Addus HomeCare Corporation

Good day and welcome to the Addis Hallam Cares fourth quarter and year end 2025 earnings conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Drew Anderson. Please go ahead.

Thank you. Good morning, and welcome to the Addis Home Care Corporation fourth quarter and 2025 earnings conference call. Today's call is being recorded. 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 Reform Act of 1995, including statements, among others, regarding ADIS expected quarterly and annual financial performance for 2026 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 and add as filings with the Securities and Exchange Commission and in its fourth quarter 2025 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.

Thank you, Drew. Good morning and welcome to our 2025 fourth quarter earnings call. With me today are Brian Poth, our Chief Financial Officer, and Heather Dixon, our President and Chief Operating Officer. As we do on each of our quarterly earnings call, I'll begin with a few overall comments, and then Brian will discuss the fourth quarter results in more detail. Following our comments, the three of us would be happy to respond to any questions. As we announced yesterday afternoon, Our total revenue for the fourth quarter of 2025 was $373.1 million, an increase of 25.6% as compared to $297.1 million for the fourth quarter of 2024. This revenue growth resulted in adjusted earnings per share of $1.77 as compared to adjusted earnings per share for the fourth quarter of 2024 of $1.38, an increase of 28.3%. Our adjusted EBITDA was 50.3 million compared to 37.8 million for the fourth quarter of 2024, an increase of 33.3%. For 2025, our total revenue was approximately $1.4 billion, which is an increase of 23.2% as compared to approximately $1.1 billion for 2024. This revenue growth resulted in adjusted earnings per share of $6.23 as compared to adjusted earnings per share for 2024 of $5.26, an increase of 18.4%. Our adjusted EBITDA for 2025 was $180 million as compared to $140.3 million for 2024 an increase of 28.3%. For the fourth quarter of 2025, cash flow from operations was $18.8 million as of December 31, 2025, and we had cash on hand of approximately $81.6 million. We ended the fourth quarter with bank debt of $124.3 million, leaving us with net leverage of under one times adjusted EBITDA, allowing us the flexibility to continue to evaluate and pursue acquisition opportunities that meet our ongoing strategy of creating geographic density and scale while focusing on the full continuum of home care. As we mentioned on our last earning call, both the states of Texas and Illinois have recently increased our rates in personal care services. The Texas rate increase was effective on September 1st, 2025. The Illinois rate increase went into effect on January 1st, 2026 and will be reflected in our 2026 first quarter results. While there are potential future changes to Medicaid due to OB-3, we believe that our value proposition for personal care services is recognized by the states where we operate. We believe that we can be a cost-effective partner to both our states and managed Medicaid payers as they look for potential savings as home-based care is substantially less costly than facility-based care. We will continue our legislative efforts in states where we operate to emphasize the benefits generated by their continuing support of these services. As we've stated before, We continue to believe that the 80-20 provision of the Medicaid access rule will be eliminated in the near future. While implementation is still several years away and has no current impact on our business or financial performance, we believe this outcome would be a significant and encouraging development for the industry and our company. During the fourth quarter of 2025, we continued to experience positive hiring trends in our personal care segment. While the holidays typically slow our hiring, we are still able to achieve 101 hires per business day during the fourth quarter. As we began 2026, our hiring numbers for the first two weeks of January increased to 107 hires per business day. However, We saw a slight slowdown in hiring due to severe weather in certain of our markets over the last couple of weeks of January. We have seen hiring rebound in February as the winter storms have dissipated. As we have mentioned the last few quarters, our clinical hiring remains consistent and has been mostly stable outside of a few more challenging urban markets. Now let me discuss our same-store revenue growth for the fourth quarter of 2025. As a reminder, these calculations exclude our Gentiva acquisition as they were not part of our business for the entire fourth quarter in 2024. For our personal care segment, our same store revenue growth was 6.3% compared to the fourth quarter of 2024. During the fourth quarter of 2025, we saw personal care same store hours increase by 2.4% compared to the same period in 2024 while our percentage of authorized hours served in the fourth quarter remained consistent with what we experienced in the third quarter of 2025. On a sequential basis, personal care same-store billable census was down slightly, although we continue to see census growth in the majority of our key states. It should positively impact our billable census during 2026. During the fourth quarter, our personal care same-store growth was more evenly divided between volume and rate as we have been expecting. According to our clinical operations, our hospice same-store revenue increased 16% compared to the fourth quarter of 2024. Our average daily census increased to 3,885 for the fourth quarter, up from 3,472 for the same period last year, an increase of 11.9%. For the fourth quarter of 2025, our hospice median length of stay inclusive of our Illinois Junior JourneyCare operation was 25 days as compared to 22 days for the third quarter, again, including JourneyCare. We are very pleased by the continued growth in our hospice segment over the past several quarters as a result of operational improvements. While our home health sanctuary revenue decreased 7.4% when compared to the same quarter of 2024, it is important to point out that over 25% of our hospice admissions in New Mexico and Tennessee are currently coming from our Addis Home Air operations, which overlap in these two markets. We are pleased to see more patients receiving the benefit of the full continuum of post-acute care and anticipate seeing similar clinical collaboration and support developed in Illinois, where we also have both home health and hospice operations. Our development team continues to focus on both clinical and non-clinical acquisition opportunities, which would increase both density and geographic coverage. We will continue our disciplined approach to identify strategic personal care service transactions, as well as to evaluate smaller clinical transactions. That said, while there is more optimism around home health care due to the final health rule for 2026 being more favorable than was originally proposed, questions remain about potential future rate increases and the uncertainty of the retrospective payment adjustments. Before I turn the call over to Brian, I want to thank the ADDIS team for the care they are providing our elderly and disabled consumers and patients. We all have come to understand that the overwhelming majority of this population refers to receive care at home, which remains one of the safest and most cost-effective places to receive this care. We believe the heightened awareness of the value of home-based care is favorable for our industry and will continue to be a growth opportunity for our company. We understand and appreciate that our operations and growth are dependent on both our dedicated caregivers and other employees who work so incredibly hard providing outstanding care and support to our clients, patients, and their families. With that, let me turn the call over to Brian.