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Operator
Good day and thank you for standing by. Welcome to the Addis Home Care third quarter 2021 earnings conference call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone keypad. Please be advised that today's conference is being recorded. If you require assistance during the conference, please press star zero. I would now like to hand the conference over to Drew Anderson. Please go ahead.
Drew Anderson
Thank you. Good morning, and welcome to the Addis Home Care third quarter 2021 earnings conference call. To the extent any non-GAAP financial measure is discussed in today's call, you will also find a reconciliation of that measure to the most directly comparable financial measure calculated according to GAAP by going to the company's website and reviewing yesterday's news release. This conference call may also contain forward-looking statements within the meaning of the Private Securities Litigation and Reform Act of 1995, including statements, among others, regarding Addis' expected quarterly and annual financial performance for 2021 or beyond. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, Discussions of forecasts, estimates, targets, plans, beliefs, expectations, and the like are intended to identify forward-looking statements. You are hereby cautioned that these statements may be affected by important factors, among others, set forth in ADDIS filings with the Securities and Exchange Commission and in its third quarter 2021 news release. Consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements. The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise. I would now like to turn the call over to the company's chairman and chief executive officer, Mr. Dirk Allison. Please go ahead, sir.
Dirk Allison
Thank you, Drew. Good morning and welcome to our 2021 third quarter earnings call. With me today are Brian Popp, our chief financial officer, and Brad Bickham, our president and chief operating officer. As is our custom, I will begin with a few overall comments, and then Brian will discuss the third quarter results in more detail. Following our comments, we'd be happy to respond to any questions. Yesterday, we announced our financial results for the third quarter of 2021, and we are proud of our operating performance. Our team was able to produce record results in the quarter despite certain pressures from the current operating environment that I will discuss. Our revenue for the third quarter of 2021 was $216.7 million as compared to $194 million for the third quarter of 2020, an increase of 11.7%. Adjusted earnings per diluted share for the third quarter of 2021 were 91 cents as compared to 76 cents for the third quarter of 2020, an increase of 19.7. Our adjusted EBITDA for the third quarter of 2021 was 24.9 million as compared to 19.5 million for the third quarter of 2020, an increase of 27.4%. During the third quarter, we continue to see the positive effect of the $350 billion in state aid, which came from the most recent federal stimulus plan, as our states have done a nice job in maintaining and, in some cases, increasing outstanding accounts receivable payments to Addis, leading to a strong cash flow quarter and a cash balance at September 30 of approximately $152 million. Over the past few years, I have discussed the minimum wage increases which were occurring in Chicago. These annual minimum wage increases have now been fully implemented. The final Chicago minimum wage increase of $1 per hour, which takes the city's minimum wage to $15, was effective on July 1st, 2021. It is important to note that this cost increase is reflected in our third quarter results without a corresponding reimbursement rate increase, which had a negative effect on our operating margin. As we told you during our last earnings call, the state of Illinois budget for the fiscal year 2022 planned to offset the Chicago minimum wage increase with an additional statewide reimbursement rate increase, which was to be effective January 1st, 2022. However, With its receipt of the additional 10% FMAT funding through the previously mentioned stimulus bill, the state has requested approval from CMS to accelerate this rate increase by two months, making it effective on November 1st, 2021, and appear confident that they will receive approval for a November 1st increase. This rate increase will cover the entire state of Illinois, and positively impact our fourth quarter financial results. Several other states have requested approval from CMS for changes to their home and community-based service programs utilizing the additional federal funds from the 10% FMAP. Many of these requests include proposed reimbursement rate increases for our services. We hope to see these requests approved by CMS in the near future and to learn more about the specific reimbursement rate increases included in those requests. Along with our positive operating trends, we saw some near-term pressure related to other developments that impacted our third quarter financial results. Our ability to continue our New York consumer-directed business, as we discussed on our last call, remains uncertain as we continue to await word on our formal protest concerning our non-award and the provider selection process for the CDPAP program. We anticipate hearing something from the state concerning this protest over the next few months, although no official timetable has been released. In the meantime, we filed our response to the state's follow-up survey, which was created by the state to consider additional awards to providers for this program. While we continue to await a decisions on any additional awards, we have stopped accepting most new referrals for the New York CDPAC program due to the uncertainty of continuity and negative reimbursement changes for a portion of our business that was already one of our lowest margin contracts. As a result of the COVID impact and our attentional approach to the New York CDPAP over the past 12 months, we have seen our revenue in this program decreased from an annualized run rate of approximately $52 million as of the third quarter of 2020 to approximately $44 million as of the end of our third quarter of 2021. We expect our revenues from the New York CDPAP to continue to decline in the absence of changes to the existing status as we continue to limit new referrals. Our third quarter results were also modestly impacted by an increase in the number of caregivers in quarantine due to the surge in COVID infections resulting from the Delta variant. While the impact of this most recent surge in the COVID virus was not as significant as the one we saw during the fourth quarter of 2020, we did see an increasing number of missed visits due to call-offs. These call-offs peaked in September and steadily decreased through the month of October. These call-offs had an immaterial effect on our third quarter revenues. While there was no impact to our third quarter results, another challenge that we, like most companies, face today is the issue concerning vaccinations. As many of you know, the federal government has proposed that all healthcare employees whose businesses operate under a condition of participation with Medicare or Medicaid must be vaccinated. This proposed vaccination mandate would cover our home health and hospice segments. In addition, New York, Delaware, and the city of Philadelphia have mandated that all healthcare companies, including personal care, must ensure that their employees in those markets are vaccinated. Companies like Addis are also operating under the potential of an OSHA requirement that all employers with 100 or more employees must mandate that their employees be vaccinated. These various city and state mandates, as well as the potential of federal mandates, make it imperative that we focus on getting as many of our employees vaccinated as possible. While Addis has not mandated vaccines for our employees, we have taken a number of steps to strongly encourage our employees to get the COVID vaccine. Over the past few months, we have implemented a number of initiatives designed to increase the vaccination rate of our employees. These include a stipend for getting vaccinated, an ongoing communication program centered around the theme of Be a Hero, which includes videos with corporate leadership and board members, as well as written communications with stories of caregivers who have received the vaccine, and now a program that provides prize opportunities for vaccinated employees. These efforts have been effective as we have seen our vaccination rates continue to increase. With New York being our largest market with the current vaccine mandate, it has been a priority to get our employees vaccinated and to track vaccination status. Our dispersed workforce makes this process more challenging, but as of today, we have confirmed that roughly 93% of our New York caregivers have now been fully vaccinated or receive their first dose of a two-shot regimen. We are very pleased with this response from our employees, but we also realize that all markets may not embrace the mandate like they have in New York. While vaccine mandates are a potential issue for Addis, we are pleased in the progress we are seeing. Overall, our confirmed vaccination percentages are 79% vaccinated in home health, 71% vaccinated in hospice, and 56% vaccinated for personal care. Based on our experience with our New York caregivers, we believe these numbers could be understated by some amount based on incomplete information. We are still working to ascertain vaccination status for all employees, which is an ongoing process, particularly with our dispersed personal caregivers. As of today, we have not seen any material effect on our revenues due to these various mandates, and we continue our efforts to be well positioned to adhere to any future mandates implemented as they occur. A critical item for our personal care organic growth is the ability to hire new caregivers. A tightening labor market had some effect on our growth in certain markets, in particularly Oregon, Idaho, and Tennessee. Many segments of the economy are seeing labor shortages, which may continue and may be more severe in some areas of the country. However, our overall hiring and our personal care segment continues to see improvement. We saw solid growth in our hires per business day during the third quarter in our personal care segment, with September being our best hiring month of 2021. This favorable hiring trend continued into the month of October. Our personal caregiver hires in our third quarter were up slightly over the third quarter of the prior year and up 5.8% on a sequential basis with most of the increase occurring in September. Now let me discuss our revenue growth in our various operating segments. Our same-store revenue growth for our personal care operation, exclusive of the New York CDPAC program, was 4% when compared to the third quarter of 2020. This growth is within our range of expectations for our personal care segment. With our upcoming Illinois rate increase, we expect to be at the high end of this rate of growth over our next few quarters. We are pleased with the performance of this segment of our business in spite of the challenges we have faced over the last several quarters due to the pandemic. As for our home health segment, this segment of our company has continued its strong performance. During our third quarter of 2021, our same store revenue growth was 24.8%. Since the beginning of 2021, our home health admissions have increased steadily with this favorable trend continuing throughout the third quarter. We are excited about our home health operation and will continue to focus our efforts on expanding this part of our company. On our last earnings call, we discussed our belief that we would start to see a steady growth in our hospice ADC during the last half of 2021. With strong hospice admissions since the beginning of the year, we believe that a corresponding increase in our ADC would come. We are pleased to see the beginnings of this growth in our third quarter hospice results. While our hospice same store revenue decreased 4.8% over a strong third quarter in 2020, it was an approximate 400 basis point improvement over our second quarter same store growth. As we saw in the second quarter of this year, our same store admissions continued to be strong, growing 22.3% over the third quarter of 2020 and 14.5% on a sequential quarterly basis. This should continue to lead to higher census as the year progresses. Our hospice ADC grew to 2,629 for the third quarter of 2021 as compared to an ADC of 2,460 for the second quarter of this year. This improvement is consistent with our expectation of seeing our hospice census gradually improve over the last half of 2021, as our median length of stay also continues to improve from our low point in January of this year. We are also seeing an improvement in our hospice volumes in both ALFs and SNFs, both of which have been slower to return than census outside of the facility setting. In July, we announced the acquisition of Armada Home Health and Hospice. Effective October 1, we closed on our acquisition of Summit Home Health, a home health provider in Illinois. This represents our entry into clinical services in Illinois, our largest state for personal care services. This is consistent with our strategy of adding clinical care to our personal care market. We are excited about Armada Home Health and Hospice, as well as Summit Home Health being a part of our company, and I want to welcome all of our new team members to the Addis family. As you saw with both of these purchases, we continue to focus our acquisitions on acquisitions which meet our goal of creating multiple markets where we provide all three levels of home care. We will continue to look at opportunities in all three segments with a focus on acquiring services in markets where we have strong personal care coverage. This past 18 months has shown the value of taking care of elderly and disabled consumers and patients in their homes during the pandemic. We have invested in planning, preparations, and materials to assist us in safely fulfilling our role as we continue to monitor developments related to the pandemic and changes in the home care industry. We believe the pandemic has raised awareness about the value our industry provides and will continue to be a growth opportunity for our company. But our operations and resulting growth are dependent on our dedicated caregivers who work so hard providing outstanding care and support to our consumers, patients, and their families. I am thankful for each one of our team members, and I am proud of the job they have done the past 18 months and continue to do each day. It is important that each of us focus on achieving our mission by putting our patients first. With that, let me turn the call over to Brian.
Brian Popp
Thank you, Dirk, and good morning, everyone. Addis had a record financial performance for the third quarter of 2021 with consistent profitable growth and solid volume trends. We saw strong organic growth in both personal care and home health with continued improvement in hospice as we expected. With sequential growth in hospice admissions, average daily census, and median length of stay, we anticipate a return to positive year-over-year organic growth in that segment by the end of 2021. As Dirk noted, total net service revenues for the third quarter were $216.7 million, up sequentially from $214.9 million in the second quarter when adjusting for the out-of-period Illinois retro rate increase that was included in our second quarter results. The revenue breakdown for the third quarter is as follows. Personal care revenues were $169.6 million, or 78.3% of revenue, an increase from $165.9 million in the prior year quarter. Hospice care revenues were $39.1 million, or 18% of revenue, an increase from 24 million in the third quarter of 2020. And home health revenues were $8 million, or 3.7% of revenue, an increase from $4.1 million in the prior year. As Dirk mentioned, we decided to suspend materially all new referrals in our New York Consumer Directed Program due to the continued uncertainty of the program. When excluding the New York Consumer Directed Revenues, our same-store revenue growth in personal care was 4%, consistent with our expectation and within our target range of 3% to 5%, and in spite of modest pressures during the quarter from the Delta variant and attacking labor markets. Home health organic growth in the third quarter was 24.8% over the prior year, with strong admission trends. Our hospice organic growth deficit is improving, down 4.8% for the third quarter of 2021, but an approximately 400 basis point improvement sequentially from the second quarter. Our home health and hospice revenues during the quarter both benefited from the acquisition of Armada Home Health and Hospice, which was completed on August 1st. We look forward to a full quarter contribution from Armada in both of these segments in the fourth quarter. Together with the recently completed Summit Home Health acquisition in Chicago, we have added combined total annualized revenue of approximately $30 million so far in 2021. We continue to evaluate and pursue other acquisition opportunities. We have several projects in our pipeline that meet our criteria, but primarily in clinical services. Other financial results for the third quarter of 2021 include the following. Our gross margin percentage was 30.9%, an increase from 29% for the third quarter last year, largely attributable to our growing mix of clinical services. This was a decrease sequentially from 31.6% in the second quarter of 2021, as we saw the impact from the final increment of minimum wage increase in Chicago negatively impact our gross margins. as we have not yet received a corresponding reimbursement increase. With the state of Illinois' application to advance their previously scheduled reimbursement increase from January 1, 2022 to November 1, 2021, we expect to see the benefit from this statewide increase in the fourth quarter. G&A expense was 21.4% of revenue, a slight increase from 21% of revenue a year ago, and lower sequentially for 22.1% in the second quarter with lower acquisition and stock compensation expenses. Adjusted G&A expense was 19.5%, up slightly from 19% for the same period in the prior year on a higher mix of clinical services with a higher G&A profile. However, adjusted G&A expense was lower sequentially from 20% in the second quarter. The company's adjusted EBITDA increased to $24.9 million for the third quarter of 2021, compared to $19.5 million in the third quarter of 2020. Adjusted EBITDA margin was 11.5%, compared with 10.1% for the third quarter of 2020, and an increase sequentially from 11.2% in the second quarter. Adjusted net income per diluted share was 91 cents. The adjusted per share results for the third quarter of 2021 exclude the following, acquisition and de novo expenses of $0.08 and non-cash stock-based compensation of $0.11. The adjusted per share results for the third quarter of 2020 exclude the following, COVID-19 expense of $0.02, acquisition and de novo expenses of $0.02, restructuring and other costs of $0.08, and non-cash stock-based compensation of $0.07. Our tax rate for the third quarter of 2021 was 26.6% within the range of our expectation. For the full calendar 2021, we continue to expect a tax rate in the mid-20% range. DSOs were 52.9 days at the end of the third quarter of 2021, compared with 56.9 days at the end of the second quarter. We continue to see consistent payments from the majority of our payers, including another strong cash collection quarter from the Illinois Department of Aging. whose ESOs were down to 36.4 days at the end of the third quarter of 2021. We continue to see strong cash flows with our third quarter net cash provided by operations totaling $17.6 million. At September 30th, 2021, the company had cash on hand of $152.4 million with $224.9 million in bank debt. Under our recently expanded revolver, at the end of the third quarter, we had capacity and availability of $367 million and $123.8 million, respectively, and remain well positioned to execute on our acquisition strategy. This concludes our prepared comments this morning. We would like to thank you for all being with us. I'll now ask the operator to please open the line for your questions.
Operator
Thank you. As a reminder, to ask a question, you will need to press star 1 on your telephone keypad. To withdraw your question, press the pound key. Our first question comes from the line of Matt Borsch with BMO Capital. Your line is open.
Matt Borsch
Yes. Impressive results, particularly given all these circumstances. Let me ask you about the M&A pipeline and how that may be changing given what we've been going through here. And to the extent you can comment at all about what kind of valuations are prevailing and how that may have changed. I'm particularly interested in the hospice side where for a while their valuations, and maybe this is still the case, have been quite elevated.
Brian Popp
Yeah, man. I think what we're seeing currently in the pipeline, I think our valuation ranges really haven't moved from the projects that we've been working on. I think we still have several things that You know, we would like to continue to progress, but as you know, we're being very selective in what we're looking to acquire, both from a valuation standpoint, but also strategically with where we have overlap in our service line. So I think we feel still pretty positive about what we're looking at today. Haven't seen valuations move. I will say, you know, I think we've seen probably a little bit of a slowdown in maybe things coming to market through brokered processes. I think, you know, from two, three, four, five months ago, there was quite a bit more activity. We are seeing a little bit, I guess, less activity today. in that regard over the last couple of months.
Matt Borsch
Okay, great. And are you trying to emphasize the home care side of the business, just given that that remains a fairly small percentage of your overall revenue?
Brian Popp
Yeah, I think we definitely indicated this the last couple of quarters as well. Our focus has been on trying to add clinical services where we have significant personal care assets. So I think that still is consistent with what we're looking at today and home care. skilled home health is obviously a much smaller portion of our business. So we were happy to bring on Summit this last quarter, which gives us our first clinical services in Illinois. It was a small acquisition, but I think it's in really well with Chicago, which is our largest personal care market. So where we can continue to replicate, you know, that type of acquisition in the future, we definitely would like to. If we get a little more size and scale, definitely is always preferred as well. All right. Thank you.
Operator
Thank you. Our next question comes from the line of Scott Fidel with Stevens. Your line is open.
Scott Fidel
Scott Fidel Hi, thanks, and good morning. I'm interested if you could maybe give us a little thoughts on the headwinds and tailwinds just in terms of thinking about modeling revenues and margins sequentially. Just thinking about in the last couple of quarters, it seemed like the street's probably been a little bit aggressive on the revenue side and a little bit conservative on the margin side. trying to get in front of that a little bit here and understanding you don't provide formal guidance, but maybe giving us some framing to think about, you know, sequentially for 4Q relative to 3Q.
Brian Popp
Yes, Scott, I think looking ahead to fourth quarter, obviously with the Illinois rate increase coming on board in November, which we expect to get full approval on that from CMS or the state to get full approval, I'm sorry, very shortly, obviously that's going to be a benefit, not just to revenue, but also to margin as we've taken the impact of the Chicago minimum wage increase Keep in mind, we'll give all of our non-Chicago workers an increase at the same time we get the rate increase, but still would be a benefit for us in Q4. So I think your point is well taken. Looking at Q3 as kind of a baseline move into Q4, especially from the top line and revenue expectation, you know, we've seen consistent sequential growth. I think we would expect to see that continuing into Q4. You know, we'll benefit from, you know, one extra month of Armada in Q4 and Summit, which is the small acquisition we did up in Chicago. But thinking about it from a margin perspective, you know, we should see, you know, the benefit of Illinois particularly in Q4. If you look forward into 2022, especially in Q1 with reset of payroll taxes, you've got potentially the Medicare sequester, you know, holiday ceasing at the end of the year, you know, probably would expect to see some of that rationalized in Q1.
Scott Fidel
Got it. Thanks. And then just as my follow-up question, just to get back onto CDPath and the situation there, and Appreciate you calling out the annualized revenue contribution. That's helpful. That's still a bit tricky, I think, for all of us, you know, in terms of what to do with that contract and our models at this point and, you know, whether to keep it in or not. You know, so not asking you what we should do with our models there, but, you know, if you could give us, you know, some insights, I guess, into sort of where you think things sit from a timing perspective at this point and, I know you mentioned that it's a much lower margin now in that contract, but if you were able to glean out even more specifically what you think the annualized EBITDA contribution is from CDPAC, I think that would be helpful for us to try to ring fence if that contract did go offline. Yeah.
Dirk Allison
You know, honestly, Scott, if we look at what's going to happen with the CDPAC program, at least in our mind, we're going to continue to limit new referrals into that program. We're concerned not only about our ability to continue in that program because of a contract, but also the profitability of that as the state has come out with and lowered the reimbursement for that particular program. So we have continued, as you will see, since the last year. We started right at about a year ago starting to limit those Referrals were down almost $10 million in revenue to around 44 million annualized today. You should see that continue to decrease at a similar rate over the next year. The only change would be if the state came through, gave us a contract, and adjusted their rates so that going forward, providers in that particular program can actually make a return then we would consider continuing to service new clients. But right now, we'll continue to see that decrease. As far as the margin?
Brian Popp
Yeah, I think, Scott, I think to Dirk's point, you know, timing is going to be probably something we don't have, you know, a lot of insight into, unfortunately, right now. I think the state has not really come forward with any kind of a set timetable. So I think we had said, you know, a few months ago, you know, they kind of put out this potential for November 1 period of starting to transfer patients. I think we were a little dubious of that even at the time. haven't seen that come to fruition. So, you know, hard for us to put a box around when will we see that transition, assuming that we do not stay in the program through one of the various methods that Dirk described in his comments earlier. You know, I think from a margin perspective, we're down to $44 million in annualized revenue. Our margins there are, you know, in kind of that mid-to-upper single-digit range. So it's a pretty low-margin contract. So, you know, not material for us. And as that continues to kind of trail off, I think even continues to lessen the exposure.
Scott Fidel
Okay, that's helpful. Thanks.
Operator
Thank you. Our next question comes from the line of Frank Morgan with RBC Capital Markets. Your line is open.
Frank Morgan
Good morning. I was hoping we could kind of go back to sort of what you're seeing in terms of momentum exiting the quarter. I think you gave a little bit of commentary about hospice. But as you look across all three of the segments, maybe what you're seeing so far in the year, and I guess I'm – Also curious on the hospice side, since that's the one that's been sort of the drag, is maybe more color specifically on the recovery in that mix of SNF and alpha pools. That's my first question.
Mitra
Yeah. Hey, Frank. This is Brad. With respect to kind of where we stand in the various segments exiting the quarter, you know, what's encouraging on the personal care side is probably impacted the most from a COVID standpoint with quarantined employees. We started seeing those numbers decrease towards the end of September, and that's continued into October. Also kind of a driver is our hiring metrics, which have been strong September through You know, surprisingly, it was actually our strongest hiring month, not just this year, but actually the strongest over the last two years. You know, I don't know if that's a reflection of some of the stimulus money coming to an end with respect to the enhanced unemployment benefits, but the timing seems to match up. With respect to it, and then just to relate to that, October hiring trends have actually been pretty favorable there as well, and we still continue to see robust demand for our services. With respect to home health, home health has been just chugging along. We've had some really good quarters. I anticipate, of course, the comps are going to start getting a little more challenging because of all the growth that we've had this year, but optimistic that that's going to continue. Traditionally on the home health side, as you get later in the year, a lot of people are going to try to use surgeries and stuff to use up any deductibles that they have. Under their plans, go ahead and get them out, taken care of this year. So you'll see a pickup kind of late Q4 and then into Q1 there. With respect to hospice, we've actually seen, you know, a couple things going in. You know, since January of this year, you know, we bottomed out on our median length of stay. We've seen nice sequential increases in our median length of stay. It's not quite up to the mid-20s yet. But this around, you know, 20, 21 days, October, it looks like we may have picked up about a day there as well. So it seems, you know, I'm continuing to see some good admission volume. Now, we'll say hospice in Q4 around the holidays tends to slow down a little bit and then pick up again in Q1. You know, as far as mix, we have seen actually a pickup in both ALS and nursing homes. We started seeing the sniff. volume pickup, you know, last quarter. This quarter we actually started seeing the ALS pickup as well. So we're still not back to what our kind of pre-pandemic mix is, and I think that's going to take some time with facility, you know, occupancy levels increasing, but certainly I've started seeing a nice pickup there.
Frank Morgan
Got you. Maybe as a follow-up, in terms of home health care and hospice, you How much agency labor or just premium labor have you had to use? And then maybe a blind question. Just remind us what the annualized effects of that sequester would be on all your Medicare revenues. Thanks.
Mitra
Yeah, I'll take the staffing question first. We really have used minimal outside staffing on both home health and hospice. We've been fortunate there.
Brian Popp
Yeah, and on sequester, Frank, I think when that goes away, just with a mix of our skill business today, that would probably be around $3 million in total. But keep in mind, we're also going to get our kind of annual CPI rate increase here in the fourth quarter as well that will probably help to offset that. So I think the way we look at it going into next year, assuming that sequester holiday does go away, will be essentially flat. But I wouldn't expect to see us have a net rate increase going into next year, but essentially flat.
Frank Morgan
Okay, thanks.
Operator
Thank you. Our next question comes from the line of Matt LaRue with William Blair. Your line is open.
Matt LaRue
Yeah, hi. Good morning. I just wanted to ask maybe the latest you're hearing around the potential for some HCPS funding and a legislative package before the end of the year. I know there's been many iterations and discussions around that, but just kind of the latest you're hearing on the Hill.
Dirk Allison
Yeah, you know, certainly we... Like everybody else, we're sitting here waiting to see if the Democrats are going to get together and pass the reconciliation bill. Right now, as we understand it, there's $150 billion in the current draft of the reconciliation bill that will be dedicated to home and community-based care. As far as really having any further insight of where that stands, All we know is that it is still in the bill today, but we have no knowledge of when and if this might be passed.
Matt LaRue
Okay. And then just on a previous question, you mentioned you didn't utilize much contract labor. Obviously, a number of your peers have referenced that. They also reference things like additional bonuses, pretty significant increases in the wage trend. Did you also not experience that? And I guess any thoughts on why you've been able to avoid some of those near-term staffing challenges?
Mitra
Yeah, I think when you look on the staffing side, I mean, one, our exposure on the clinical is certainly not as maybe significant as some of our peers. But it is, you know, we're starting to see some wage pressure, certainly, in particular markets. So nurses specifically are more competitive. We've had to make some proactive adjustments there on the compensation side. You know, so far we've avoided some of the special bonuses. But, you know, we are having to make some proactive adjustments for wages, particularly with respect to nurses. But we've been fortunate to, you know, be able to avoid any of that premium labor so far. But, you know, it's a competitive environment out there on the clinical services. And administrative. Yeah, and we're starting to see, you know, administrative services kind of across all segments. That, you know, is a much smaller part of our cost structure. But certainly, you know, service coordinators on our personal care side, you know, with our schedulers, certainly starting to see some wage pressures there.
Matt LaRue
Okay. Appreciate it. Thanks.
Operator
Thank you. Our next question comes from a line of Brian Canquillette with Jefferies. Your line is open.
Brian Canquillette
Hey, good morning, guys. I guess, Brian, first question for you or maybe for Dirk as well. I know in the past you've talked about kind of like a goal of acquiring at least 100 million of revenue a year, and you're at 30 this year. So I know you typically source your own deal. So Just curious, you know, Brian, you said you're not seeing that much or there's a slowdown in broker deals, but what are you seeing on the deal front from, you know, your own BD team? And are there any changes in the market that you would call out that would explain some of the slowdown in your typical M&A pace?
Brian Popp
Yeah, I mean, I think us specifically, I just talk about kind of our pace for this year. And, you know, we had some projects that we were working on early this year. I think, as you guys know, we're pretty stringent in our diligence process. We also are looking at things that are very specific and strategic to us. We're not looking to necessarily just, you know, make acquisitions to make acquisitions. So, you know, kind of through that selective process and then some things that didn't get across the finish line, I think it's put us where we are a little behind where we'd like to be as far as acquired revenues for this year. I will say the year's not over just yet. It's still November, but, you know, we still got some things in our pipeline that we're excited about and we'll see if we can get those through our process and to close. So, I think from the market perspective, I think what we've seen, as I mentioned a little bit earlier, just broker processes, we're not seeing the level of activity we saw probably over the summer. It seemed like there were several things out on the market at the time. A lot of those didn't fit well with us, but we are probably feeling that broker processes are a little slower toward the end of the year. I think a big bolus of people that were looking to get out to the market in advance of potential cap gains issues, I think they realize now going into the end of the year, that's probably going to be difficult to get closed this year. So maybe their decision process is, hey, it's better to kind of rebase off of a delta wave and look at going out early next year. I'm not really sure. That's a little speculative on my part. But that's probably all I can really say to what we're seeing different in the market today.
Brian Canquillette
Got it. And then, Dirk, just any updates you can share with us on the MA front in terms of your efforts to try to gain traction there and maybe expand into the MA markets?
Dirk Allison
Yeah, you know, again, Brian, what we've been doing as it relates to Medicare Advantage and really the whole value-based care approach, we currently, as we said, we've announced one deal with Presbyterian where we're working on a value-based approach. We hope to, we should be announcing further deals soon, which will show that we're into a number of pilots and all related around value-based care. And the reason I talk about that is even though some of the pilots will be doing our managed Medicaid providers, the data that we're going to develop or are developing from these various pilots will allow us to sit across with the Medicare Advantage providers and talk about how we can help them control their medical loss costs. So we're still very excited about this. In fact, we believe value-based care has a real impact is a real opportunity not only for Addis, obviously, but for others in the industry. We think the market is headed that direction. We have a team that is working specifically around value-based care and what we can do in the future with Medicare Advantage. It's just, again, it's not going to be something that flips the switch and becomes material to Addis, you know, in the next year or so. It's going to take three or four years for us to continue to work with these various companies and present the opportunity we believe we bring to them to lower their costs. So we're still excited about it, but it's going to be a long-term process.
Brian Canquillette
Awesome. Thank you.
Operator
Thank you. Our next question comes from the line of John Ransom with Raymond James. Your line is open.
John Ransom
Good morning. Have you seen any material inflection in labor supply since some of these states ended their unemployment benefits?
Mitra
Yeah, John, this is Brad. We have, I mean, it certainly appears to be. If you look at our September hiring numbers, which corresponds when the enhanced federal unemployment benefits expired across the country, We did see a nice pickup there. It was our strongest personal care hiring month in over two years. So, you know, whether that's specifically tied to that, not sure, but it seemed to correspond with it, and particularly in our hiring numbers, honestly, kind of in the Illinois market increased pretty significantly, particularly in the Chicago area, which was, you know, one of the ones that had the unemployment benefits, enhanced benefits out there to early September. Okay.
John Ransom
Great. And then conversely, you know, in states that you're operating in that are embracing vaccine mandates as sort of a harbinger for maybe some, you know, the federal program that you talked about, have you been able to navigate those, you know, as successfully, more successfully, less successfully than you might have thought?
Mitra
Yeah, actually, I think more successfully than we would have thought. I mean, now New York being the largest market that is subject to a vaccine mandate, That applies to our personal care caregivers. You know, as Dirk mentioned in his script, I mean, we ended up, you know, around 93% vaccinated. You know, we still have a few out there, employees that I think are still considering getting vaccinated. Impact was pretty negligible. It was probably less than 2% on hours out of the gate with the mandate going into effect. So it's something that we're certainly monitoring, and, you know, whether New York is going to be, you know, the same as downstate Illinois or Montana or Idaho is to be seen. But, you know, we're really pushing hard and encouraging our caregivers to get vaccinated, and not just for in preparation of the mandates, but we just honestly as a company think that's the right thing to do. We do believe that, you know, it's in the best interest of our employees. I mean, if you look at the safety and efficacy of the vaccines. So we're still continuing to push it. Our biggest challenge, honestly, is just understanding the vaccination status of a very dispersed workforce that's primarily part-time for us. We still have a lot of unknowns, and that's our focus over the next month or so.
John Ransom
And just remind me the current stat on percent of your labor that's family members and how that may have evolved over the past couple of years.
Mitra
Yeah, we're probably around 35% family caregivers, and that's a good point when it comes to the vaccine mandates. You know, what we have seen at some of the local levels is that family caregivers or those that are residing in the home are typically exempt from those mandates. So we'll have to wait and see what happens on the federal front and with some of these other mandates, but we have seen some relief there. Okay. Thanks so much.
Operator
Thank you. As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad. Our next question comes from a line of Mitra Rangopa with Sudoti. Your line is open.
spk11
I'm just curious if hiring is not the problem. Mitra, you're breaking up pretty bad. No. Try again.
Mitra
Can you hear us? Yeah, you're not coming through.
Dirk Allison
Operator, why don't we go ahead and if there's no other questions other than Mitra, we'll contact Mitra directly and get his questions.
Operator
Okay. Thank you. I am showing no further questions at this time. I'd like to turn the call back over to Dirk Allison for closing comments.
Dirk Allison
Thank you, Operator. I want to thank each of you for your interest in ATIS and for being part of our earnings call today. We hope you have a great week.
Operator
This concludes today's conference call. Thank you for participating. You may now disconnect.
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