- Earnings call transcript Q3 2022

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Operator

Good day. And welcome to the Addus HomeCare’s Third Quarter 2022 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to Dru Anderson. Please go ahead.

Dru Anderson

Thank you. to call. HomeCare welcome XXXX third and conference earnings morning, the Corporation Addus quarter Good is recorded. call Today’s being To the reconciliation release. extent measure the in to today's company's any most calculated non-GAAP financial you the reviewing by also measure according will website to find going comparable and a directly of GAAP measure call, that financial is to discussed news yesterday's among of the also regarding statements, This statements of Litigation forward-looking quarterly may expected XXXX annual others, meaning contain performance Private conference XXXX, Reform and Act call the within Securities for including beyond. Addus' financial or

purpose, this Without beliefs, to the like statements deemed not statements forecasts, the this identify For may be expectations and forward-looking to any of made plans, limiting call that be targets, intended fact historical during are foregoing are statements. statements. forward-looking discussions of estimates,

Allison. information, The go this You events by affected over results news Addus' Exchange materially statements. may no the update quarter new to forward-looking its or Please discussed whether are important forth company's results Chairman may from these with turn the undertakes to Officer, third as factors, now of Dirk result Commission the ahead, otherwise. Executive obligation cautioned statements, hereby At like would Mr. in statements forward-looking operations and time set and Consequently, actual a call the Securities in filings others, be differ I that and any to release. company in future the Chief and among XXXX sir.

Dirk Allison

Bickham, me today Chief Poff, our Chief quarter morning, to call. XXXX Financial our With Dru. Operating and our Good Officer. you, Thank Brian President third and Officer; Brad welcome are earnings

in begin few detail. of do results I calls, comments, then with quarter the on and we earning these will discuss Brian As more a third overall each will

comments, our questions. us a quarter items performance. begin, to the any from few three would third to To to our want of happy respond be I highlight Following

third are we This to our million adjusted labor grew earnings as in continuing share $X.XX. to our the team XX% with seeing of XXXX. challenges revenue for quarter industry, the of compared in even of of resulted First, quarter for XXXX parts third million the per $XXX.X $XXX.X

in strong from this our million. quarter of This times saw cash quarter we our position than our flow totaling had third adjusted operations to we one year, As reduced EBITDA. in net leverage less second $XX.X

not spite economic of future advantage a We conservative in take with balance our environment. and approach to that strong are our sheet acquisition am believe of only two disciplined our during third has very the also I of current quarter and put the to of position the occur COVID of in pleased opportunities proud spike may experienced the first us with third quarter. especially the our extent year-to-date, of light months beginning year we performance, a lesser but results at in the

Our continued reoccurring despite care excellent team has to these patient challenges. perform provide and

As labor remains we discussed challenge. last the environment a quarter,

increasing XXXX second as approximately up per in quarter XXXX of per third of business XX% Hours Personal over we quarter, X% business improved hours third for the with our see hours we the day day of of the in hours quarter year. quarter per day business were XXXX. in our per this our compared experience started in hiring as to day third approximately the second did Care business However, in to segment quarter the

hours in business our per We of running seeing this ahead XXXX quarter of improved October hiring with day are trend third performance.

demand hiring improve of we to our help our us previously are sourcing, meet to investing personal further to that the As technology services. increase our process numbers onboarding in care and will mentioned, hiring robust

business, as to in our segment, hire the reduction in all feel last a help a patients. clinical of an we turnover direction over consumers segment positive well is our more and few serve with challenging turnover hiring modest Clinical should in we numbers. segments moving our trend are in both is ability in which than the and as us months our improvement personal Overall, more in seeing increased care hiring new clinicians While

efforts a been state third the funding receive still quarter, to Rescue as wages, Act portion quarter to over has to of past American retention begin us has the significant Plan allowed caregivers ARPA our our these the provide increase and utilized. one-time hiring During we we bonuses from current caregiver sign-on should and pay our program. to be with depending and the or help or This efforts have recruitment on dollars helpful bonuses, retention

operations, As workforce. state Chicago care in This margin for per wage during gross quarter. the our negatively third approximately hour state $X.XX by largest increased the Illinois, our minimum personal impacted area of our on X, July for

Illinois receive caregiver employees, with help effective the However, receive positively which impacting in will rate we X, $X.XX believe we our per profile will a remaining statewide our statewide we recruitment rate for gross we hour Once increase, XXXX. will likewise wages January margin while adjust Illinois. increase,

quarter Now, the growth revenue of let third discuss our me XXXX. for same-store

October. regarding a experienced a Care for with second of quarter increasing continuing developments or growth positive year's third York same-store funds, in and of August New of ARPA to Personal York recent growth For want compared our same-store program. our exclusive CDPAP New this and update also segment revenue quarter the our X% the Care was our brief CDPAP Personal Program X.X% September as participation in we We this XXXX, up Consumer when on Directed the to of I into momentum expected. admissions give from

the process request a selected along with other state initiated overhang a the that under with process we of not potential will eliminates that need state Addus providers. of of CDPAP in transparency. in to order existing before and simply subsequently in appealed program, state Medicaid all In criteria we station, many the XXXX. other has market. used We providers the CDPAP providers providers RFO as believe select know has Medicaid for the challenging. decision certain winner November which respond as this to Ultimately, were lacked which changes offer transfer you the state-made As qualify, allowed the size providers to a to level rescinded the winning deadline. indefinitely an in of submit program our made continue profitability to clients CDPAP Separately, the XXXX state an XX, appropriate reimbursement we the Medicaid Recently,

taking of the referrals. a of these under we our new but serve existing any clients both As Medicaid result continue to actions, state ceased program, CDPAP

and Medicaid will we other clarity necessary manageable inbound program. participating referrals While are adjustments program make In also to determine the hopeful to allow the that state lobbying Medicaid providers our and and margin are the resume the existing providers of in evaluating environment CDPAP the we a of will to we in we for meantime, CDPAP extensively resumption accepting under need. program are future services state have the those clients, return reimbursement the current on now state for the whether

As a our with plan reminder, New York the operate we long-term in normal managed market. to as partners continue care

our clinical care operations. to Turning

quarter year, While home XX.X% compared same-store same-store in when our did the prior segment over health admissions increase revenue XXXX. we of third flat to a see was the

shift This non-episodic of our towards in quarter, saw mix a care. we patients

improve level. to working this more mix is team operations to Our a historical

payers Medicare adjustments discussions with to rates. also contract our concerning Advantage our are in We

health. staffing and as mix In presence in addition, home Brad on we operation expand working his our team our are

compliments personal in excited services, we where as about value-based our operation, are home contracting We our care particularly it health models. participate

compared of census our when in as was did compared to our revenue to third quarter flat of XXXX we daily year. X.X% the as While in of X.X% hospice average see increase third our and of same-store to quarter this sequential increase compared second XXXX, quarter a an the

of in we did normal While late to discharge experience we had we saw this starting year, a what higher August, similar the rate. second admissions in quarter than

October, level, return grow likes higher started see During ADC. to which should believe started more discharges admissions to our our we we normal a to while volumes

medium our quarter length of quarter improved pre-pandemic XX XXXX, Our length to of with bringing line stay second back third median the to of as [indiscernible] days in for stay levels. days the in compared

the discharge to in this was of the rate part quarter. elevated Although increase due

largest X,XXX Our acquisition, closed provider. Xst Apple This acquisition three in ADC presence. XXXX services markets attributable closed the health in home year. area of X which increased to clinical of furthers the care JourneyCare in personal patients inclusive we quarter of this strong allowing of as this XXXX October family. Chicago. building while including to an market of health On patients both a Apple With home Chicago of in XXX to and third ability Advantage in metro our hospice the Healthcare approximately out of we acquisition Apple personal our with serves where February Home Chicago year of hospice all care quarter Home ADC have acquisitions welcome XXXX Medicare our care skilled our we Healthcare, work I plan. serve to Addus strengthened and have more the our to based for XX-county Healthcare the around Home want ADC closely X,XXX on of team to MCOs for to the compared third us a strategy

activity criteria. look we As pipeline with our as for for in strategic efforts, our the our level development that are we of ongoing acquisitions pleased meet

of across smaller over two levels of consisted all flow opportunities last of the three deal number acquisition has Our quarters a care.

these market, a and number a in opportunities of to increase we starting the the scale months. were brought XXXX. We more of are X.X% expect We being to excited slight see yesterday see announcement of CMS now by for assets to coming larger

we the proposed appreciative see, this away is moving than While change the smaller are X.X%. we would CMS decrease by to from increase of like of

That now final capitalized. We advantage to remain published expect acquisition occur we that take healthcare well as more been opportunities. has to rule the be home of able should

As our care for various results value-based positive from care we efforts, value-based are contracts. our seeing

reminder, on readmissions and our contracts value-based unnecessary These a three states. both we are emergency visits four discharge. room contracts admissions currently as As at avoid as focused various well of hospital a patients care hospital in our following have timeframes helping

our patient received teams personal and recently home We care health results. improved have from partners value-based as care our feedback positive have

on our we start working are to early in which In addition contracts, opportunities, XXXX. four should new two current

We a additional and number ACOs MCOs also contracts care. are negotiations in of with potential around value-based for

how growth and our to care one understand so to home receive a do effective who the operations cost awareness turn patients place want and remains efforts on elderly individuals and the of incredibly each dependent have the and members are the prefer growth to and the proud on you job putting team for and be and over company. dedicated value the The am relatively we call As our opportunity and today you've to first. and that Brian. them done more places home-based disabled is care few We will favorable to families are heightened day. outstanding consumers, each the elderly so proud hard for mission, our always be. expect that It years. of a safest families. am for their most mentioned, past previously believe providing team our grow thank the to value-based to of and they We tell over our providing consumers and With of our but is we of our support care their also that industry of focus patients. our in caregivers continue most our where to immaterial I to appreciate I meaningful amount patients next and our are important we work our care I me and consumers the is let

Brian Poff

morning Thank the and financial and Dirk, third quarter. everyone. you, Addus solid another for had good performance operating

the particularly positive expected year in to X% to quarter of growth line store which trends top compared was reflects in last all X%. third at our normal three X% same Our personal growth above care, range segments

turnover services, and still to the While labor clinical we continue care in third a facing are trends in our quarter. market improve personal in challenging our hiring

volume Armada Our by Health. had home Home strong Health completed of XXXX, addition Home boosted and business Summit we the a in health quarter acquisitions two

median length We see more are business continued stay. hospice improvement with for of to in trends also stable our pleased

net revenue is follows: February $XX.X when X, breakdown revenues or million $XXX.X the division third which XX.X% Dirk of care the acquired third revenues The XX.X% care X, hospice revenue; Personal were hospice service were $XXX.X or on include of on of to million. operations million As the year million of X.X% revenue, revenues last for August $XX Armada, the of Home addition health Hospice total or closed compared noted, quarter quarter hospice the revenues were as which XXXX, and care JourneyCare, of revenue. XXXX. closed revenues were

of operations acquisitions, X, include XXXX. the closed Armada two these which noted, Summit Home of Home and As results Health [indiscernible] Division Health,

Healthcare of complement to $XX an opportunities strategy. actively to important added in date acquisition remain recent we February pursue October million With revenue Home of and growth in addition Xst growth acquisitions that continued a part acquisition have JourneyCare the have of on our organic XXXX. We our Apple and approximately annualized

We opportunities robust acquisition continue meet potential transactions and other to evaluate have and pipeline pursue a of our criteria. that

home front the forward to the caused arise. to landscape take these the followings. the look to remain and Other overhang on pipeline. health allow becoming With portion rule, of this health anticipate this the our announcement XXXX capitalized the financial quarter M&A acquisition advantage results opportunities has final for more dissipate as active on of well We the home of include and third of acceleration of we they

compared as clinical XX.X% the to higher from percentage continue services. with for we benefit percentage Our of was gross overall quarter XX.X% of XXXX third a margin

partially minimum in July one markets. our this the negative of the X, increase of largest wage by was impact offset However, Chicago, XXXX

to We increase a scheduled effective X, January wage are will receive offset minimum XXXX the statewide in increase. which Illinois reimbursement

As third of the in quarter in experience the effective of July negative Xst. phase sequestration impact final Medicare expected we also the

sequentially the to in we benefit slightly should as acquisition the of stock which higher EBITDA our and services well increase for an basis XXXX margin expense Adjust G&A quarter gross expense based quarter to over $XX.X approximately the with year G&A a adjustment, as to of XX.X% of a revenue, contribute points XX.X% second primarily higher G&A compensation decrease expenses. XX.X% expect in The profile of quarter. revenue from volumes. increased was clinical to XX hospice percentage XX.X% prior third a the the than larger ago, third a XXXX, per quarter XXXX per was fourth X, company's year October diluted XX.X% in quarter However, current higher the of of quarter for was $XX.X for on rate a XX.X% of due million but adjusted XXXX. million third ago. XXXX compared XXXX. results year was compared of $X.XX adjusted margin third the Adjusted EBITDA share of income compared with for The quarter with third to XX.X% net the third expenses share exclude the novo the share Adjusted adjusted based and following: $X.XX quarter of compensation XXXX results for $X.XX, $X.XX of acquisition novo compensation $X.XX. non-recurring expense following: $X.XX acquisition of of stock restructure and of and stock of de exclude based per other The expenses expense costs de $X.XX. the from and the and

quarter Our improve. the care we higher our tax hiring was XXXX to opportunity and work continue primarily expectation credits to XX.X% for due personal than see as rate third of slightly tax lower numbers

quarter relatively of the XXXX. XXXX of DSOs days XXXX, flat compared calendar XX% we second at range. effective the of For XX.X the remain the end rate XX% our in to tax with were expect to XX.X of end third at days quarter the

expect We currently budget where payments. trend focused this especially have to have continue markets experienced and the see strong states approach to a cash under key surpluses collections and

Department compared Our quarter at third XX the DSO and this an are Addus' for on the of Aging quarter the with days at Illinois second days all-time were the history. in low end for XX.X year,

Illinois in we be payment strong consistent continuing our a trends we few years. also have services past While over supporter in state, the appreciate experienced the to of the

operations rate ahead provided cash total was ARPA in line primarily our million, our normal and of expectation. Our $XX.X $XX.X Exclusive third normal our net net funding collections. strong in cash $X.X result million quarter provided by of conversion a by as funding, was ARPA operations million our with cash year-to-date, a including of

As a quarters revolver XXXX. have during a pay been of our net in the to million result, $XX a $XX down over the million past able of two we with quarter reduction third

As leverage economic is respectively. support capital and just In $XXX.X had revolver company with million of our of capacity $XXX.X this are XXth, September as positioned and a under initiatives ratio cash acquisition structure continues growth million the and net well under XXXX, our strategy availability we that with times. of million $XXX.X to one environment, our

a offerings enhance be questions. result, our that the This lie in us. and our geographic ask M&A to the to the to markets your and opportunities now operator the this service ability anticipate and you As open morning, look our concludes line forward thank ahead. active further prepared for we to concentration for with being comments I'll the please

Operator

Bank from Gajuk Instructions] America. [Operator comes The with Please ahead. today go Joanna question first of

Joanna Gajuk

Good morning. for Thanks so question. taking much the

pricing first So care. strong personal I guess the on in

And QX benefited was of terms help increases? to ARPA of just And us think out have pieces in rate all? and but about Obviously other for you pricing if states the about also quantify can you the break pointing we the that other next next trying it at to it into how increasing year? you how experienced of January Illinois, of terms much July magnitude I how know increases pricing to guess, understand funding these any would the and in understand to X much in or pricing then trying certainly the So into year. examples outlook to into going forward us be

Brad Bickham

Hey, is Joanna, this Brad.

on I think a provide little that. I can color

sheet. funding flows through factor we the hour our pricing, to kind per into revenue as ARPA all Just of previously, or the most doesn't of of quantify discussed that balance that

supported states. for it per is his basically impact the most by So on as and a think bonuses, rate that our revenue enhanced actually of caregivers through bonuses, in well actually front, pass our discussed retention sign-on I But so to been comments doesn't hour. typically Dirk kind comes very through of we've wages,

We get of year. at another Xst year. example this XXXX the up coming is our got January I the Illinois rate last rate think our We'll best increase increase particularly largest market. probably of end

state, Again, the QX to increase think increases well was wage done Mexico, very the some of second enhancements as in affected period helpful so, our market, the minimum we've sick like. New rate kind offset. largest an I for wage costs so time or and we that sick in offset put be place current a reimbursement historically is in of in we've recently in either they discussed which that's offsets getting kind that received new

into and So I overall we've seen think last that's year the going kind the that of landscape to expect over XXXX.

Joanna Gajuk

Okay, that's helpful.

So at should any increases, in watching? terms the other states of we be looking states

Brad Bickham

Yes.

is going in impact, the the be primary Xst. be to that'll again is think XXXX, I going largest January Illinois, material is be to effective

I of have the helpful. some think been states smaller

New Mexico get has Obviously, markets. us as on does largest two rate also been well, it's and increases revenue we our very per meaningful supportive so hour. from help our

Joanna Gajuk

tailwinds I you. Thank rate but heading keep you guess the so sense or understand you us we your also next you. guidance, the would assume biggest give And increase headwinds, you you year, when that color in us Illinois any for I about terms into wage of can know other about next you Great. or I just give can think thinking year? guess inflation but volumes Thank of

Dirk Allison

you do Brad, to take that? want

Brad Bickham

Yes.

looking as as is I a moderation clinical when think of little of at seen far late So on particularly we've you're that helpful. the inflation, wage of kind bit side

encouraging. that's So

some will in down the to be the X the You the Jan Chicago. areas will $X.XX when still increase, in related increasing get as wages CBA, outside Illinois an of example southern increases where we see

CBAs, some those there. but really the pressure about of think may bit I are very when employees don't you of addressed think inflation, set many so are those on markets, little in in subject we our there, on but been so the pressures a particular, front, So side so personal this place, their We in our see you'll QX smaller of rates care to really of in wage the in have of some lot see early and year. kind again, inflation see a

in increases anticipate So I don't XXXX. significant any

Joanna Gajuk

think headwinds, about, comes it when to year-over-year you should next tailwinds other year? Any

Dirk Allison

we've No. I mature I about. talked ones the mean, think

Sequestration health So with on for clarity now rate in that'll fully I baked impact rule increase now. think we is play, the hospice coming in home the obviously year. next have

are going for material of those kind XXXX. So pieces moving the more us into

Joanna Gajuk

Thank I'll you. to right. All queue. hop Thanks. back the

Operator

ahead. Jefferies. comes question Brian Tanquilut with next The go Please from

Unidentified Analyst

Hi, good morning.

question. on Brian. for got Thank You've for Taji taking you my

you're your your road? So just to can and value-based play if around the wondering efforts moving you that'll down Advantage into about circling and Medicare envisioning that; how programs your Thank maybe efforts you. back talk how just

Dirk Allison

rates really Well under our focusing in little cost care to value-based ability program our deal New do positively room But the we rates patients or market. hospitalization, over of our with the help there. managed of ago, emergency what personal health is we started we something Medicaid out to that with Mexico we learning is care And from the with the home a try visits. certain three and affect that's to for ability care we're initial a the have hospitalization year on programs have readmit

markets, And of of ability so the goal out be or over a personal or the of that's care to being to country strong move Advantage of some of move we year where and a where period Medicare areas contracts and good And under able the our other see those these we more payer. particularly was have with really to able country interface going learned our as information you're we besides to care that there goals in one the to the health. around home into whole take give pilots the ability

in Illinois. looking can at We're that about where contract markets excited doing that. some process. other we're we We're So add

has a plans business. moving next part be company. as do lot But revenue two our our the a our But really opportunity is industry Medicare large three to over stand. we believe when long-term for it that more we or we takes size there where line of grown our seeing quite become not and a Now, much see on is, it to where per Addus our for as Advantage particularly care meaningful company the of you're value-based material for we're believe relationships a we that really material years should

Operator

go next you. ahead. Fidel with Stephens. from Thank Please question comes The Scott

Scott Fidel

you and the just little personal now. at talked out Hi thanks health being for know a question, updated about I some and home bigger on care bit pipeline deals – talked you guys flesh first the looking particularly talked maybe morning. the about Dirk, good of deals. you've Was hoping the deal commentary have we're you're focus you could when more area

So home out deals visibility it's just interested maybe the may but of right, put the two how those that the rates, adjustment break segments then CMS health you're health care and for beyond. pay obviously in talking willing between flat at home still point and and into multiples personal to XXXX those this up; bigger flat, to and some on not still clearly – also continuing rest it about behavioral in got

interested guys your health for of home factoring deals? sort valuation that how So into you in just expectations

Dirk Allison

what Yes. of talk kind what and let pay. about the you at to looking we're I'll talk willing about and of I'll Brian, the and we're segments the size deals

started from some in to have think standpoint, are of see I the our deals bigger the we market. health home

through the going understand to X% with to go looking they couple consider before rule when they're make material Now, on that's sellers for process. want were a honestly a sure final are awaiting got and most working the it going to was factor as that you're delayed obviously reduction, at we whether they a

these health most it's folks have we operations look that personal for hospice important care markets; hospice the of go either focus health to where be that with we we'd look the can to or to personal fill-in to like now small larger put our that basically encourage XX a we flat ahead in it's rule markets think particularly should home around in care, And at will next as we think market care. deals see – process. – as hospice months while build the I on the you personal is very deal home will personal think see our larger over we on we top to some our deals currently you care, continue out, larger included deals XX I a of said, that

talk about we're to paying? and what seeing we're want You multiples them

Brian Poff

talked Scott, pipeline, I Yes. previously. think think our I we've in about it

off year last I of think have couple; I the perspective. think our this line into from reasonable come more definitely particularly a back multiples

think that, coming with rule that out, think expectation I health home doesn't multiples. necessarily enhance I So the our is

couple obviously I think and those we've years. last stay seen down of from what pretty the consistent in

it Personal we still to fairly there in to I market. of keeps I be of think Although potential least kind in a could considered think model I cut, still at out rate multiples a probably that changed alleviates those activity, needs think with still that and X% think is but be care, trying kind there, flat tempered. nothing really

So coverage sub-ten there think is strategic view our of I size more larger those are for or us. still things

I with as think we've I X in past today. X consistent still our been it's deals X the and that's paid times, to X.X think to low as times but for thinking smaller

Brad Bickham

where going just a what other a And still deal deals in going and we're our with even company value-based to as because be home those to markets of Scott, health services person very that's – don't year potential an saw add If we care to we're be Brian strategic this we can the do willing mention, sometimes those add-on at said. reduction reductions let me to we're we're there – looking to come out care through.

the to be to our trying always conservative strategic it's to approach deal, interested close. get we deals a try that somewhat So if in to we're in going be while towards

Scott Fidel

out for care MA just Medicare opportunity big just back MA. the go follow-up sort wanted mitigated can it's Maybe plans that sort then to again, hours what And but selling talk benefits, offering like you really great. we've paltry, benefits, over on in plans theoretically, a more the you seeing like. tease of in services Obviously are theoretically number the what looking lot talk that offering It of my about question, opportunity. it's just Advantage and XXXX? years, landscape that hours more seen I about are of these and has is know the harder of been look to Okay, the data personal authorized or just which sort the but opportunity authorized several remained to minimized relatively for did

you looking the opportunity XXXX? MA for at are Thanks. how So

Brad Bickham

Yes, is to plans this benefits. respite more hours, are of Scott, type Brad. offer very again It those more is you kind XXXX. similar seeing they're but Truthfully

are what lower PCS Medicaid would receive. hours So significantly our client typical than

in changes I don't for So any see XXXX. material landscape the

plans they I think provide think more self-funded looking and also start hours XXXX, down landscape And where opportunity upside on see benefit. we the model start road. aggressive little will to again, MA be of plans more provide don't a those us of they are potential of a the benefit change But I road the big the and with when current down pushing again, the care some offering. value-based on the kind is the number it's what based value-based in contracts material a those that the could I of

Dirk Allison

on an them, be a And as We part pilots need a opportunity to Brad develop to plans that said, Medicare Okay. develop is we results and can plan. need honestly, – us. how the it and in we're Advantage of from these move take program self-funding getting these that with show to

for on So XXXX. what working that's we're

Scott Fidel

thank Okay, you.

Operator

Stifel. [indiscernible] The from next Please with question go ahead. comes

Unidentified Analyst

should – kind good side? question on what personal is York the of My us would what remind that City have volume you you start morning. New impact admission program, Hey, care could first [indiscernible] the should

Dirk Allison

evaluating. gotten is very in the gross to increases still lacking contingent in I measured, or a a us the minimum of which rates Care get little kind still clarification sense. kind in But the we're or Personal it a But calls. to increase some We're that's fully more think opportunity there that. the the be on standpoint all kind of is that And New to We've recent $X from wage baked waiting related historic we cost-based Yes, state of make what some what York, makes lot from of for still we for what encouraging, on sufficient tremendous margin are. rates a that for funds is clarity the that able haven't it's we're there.

we'll able there. that, more be have to we information an provide the once assess So regarding to volume opportunity potential

Brian Poff

before on looking that way one back, was, it. just use our potentially started, wanted you Yes, if piggyback a to RFO frame maybe program where to to the as thing that,

a I $XX $XX annual of that but things we've reduced on again, million the over of million last in have Although since to changed as an kind new revenue clients. taken program, basis we've think, not years lot then, couple

much process we I three guess, higher, all were that before ago started. running kind So this of years

or So I know that's not. if don't helpful

Unidentified Analyst

how larger XXXX home if revenue pursue deals question assessing personal But out Yes, there. you kind earlier $XXX that's XXXX, that risk is, $X.X acquired this. the to think investment about you I your on would target? sounds helpful. any per it the willing like about and of follow-up billion overpayment secondarily, to Thanks. targeting that of health are and two, comments you heard if build million of And still you you still Are larger care My underwriting year risk also process?

Brian Poff

let risk and component. on start the guys the could kind of Yes, I weigh

think for we I I think acquired attainable. achievable still million revenue definitely in that's and us, $XXX think,

came for pipeline. rule year on until that proposed some things of the I in we this with out think our the were pace

So for we acquiring what I think are as definitely revenue we in where capitalized year with we acquired as and each there's is an a are that. still million $XXX feel opportunity

us. let in on potential adjustments kind road. I proxy good how for I'll Dirk of the the risk the of think So weigh just about additional down thinking a But we're that's still

Dirk Allison

a on look at certainly mean, health to Yes, asset. I home it's have we chunkier something that particularly

kind So impact, that of course, pay. multiple our go willing it's EBITDA would the to of we're might pricing model something into of that and

Unidentified Analyst

you. Thank you. Got

Operator

go The next Please Matt William from ahead. Larew Blair. comes question with

Madeline Mollman

Mollman Larew. Matt for this Madeline is Hi, on

evolved? approach Just has if And of found more of because building then changed versus there priority, M&A your the just to was level like profitability up consider the the down you paying non-profit questions of a be you I at deals? made environment For you do at have JourneyCare, has specific which leverage looking you How said assets a the a changed when example, of leverage priority look want macro something is conversion? see debt to kind on sort a go macro you're to for right that, all? and one. environment M&A you level that off was below the you if Going know to would willing deal? like that your Is way has as

Brian Poff

Brian. is this Yes,

prefer I a arena. been think, in think focused we've paying effort But that to completing. the a not definitely on just raising would those of I deals down and perspective, interest leverage about use having just had thinking absence the proceeds that with and year it from obviously we've just and debt revolver over rates in M&A the

we I be able So if up we more interim. more some put back work that paying will hopefully of the anticipate, down to in coming have to think would as opportunities

even very from deal we down that that X for we've think to through way a said kind right on we're flow. leverage I X.X, stretch of So think, basis. X.X We to would I a than perspective, saw to ongoing higher be an pay back comfortable, willing strategic times the if plus historically, cash

over I think for leverage than an maintaining position good opportunity years which this a market being us, benefits of in that is paid conservative taken year be the several think, active definitely think, and to I I given us past approach in still. has we've some, the different

as into health personal But again, of the I environment, how it segments it about fit when deals, that that's far thinking as concentration home into we're is at just target macro three we looking anticipate the for Dirk XXXX. geography, earlier we think, So where way, the I focused, but moving us and today, said how as on think, primarily does have that we services, care. right

was a little think different. bit I JourneyCare

is, what look of from way at are. is reimbursement we gross think we some is, wage what deals those margin understand the the what really line structure costs I

really it's depending SG&A. going market market of have what the But like the in control the more lot a look forward that there us on in and on a future. particular for paying the reimbursement does from in environment attention and we support, So segment that are that they

full So I think of Journey level consider our hospice it get those was a normal little that unique And experience what where segment. we a over and clarity to in be knew some we we control had to profitability we process. could to changes of make

think environment source, and changed typically has where we're anything macro and look from don't to deals. looking, the I really our trying strategy So how at on we're

Madeline Mollman

And you you. hedges offset exposure? Great. or of or just you a rates? rate then, can rising Thank to talk environment, Do your interest any interest have the speaking interest little anything rate bit about swaps

Brian Poff

have We not.

place. swaps, in currently no have we So hedges

goes Our if bit up I But little X%. exposure little over effective today think, of we still a there. just still a rate little more, it a is have bit

Madeline Mollman

Great. Thank you.

Operator

The with Ben next go Hendrix question from RBC. Please comes ahead.

Ben Hendrix

Hey, questions. thank you for taking the

seemed and this steam than final rule Do around on Just a it expected, the any of the legislative assumptions the underlying CMS think quick you looks takes like with neutrality just Clearly efforts kind that the place. of expected in the stay I'll better methodology than out better that rule. question the definitely budget but end behavioral for And stay of of start year? final rule, any one. to

Brad Bickham

the lot elephant on they is they going still than that handle doesn't legislative address It what steam takes of based think, think don't in final forward. I the efforts something how fact is put we out it And future a address which the big have still because it out you behavioral Yes. for cuts think Capitol Hi methodology have that's interest Brad. real anticipated, any I was the certainly the the of the adjustment. on to I there do rule. Hill better but the is, that in room, this potential left that,

legislative So we'll in associations pushing our stakeholders work that with well. as industry and fix

Ben Hendrix

as or as layer bit identified near market you other health to M&A a in kind or those term markets are home Illinois, the just up I'm still core markets, a on on very sorry, focused more have Great. more hospice And opens current of now, platforms? the little to PC follow-up, and you assets primarily New Mexico PC

Brad Bickham

a mean State Chicago job certainly of of we've Illinois area. part state, really just size. is Illinois. northern In adding most up probably I throughout in programs of some Yes, metro big We've essentially the because of done the the market the Illinois the clinical good the services attractive got pretty

right another attractive are also or certainly on where Ohio, expand to Personal Tennessee we home Pennsylvania, Michigan, that geographic looking can states in Other good We would rest in we the be looking is all have health states. down presence, in. Illinois. for you geographic have find good opportunities State those the the we side state look be very in in. the coverage something at services, the we'll So in where clinical on of interested Care particularly of

CMS navigate in have you got few. some to have You [ph] that a

Ben Hendrix

you. Thank

Operator

next from Instructions] Please Sidoti. comes go with ahead. question [Operator The Mitra Ramgopal

Mitra Ramgopal

Thanks morning. good Hi, for questions. Yes. the taking

couple me. a Just for

three increased driving incremental curious First in state a I across are particular was volumes you strategy just seeing providing benefits if of from any of and in all the segments? better services partnerships terms your

Brad Bickham

service we we a of lines we of having three market all Yes, at levels is nice mature look Mexico, certainly. have have of When where three service, most all seen benefit the referrals we our or New which the having with there, in home calls benefit to health from one referred service or line have even contracting clients have to division. the seen house we other. With hospice of our that value-based kind

personal adding those And certainly focused Illinois, the and in some we seeing that lines seen that of care to certainly strategy seeing too kind a really anticipates having think early lot the service So we're opportunity we're But clinical And expand there. on from of cross of to services benefits already have big I referrals different the markets. in numbers. market.

Mitra Ramgopal

of maybe having just a season, talk great. hearing we that's flu rough No, And some variants could still be COVID impact. Okay. then this an were curious about

for caregivers? you being having that – if Just any seeing issue an and wondering the you with are

Brad Bickham

Well of we've a COVID. with through been it's been always lot so we've – waves

in forward. as out I are mandated them have with But it's by of of kind Now PPE – safe. are federal a We at keep of is the not just than don't the think, the mentioned talk call. or government hard seen I We in plan surge upticks down. them vaccinations that something unless his a there the require with state case little have but the I had local to to encourage opening think, government skilled or bit provide flu lack this they any kind now, actually the lines. a we've that's to of it's that, Dirk just gone mean, business think seen now. because, the necessary as early as certainly the it's historically mask us numbers not a much our I more that continue comments I people going We kind is maybe right And the that usual employees July, of little wearing term. season of worse in in of better think, we've maybe But past.

Mitra Ramgopal

Yes, no, the taking for me. agree. question. Thanks That's it totally for

Dru Anderson

Great.

Operator

back I session. to any closing question-and-answer our over Dirk turn conference the would concludes to for like This Allison remarks.

Dirk Allison

Addus Thank being you, interest you I for hope you. you call and today. operator. in want We have to of week. earnings Thank part for a great your all thank our

Operator

The conference is you attending today's now presentation. concluded. Thank for

disconnect. now may You

Addus HomeCare (ADUS) 1 Nov 222022 Q3 Earnings call transcript