein).

10.1*		Second Amendment to Amended and Restated Credit Agreement, dated as of July 30, 2021, by and among Addus HealthCare, Inc., as the Borrower, Addus HomeCare Corporation, the other Credit Parties party thereto, Capital One, National Association, as administrative agent and as a Lender, and the other Lenders party thereto (filed on August 4, 2021 as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-34504) and incorporated by reference herein).

31.1		Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.

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	ADDUS HOMECARE CORPORATION

Date: November ~~6, 2020~~2, 2021	By:	/s/ R. DIRK ALLISON

		R. Dirk Allison ~~President~~Chairman and Chief Executive Officer (As Principal Executive Officer)

Date: November ~~6, 2020~~2, 2021	By:	/s/ BRIAN POFF

		Brian Poff Chief Financial Officer (As Principal Financial Officer)

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