Addus HomeCare Corporation

Good day and welcome to the Addis HomeCare Third Quarter 2026 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 your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to hand the call over to Brandon Cox. Please go ahead.

Good morning and welcome to the Addis HomeCare Corporation third quarter 2026 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 Addis' 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 in ATIS's filings with the Securities and Exchange Commission and its third quarter 2026 news release. Consequently, actual operations and results may differ materially from the results discussed in the forward-looking statement. The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise. I would like to now turn the call over to the company's chairman and chief executive officer, Mr. Dirk Allison. Please go ahead, sir.

Thank you, Brandon. Good morning, and welcome to our 2026 third quarter earnings call. With me today is Brian Poff, our Chief Financial Officer. As we do on each of our quarterly earnings calls, I will begin with a few overall comments, and then Brian will discuss the third quarter results in more detail. Following our comments, we will be happy to respond to any questions. As we announced yesterday afternoon, our total revenue for the third quarter of 2026 was $387.7 million, an increase of 7% as compared to 362.3 million dollars for the third quarter of 2025. This revenue growth resulted in adjusted earnings per share of $1.83 as compared to adjusted earnings per share for the third quarter of 2025 of $1.56, an increase of 17.3 percent. Our adjusted EBITDA was 51.2 million dollars compared to 45.1 million for the third quarter of 2025, an increase of 13.5%. For the third quarter of 2026, cash flow from operations was 40.9 million with cash on hand on September 30 of just under $100 million. During the third quarter, we reduced our bank debt to 24.3 million which provides us the financial flexibility to close on our previously announced AccentCare personal care service acquisition while still considering additional large acquisition opportunities as we continue to pursue expansion of our market reach and increase geographic density. As we announced on September 14th, we signed a definitive agreement to acquire the personal care assets of AccentCare. This acquisition excludes AccentCare's New York operation and is expected to add approximately $280 million in annualized revenue. It furthers our strategy of creating density in our current markets while also enhancing our private pay home care business. Last week, the federal antitrust review period for the transaction expired. We are now waiting on additional customary regulatory approvals needed to complete the transaction. We anticipate closing on this acquisition in the first quarter of 2027. On July 1 of this year, we received an approximate 4% rate increase from the state of New Mexico, our third largest personal care market. This was an important development showing that states recognized supporting personal care services save states money in caring for the elderly and disabled population covered by Medicaid. We continue to have discussions with other states concerning potential rate increases for 2027 as part of their normal state budgeting processes. We still believe that we will see additional rate support from other states while also realizing that we are returning to a more balanced environment for same-store growth between rate and volumes. As we mentioned on our last quarterly call, CMS published the final fiscal 2027 hospice rate which was effective on October 1st, 2026. This increase continues the consistent federal rate support we have seen for hospice services over the past few years. Currently, we are awaiting the final home health rate announcement from CMS for 2027. Based on the preliminary rate announcement, which was made this summer, we expect to see a positive adjustment for our home health services which would be an encouraging sign for this segment of our business considering the state pressure, the rate pressure the industry has experienced over the past three or four years. During the third quarter of 2026, we continue to experience positive hiring trends in our personal care segment. Our number of hires per business day in the third quarter of 2026 was 105, up slightly from the prior period and within our target range. Our team continues to do a nice job of reducing hiring numbers at the level needed to meet our organic growth targets. As for clinical hiring, we continue to see a more normalized labor environment, as has been the case for the past couple of years. Now let me discuss our same-store revenue growth for the third quarter of 2026. For our personal care segment, our same store revenue growth was 6.9% compared to the third quarter of 2025. During the third quarter of 2026, we saw personal care same store hours increase by 1.6% compared to the same period in 2025, while our percentage of authorized hours served in the third quarter stayed in the mid 80s. While our same-store average daily census for PCS was down 0.4% over the prior period, in the third quarter we saw seven of our ten largest markets achieve positive year-over-year growth, with Texas and Illinois slightly negative for the quarter. Based on what we see to date in the fourth quarter, we currently believe we can achieve flat to slightly positive census growth in this current quarter. The slight decline in our personal care census over the prior year has primarily been in our lower hour cases as our higher hour cases have increased year-over-year. This, along with the continued improvement in our service percentage, has contributed to our year-over-year increase in same-store personal care hours. Turning to our clinical operations, Our hospice service same-store revenue increased 4.1% compared to the third quarter of 2025. As discussed last year, our 2025 third quarter had a positive impact from implicit price concession, and excluding that input, our same-store hospice revenue growth for the quarter was 8.8% at the high end of our targeted goal for hospice. We were pleased to see our same-store average daily census increase to 4,031 for the third quarter, up from 3,866 for the same period last year, an increase of 4.3%. Our growth in hospice has continued in October, with our average daily census exceeding 4,100. For the third quarter of 2026, our hospice median length of stay was 25 days as compared to 22 days for the third quarter of 2025 and 24 days sequentially. Overall, our hospice segment has continued to generate consistent growth over the past several quarters. Our home health same store revenue increased 2.5% when compared to the same quarter in 2025. Also, same store admissions in home health for the third quarter of 2026 grew 13.8% as compared to the third quarter of 2025. This is the first positive year over year revenue quarter we have had in a couple of years for home health as we are seeing the impact made by our new leadership team. Importantly, we also saw sequential improvements in revenue and admissions. As you can see with our pending AccentCare and previous Gentiva acquisition, We continue to believe that creating size and scale are important in post-acute health care services. This has been the long-term focus of our development strategy. Our development team continues to evaluate opportunities which will increase both the density and geographic coverage as we seek to further strengthen our relationships with states and managed care organizations. Going forward, We anticipate being more aggressive in looking at various clinical opportunities which we believe will present themselves over the next two quarters. While we will still actively pursue PCS opportunities, we believe it is time with recent market changes to consider adding more clinical acquisitions in both home health and hospice. Before I turn the call over to Brian, I want to thank the Addis team for the care they are providing to our elderly and disabled consumers and patients. We all have come to understand that most of this population prefers to receive care at home, which not only remains one of the safest but also the most cost-effective place to receive this care. We believe the heightened awareness of the value of home-based care has proven to be 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 our 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.