Q - Addus HomeCare

Previous wording

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Current wording

ITEM 2. MANAGEMENT**’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Previous wording

You should read the following discussion together with our unaudited condensed consolidated financial statements and the related notes included elsewhere in this quarterly report on Form 10-Q. This discussion contains forward-looking statements about our business and operations. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include words like “believes,” “belief,” “expects,” “plans,” “anticipates,” “intends,” “projects,” “estimates,” “may,” “might,” “would,” “should,” and similar expressions are intended to be forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: the impact of macroeconomic conditions, including significant global inflation and interest rates, legislative and political developments, including any hold on or cancellation of congressionally authorized spending or interruptions in the distribution of government funds, trade policies and tensions, including changes in, or the imposition of, tariffs and/or trade barriers and the economic impacts, volatility and uncertainty resulting therefrom, and the potential adverse effects of current conditions; business disruptions due to inclement weather, natural disasters, acts of terrorism, pandemics, civil insurrection or social unrest; changes in operational and reimbursement processes and payment structures at the state or federal levels; changes in Medicaid, Medicare, other government program and managed care organizations’ policies and payment rates, and the timeliness of reimbursements received under government programs; changes in, or our failure to comply with, existing federal and state laws or regulations, or our failure to comply with new government laws or regulations on a timely basis; the impact of decisions of the U.S. Supreme Court regarding the actions of federal agencies; changes in presidential administrations; changes in the structure and administration of, and funding for, federal and state agencies and programs; competition in the healthcare industry; the geographical concentration of our operations; changes in the case mix of consumers and payment methodologies; operational changes resulting from the assumption by managed care organizations of responsibility for managing and paying for our services to consumers; the nature and success of future financial and/or delivery system reforms; changes in estimates and judgments associated with critical accounting policies; our ability to maintain or establish new referral sources; o…

Excerpt shortened here; the source contains the full paragraph.

Current wording

You should read the following discussion together with our unaudited condensed consolidated financial statements and the related notes included elsewhere in this quarterly report on Form 10-Q. This discussion contains forward-looking statements about our business and operations. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include words like“believes,”* “belief,” “expects,” “plans,” “anticipates,” “intends,” “projects,” “estimates,” “may,” “might,” “would,” “should,” and similar expressions are intended to be forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: the impact of macroeconomic conditions, including significant global inflation and interest rates, legislative and political developments, including any hold on or cancellation of congressionally authorized spending or interruptions in the distribution of government funds, trade policies and tensions, including changes in, or the imposition of, tariffs and/or trade barriers and the economic impacts, volatility and uncertainty resulting therefrom, and the potential adverse effects of current conditions; business disruptions due to inclement weather, natural disasters, acts of terrorism, military conflicts, pandemics, civil insurrection or social unrest; changes in operational and reimbursement processes and payment structures at the state or federal levels; changes in Medicaid, Medicare, other government program and managed care organizations*’* policies and payment rates, and the timeliness of reimbursements received under government programs; the implementation of new, and possible changes to, existing, federal and state laws or regulations, or our failure to comply with such laws or regulations or comply on a timely basis; the impact of decisions of the U.S. Supreme Court regarding the actions of federal agencies; changes in presidential administrations; changes in the structure and administration of, and funding for, federal and state agencies and programs; competition in the healthcare industry; the geographical concentration of our operations; changes in the case mix of consumers and payment methodologies; operational changes resulting from the assumption by managed care organizations of responsibility for managing and paying for our services to consumers; the nature and success of future financial and/or delivery system reforms; changes in estimates and judgments associated with critical accounting policies; our ability to maintain or e…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

We are a home care services provider operating three segments: personal care, hospice, and home health. Our services are principally provided in-home under agreements with federal, state, and local government agencies, managed care organizations, commercial insurers, and private individuals. Our consumers are predominantly “dual eligible,” meaning they are eligible to receive both Medicare and Medicaid benefits. Managed care organizations accounted for 35.6% and 34.2% of our net service revenues during the three months ended March 31, 2025 and 2024, respectively.

Current wording

We are a home care services provider operating three segments: personal care, hospice, and home health. Our services are principally provided in-home under agreements with federal, state, and local government agencies, managed care organizations, commercial insurers, and private individuals. Our consumers are predominantly “dual eligible,” meaning they are eligible to receive both Medicare and Medicaid benefits. Managed care organizations accounted for 35.6% and 34.2% of our net service revenues during the three months ended June 30, 2025 and 2024, respectively, and 35.6% and 34.2% of our net service revenues during the six months ended June 30, 2025 and 2024, respectively.

Previous wording

As of March 31, 2025, we provided our services in 23 states through 260 offices. We served approximately 72,000 and 57,000 discrete individuals, respectively, during the three months ended March 31, 2025 and 2024. Our personal care segment also includes staffing services, with clients including assisted living facilities, nursing homes, and hospice facilities.

Current wording

As of June 30, 2025, we provided our services in 23 states through 260 offices. We served approximately 78,000 and 70,000 discrete individuals, respectively, during the six months ended June 30, 2025 and 2024. Our personal care segment also includes staffing services, with clients including assisted living facilities, nursing homes, and hospice facilities.

Previous wording

On December 2, 2024, we completed the acquisition of the personal care business of Curo Health Services, LLC, a Delaware limited liability company that does business as Gentiva, consisting of certain equity interests and assets and liabilities (collectively, the “Gentiva Acquisition”) for approximately $353.6 million, with funding primarily provided by drawing on the Company’s revolving credit facility and a portion of the net proceeds of the Company’s public offering of common stock. The purchase price is subject to the completion of working capital and related adjustments. With the Gentiva Acquisition, the Company expanded its services within its personal care segment in Arizona, Arkansas, California, and North Carolina, and entered the market in Missouri and Texas. The home health segment also was expanded in Tennessee.

Current wording

On December 2, 2024, we completed the acquisition of the personal care business of Curo Health Services, LLC, a Delaware limited liability company that does business as Gentiva, consisting of certain equity interests and assets and liabilities (collectively, the “Gentiva Acquisition”) for approximately $350.6 million, with funding primarily provided by drawing on the Company’s revolving credit facility and a portion of the net proceeds of the Company’s public offering of common stock (the “Public Offering”). With the Gentiva Acquisition, the Company expanded its services within its personal care segment in Arizona, Arkansas, California, and North Carolina, and entered the market in Missouri and Texas. The home health segment also was expanded in Tennessee.

Previous wording

On March 1, 2025, the Company completed the Great Lakes Acquisition for $2.6 million, with funding provided by available cash. With the Great Lakes Acquisition, the Company expanded its personal care segment in Michigan and recognized goodwill in its personal care segment of $2.6 million during the three months ended March 31, 2025.

Current wording

On March 1, 2025, the Company completed the Great Lakes Acquisition for $2.6 million, with funding provided by available cash. With the Great Lakes Acquisition, the Company expanded its personal care segment in Michigan and recognized goodwill in its personal care segment of $2.6 million.

Previous wording

As the labor market continues to be tight and unemployment remains at low levels, the competition for new caregivers, including skilled healthcare staff, and support staff continues to be significant. In addition, the United States economy continues to experience inflationary pressures. To the extent that we continue to experience a shortage of caregivers, it may hinder our ability to fully meet the continuing demand for both our non-clinical and clinical services.

Current wording

As the labor market continues to be tight and unemployment remains at low levels, the competition for new caregivers, including skilled healthcare staff, and support staff continues to besignificant. In addition, the United States economy continues to experience inflationary pressures. To the extent that we continue to experience a shortage of caregivers, it may hinder our ability to fully meet the continuing demand for both our non-clinical and clinical services.

Previous wording

The personal care segment derives a significant amount of its net service revenues from operations in Illinois, which represented 33.0% and 38.3% of our net service revenues for the three months ended March 31, 2025 and 2024, respectively. One payor, the Illinois Department on Aging, accounted for 18.5% and 20.8% of net service revenues for the three months ended March 31, 2025 and 2024, respectively.

Current wording

The personal care segment derives a significant amount of its net service revenues in Illinois, which represented 33.0% and 38.6% of our net service revenues for the three months ended June 30, 2025 and 2024, respectively, and accounted for 33.0% and 38.5% of our net service revenues for the six months ended June 30, 2025 and 2024, respectively.

Previous wording

A significant amount of our net service revenues are derived from one payor, the Illinois Department on Aging, the largest payor program for our Illinois personal care operations, which accounted for 18.5% and 20.8% of our net service revenues for the three months ended March 31, 2025 and 2024, respectively.

Current wording

A significant amount of our net service revenues are derived from one payor, the Illinois Department on Aging, the largest payor program for our Illinois personal care operations, which accounted for 18.6% and 21.1% of our net service revenues for the three months ended June 30, 2025 and 2024, respectively, and accounted for 18.6% and 20.9% of our net service revenues for the six months ended June 30, 2025 and 2024, respectively.

Previous wording

The City of Chicago requires the Chicago minimum wage to be adjusted annually based on increases in the Consumer Price Index (“CPI”), subject to a cap and other requirements. On July 1, 2024, the rate was adjusted to $16.20 based on the increase in the CPI.

Current wording

The City of Chicago requires the Chicago minimum wage to be adjusted annually based on increases in the Consumer Price Index (“CPI”), subject to a cap and other requirements. Effective July 1, 2025, the rate was adjusted to $16.60 based on the increase in the CPI.

Previous wording

Under the nationwide Home Health Value-Based Purchasing (“HHVBP”) Model, home health agencies receive increases or decreases to their Medicare fee-for-service payments of up to 5% based on performance against specific quality measures relative to the performance of other home health providers. Data collected in each performance year will impact Medicare payments two years later. This program has not had a material impact on our results of operations or financial position.

Current wording

Under the nationwide Home Health Value-Based Purchasing (“HHVBP”) Model, home health agencies receive increases or decreases to their Medicare fee-for-service payments of up to 5% based on performance against specific quality measures relative to the performance of other home health providers. Data collected in each performance year will impact Medicare payments two years later.

Previous wording

In May 2024, CMS finalized a rule intended to improve access to services and quality of care for Medicaid beneficiaries across fee-for-service and managed care delivery systems. The final rule includes significant provisions related to HCBS, including the “80/20” or “payment adequacy” requirement, which will require states to ensure that at least 80% of all Medicaid payments a provider receives for homemaker, home health aide, and personal care services, less certain excluded costs, under specified programs are spent on total compensation (including benefits) for direct care workers furnishing these services, rather than administrative overhead or profit, subject to limited exceptions. States are required to ensure compliance with the 80/20 requirement by mid-2030. The final rule includes several other measures intended to promote transparency and enhance quality and access to services, including a variety of reporting requirements for states. Given the very long implementation period and the likelihood of further changes as a result of litigation, administration and congressional changes, further rule-making and state changes in response to the final rule, it is premature to predict the ultimate impact of the final rule on our business.

Current wording

In May 2024, CMS finalized a rule intended to improve access to services and quality of care for Medicaid beneficiaries across fee-for-service and managed care delivery systems. The final rule includes significant provisions related to HCBS, including the “80/20” or “payment adequacy” requirement, which will require states to ensure by mid-2030 that at least 80% of all Medicaid payments a provider receives for homemaker, home health aide, and personal care services, less certain excluded costs, under specified programs are spent on total compensation (including benefits) for direct care workers furnishing these services, rather than administrative overhead or profit, subject to limited exceptions. The final rule includes several other measures intended to promote transparency and enhance quality and access to services, including a variety of reporting requirements for states. Given the long implementation period and the likelihood of further changes as a result of litigation, administration and congressional changes, further rule-making and state changes in response to the final rule, it is premature to predict the ultimate impact of the final rule on our business.

Previous wording

Home care and other healthcare providers may be significantly impacted by changes to the Medicaid program, including changes resulting from legislation and administrative actions at the federal and state levels. Federal actions may impact funding for, or the structure of, the Medicaid program, including through changes to Medicaid waiver programs, and may shape provider reimbursement rates, eligibility and coverage policies, and other aspects of state Medicaid programs. Currently, the federal government pays a percentage match for state Medicaid expenditures that varies by state and other factors, with no pre-set limit on federal spending. However, some members of Congress and the presidential administration have raised, and Congress may in the future adopt, proposals to reduce and restructure Medicaid expenditures. Reduced funding for Medicaid or changes to Medicaid waiver programs could put pressure on state budgets and result in reductions to Medicaid payments, scope of coverage and enrollment. Such reductions could, in turn, affect our reimbursements for services rendered.

Current wording

Home care and other healthcare providers may be significantly impacted by changes to the Medicaid program, including changes resulting from legislation and administrative actions at the federal and state levels. Federal actions may impact funding for, or the structure of, the Medicaid program, including through changes to Medicaid waiver programs, and may shape provider reimbursement rates, eligibility and coverage policies, and other aspects of state Medicaid programs. For example, the OBBBA includes policy changes that are expected to eventually result in significant cuts to federal healthcare spending, including significant changes to the Medicaid program, if fully implemented as enacted. The OBBBA limits eligibility for Medicaid through work requirements for some populations, reduces federal Medicaid funding and expands cost-sharing obligations for certain enrollees. Among other changes, the law makes significant changes to Medicaid financing mechanisms, including restrictions on provider tax arrangements that are intended to reduce the federal matching funds received by state Medicaid programs. In addition, the OBBBA, if implemented as enacted, would require eligibility redeterminations at least every six months for individuals covered under Medicaid expansion, with state compliance required by December 31, 2026. The law also would eventually prohibit states from establishing new provider taxes or increasing rates of existing provider taxes while also limiting the structure of such taxes. Future Medicaid reform initiatives at the federal and state levels may result in further reductions to Medicaid expenditures and involve additional administrative changes. Reduced funding for Medicaid or other changes to Medicaid programs, including Medicaid waiver programs could put pressure on state budgets and result in reductions to Medicaid payments, scope of coverage and enrollment. Such reductions could, in turn, affect our reimbursements for services rendered. We expect the impact of the OBBBA on the home care business will be less significant than the impact on other healthcare businesses.

Previous wording

All of our income is from domestic sources. We incur state and local taxes in states in which we operate. The effective income tax rate was 21.4% and 25.7% for the three months ended March 31, 2025 and 2024, respectively, compared to our federal statutory rate of 21%. The difference between our federal statutory and effective income tax rates was principally due to the inclusion of state taxes, non-deductible compensation, excess tax expense/benefit and the use of federal employment tax credits.

Current wording

All of our income is from domestic sources. We incur state and local taxes in states in which we operate. The effective income tax rates were 26.4%and 26.3% for the three months ended June 30, 2025 and 2024, respectively. The effective income tax rates were 24.0% and 26.0% for the six months ended June 30, 2025 and 2024, respectively, compared to our federal statutory rate of 21%. The difference between our federal statutory and effective income tax rates was principally due to the inclusion of state taxes, non-deductible compensation, excess tax expense or benefit and the use of federal employment tax credits.

Previous wording

Gross profit, expressed as a percentage of net service revenues, increased to 31.9% for the three months ended March 31, 2025, compared to 31.4% for the same period in 2024 due to growth in our higher margin hospice segment, the New York Asset Sale and the Gentiva Acquisition.

Current wording

Gross profit, expressed as a percentage of net service revenues, increased to 32.6% for the three months ended June 30, 2025, compared to 32.5% for the same period in 2024 due to growth in our higher margin hospice segment and the New York Asset Sale.

Previous wording

General and administrative expenses increased to $73.2 million for the three months ended March 31, 2025, as compared to $61.1 million for the three months ended March 31, 2024. The increase in general and administrative expenses was primarily due to the Gentiva Acquisition that resulted in an increase in administrative employee wage, bonus, tax, and benefit costs of $9.4 million. General and administrative expenses, expressed as a percentage of net service revenues, decreased to 21.7% for the three months ended March 31, 2025, from 21.8% for the three months ended March 31, 2024.

Current wording

General and administrative expenses increased to $77.1 million for the three months ended June 30, 2025, as compared to $63.6 million for the three months ended June 30, 2024. Theincrease in general and administrative expenses was primarily due to the Gentiva Acquisition that resulted in an increase in administrative employee wage, bonus, tax, and benefit costs of $9.0 million. General and administrative expenses, expressed as a percentage of net service revenues, decreased to 22.1% for the three months ended June 30, 2025, from 22.2% for the three months ended June 30, 2024.

Previous wording

Interest expense increased to $4.0 million for the three months ended March 31, 2025 from $2.8 million for the three months ended March 31, 2024. The increase in interest expense was primarily due to higher average outstanding borrowings held under our credit facility for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Current wording

Interest expense increased to $3.5 millionfor the three months ended June 30, 2025 from $2.1 million for the three months ended June 30, 2024. The increase in interest expense was primarily due to higher average outstanding borrowings held under our credit facility for the three months ended June 30, 2025,compared to the three months ended June 30, 2024.

Previous wording

All of our income is from domestic sources. We incur state and local taxes in states in which we operate. The effective income tax rate was 21.4% and 25.7% for the three months ended March 31, 2025 and 2024, respectively. Our lower effective income tax rate for the three months ended March 31, 2025 was principally due to a higher excess tax benefit with a lower benefit from the use of federal employment tax credits. For the three months ended March 31, 2025 and 2024, the excess tax benefit and federal employment tax credits were 7.2% and 3.5%, respectively.

Current wording

All of our income is from domestic sources. We incur state and local taxes in states in which we operate. The effective income tax rate was 26.4% and 26.3% for the three months ended June 30, 2025 and 2024, respectively. Our higher effective income tax rate for the three months ended June 30, 2025, was principally due to a higher excess tax expense with a higher benefit from the use of federal employment tax credits. For the three months ended June 30, 2025 and 2024, the excess tax expense and federal employment tax credits were 2.6% and 2.8%, respectively.

Previous wording

Net service revenues increased by 20.3% to $337.7 million for the three months ended March 31, 2025 compared to $280.7 million for the three months ended March 31, 2024. Revenue increased by $50.3 million in our personal care segment, by $5.6 million in our hospice segment and by $1.1 million in our home health segment during the three months ended March 31, 2025, compared to the same period in 2024. The increase in our personal care and home health segments was primarily due to the completion of the Gentiva Acquisition on December 2, 2024, as well as the same store growth in our home health segment. The increase in our hospice segment revenue was due to organic growth.

Current wording

Net service revenues increased by 21.0% to $687.2 million for the six months ended June 30, 2025 compared to $567.7 million for the six months ended June 30, 2024. Revenue increased by $106.6 million in our personal care segment, by $11.8 million in our hospice segment and by $1.1 million in our home health segment during the six months ended June 30, 2025, compared to the same period in 2024. The increase in our personal care and home health segments was primarily due to the completion of the Gentiva Acquisition on December 2, 2024. The increase in our hospice segment revenue was due to organic growth.

Previous wording

Net service revenues from state, local, and other governmental programs accounted for 51.5% and 51.8% of net service revenues for the three months ended March 31, 2025 and 2024, respectively. Managed care organizations accounted for 45.3% of net service revenues for both the three months ended March 31, 2025 and 2024, with commercial insurance, private pay, and other payors accounting for the remainder of net service revenues.

Current wording

Net service revenues from state, local, and other governmental programs accounted for 51.4% and 53.1% of net service revenues for the three months ended June 30, 2025 and 2024, respectively. Managed care organizations accounted for 45.3% and 44.2% of net service revenues for the three months ended June 30, 2025 and 2024, respectively, with commercial insurance, private pay, and other payors accounting for the remainder of net service revenues. Net service revenues from state, local, and other governmental programs accounted for 51.4% and 52.5% of net service revenues for the six months ended June 30, 2025 and 2024, respectively. Managed care organizations accounted for 45.3% and 44.8% of net service revenues for the six months ended June 30, 2025 and 2024, respectively, with commercial insurance, private pay, and other payors accounting for the remainder of net service revenues.

Previous wording

Net service revenues increased by 24.2% for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. Net service revenues included a 7.4% decrease in revenues per billable hour for the three months ended March 31, 2025, due to lower reimbursement rates attributable to the Gentiva Acquisition, as well as the New York Asset Sale, compared to the three months ended March 31, 2024.

Current wording

Net service revenues increased by 26.5% for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. Net service revenues included a 7.2% decrease in revenues per billable hour for the three months ended June 30, 2025, due to lower reimbursement rates attributable to the Gentiva Acquisition, as well as the New York Asset Sale, compared to the three months ended June 30, 2024.

Previous wording

Gross profit, expressed as a percentage of net service revenues, increased to 27.6% for the three months ended March 31, 2025 from 26.7% for the three months ended March 31, 2024. This increase was due to decreases in direct payroll and benefits expenses as a percentage of revenue for the three months ended March 31, 2025 primarily related to the New York Asset Sale.

Current wording

Gross profit, expressed as a percentage of net service revenues, increased to 27.9% for the six months ended June 30, 2025 from 27.5% for the six months ended June 30, 2024. This increase was due to decreases in direct payroll and benefits expenses as a percentage of revenue for thesix months ended June 30, 2025 primarily related to the New York Asset Sale.

Previous wording

The personal care segment’s general and administrative expenses primarily consist of administrative employee wages, taxes, and benefit costs, rent, information technology, and office expenses. General and administrative expenses, expressed as a percentage of net service revenues, was 9.2% and 7.4% for the three months ended March 31, 2025 and 2024, respectively.

Current wording

The personal care segment’s general and administrative expenses primarily consist of administrative employee wages, taxes, and benefit costs, rent, information technology, and office expenses. General and administrative expenses, expressed as a percentage of net service revenues, was 9.1% and 7.7% for the six months ended June 30, 2025 and 2024, respectively.

Previous wording

Net service revenues from Medicare accounted for 92.4% and 90.7% for the three months ended March 31, 2025 and 2024, respectively. Net service revenues from managed care organizations accounted for 3.3% for both the three months ended March 31, 2025 and 2024.

Current wording

Net service revenues from Medicare accounted for 93.0% and 91.2% for the three months ended June 30, 2025 and 2024, respectively, and 92.7% and 91.0% for the six months ended June 30, 2025 and 2024, respectively. Net service revenues from managed care organizations accounted for 3.2% and 3.4% for the three months ended June 30, 2025 and 2024, respectively, and for 3.3% for both the six months ended June 30, 2025 and 2024.

Previous wording

Net service revenues increased by $5.6 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily attributed to organic growth in average daily census.

Current wording

Net service revenues increased by $6.2 million and $11.8 million for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024, primarily attributed to organic growth in average daily census.

Previous wording

Gross profit, expressed as a percentage of net service revenues, was 40.0% and 34.4% for the three months ended March 31, 2025 and 2024, respectively. For the three months ended March 31, 2025, the increase was primarily due to an increase in net service revenues compared to the three months ended March 31, 2024.

Current wording

Gross profit, expressed as a percentage of net service revenues, was 47.9% and 46.9% for the three months ended June 30, 2025 and 2024, respectively, and 47.7% and 47.5% for the six months ended June 30, 2025 and 2024, respectively. For the three and six months ended June 30, 2025, the increase was mainly attributed to organic growth.

Previous wording

The hospice segment’s general and administrative expenses primarily consist of administrative employee wage, tax, and benefit costs, rent, information technology, and office expenses. General and administrative expenses, expressed as a percentage of net service revenues, was 23.7% and 24.1% for the three months ended March 31, 2025 and 2024, respectively. The decrease in general and administrative expenses as a percentage of net service revenues was primarily due to more efficient operations for administrative employees for the three months ended March 31, 2025.

Current wording

The hospice segment’s general and administrative expenses primarily consist of administrative employee wage, tax, and benefit costs, rent, information technology, and office expenses. General and administrative expenses, expressed as a percentage of net service revenues, was 24.1% and 24.0% for the three months ended June 30, 2025 and 2024, respectively, and 23.9% and 24.0% for the six months ended June 30, 2025 and 2024, respectively.

Previous wording

The home health segment generates net service revenues by providing home health services on a short-term, intermittent or episodic basis to individuals, generally to treat an illness or injury. Net service revenues from Medicare accounted for 69.9% and 69.1%, managed care organizations accounted for 21.2% and 26.1%, and state, local, and other governmental programs accounted for 6.0% and 0.2% for the three months ended March 31, 2025 and 2024, respectively. Home health services provided to Medicare beneficiaries are paid under the Medicare Home Health Prospective Payment System, which uses national, standardized 30-day period payment rates for periods of care. CMS uses the PDGM as the case-mix classification model to place periods of care into payment categories, classifying patients based on clinical characteristics. An outlier adjustment may be paid for periods of care in which costs exceed a specific threshold amount.

Current wording

The home health segment generates net service revenues by providing home health services on a short-term, intermittent or episodic basis to individuals, generally to treat an illness or injury. Net service revenues from Medicare accounted for 69.4% and 69.3%, managed care organizations accounted for 23.6% and 25.9%, and state, local, and other governmental programs accounted for 4.4% and 0.2% for the three months ended June 30, 2025 and 2024, respectively. Net service revenues from Medicare accounted for 69.7% and 69.2%, managed care organizations accounted for 22.4% and 26.0%, and state, local, and other governmental programs accounted for 5.2% and 0.2% for the six months ended June 30, 2025 and 2024, respectively. Home health services provided to Medicare beneficiaries are paid under the Medicare Home Health Prospective Payment System, which uses national, standardized 30-day period payment rates for periods of care. CMS uses the PDGM as the case-mix classification model to place periods of care into payment categories, classifying patients based on clinical characteristics. An outlier adjustment may be paid for periods of care in which costs exceed a specific threshold amount.

Previous wording

Net service revenues increased by $1.1 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024 primarily due to the Gentiva Acquisition and an increase in billable census in our home health segment for New Mexico.

Current wording

Net service revenues remained constant for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, and increased by $1.1 million for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily due to the Gentiva Acquisition.

Previous wording

Gross profit, expressed as a percentage of net service revenues, was 47.5% and 48.1% for the three months ended March 31, 2025 and 2024, respectively. For the three months ended March 31, 2025, the decrease was mainly attributed to increases in direct employee wage, tax, and benefit costs as a percentage of net service revenues.

Current wording

Gross profit, expressed as a percentage of net service revenues, was 45.9% and 37.6% for the three months ended June 30, 2025 and 2024, respectively, and 42.9% and 36.1% for the six months ended June 30, 2025 and 2024, respectively. For the three and six months ended June 30, 2025, the increase was mainly attributed to a decrease in direct care wages, taxes and benefit costs as a percentage of net service revenues, compared to thethree and six months ended June 30, 2024.

Previous wording

The home health segment’s general and administrative expenses primarily consist of administrative employee wage, tax and benefit costs, rent, information technology, and office expenses. General and administrative expenses, expressed as a percentage of net service revenues, was 23.2% and 26.9% for the three months ended March 31, 2025 and 2024, respectively. General and administrative expenses for the three months ended March 31, 2025 decreased compared to the corresponding period in 2024, primarily due to more efficient operations for administrative employees for the three months ended March 31, 2025.

Current wording

The home health segment’s general and administrative expenses primarily consist of administrative employee wage, tax and benefit costs, rent, information technology, and office expenses. General and administrative expenses, expressed as a percentage of net service revenues, was 21.6% and 25.3% for the three months ended June 30, 2025 and 2024, respectively, and 22.4% and 26.1% for the six months ended June 30, 2025 and 2024, respectively. General and administrative expenses for the three and six months ended June 30, 2025 decreased compared to the corresponding period in 2024, primarily due to more efficient operations for administrative employees for the three and six months ended June 30, 2025.

Previous wording

Our primary sources of liquidity are cash on hand and cash from operations and borrowings under our credit facility. At March 31, 2025 and December 31, 2024, we had cash balances of $97.0 million and $98.9 million, respectively. At March 31, 2025, we had a $650.0 million revolving credit facility and a $150.0 million incremental loan facility, which may be for term loans or an increase to the revolving loan commitments. The maturity of this credit facility was extended to July 30, 2028.

Current wording

Our primary sources of liquidity are cash on hand and cash from operations and borrowings under our credit facility. At June 30, 2025 and December 31, 2024, we had cash balances of $91.2 million and $98.9 million, respectively. At June 30, 2025, we had a $650.0 million revolving credit facility and a $150.0 million incremental loan facility, which may be for term loans or an increase to the revolving loan commitments. The maturity of this credit facility was extended to July 30, 2028.

Previous wording

During the three months ended March 31, 2025, we used $3.4 million in cash to fund the Jacksonville Acquisition and the Great Lakes Acquisition and repaid $20.0 million under our revolving credit facility. As of March 31, 2025, we had a total of $203.0 million in revolving loans, with an interest rate of 6.32% outstanding on our credit facility and after giving effect to the amount drawn on our credit facility, approximately $8.0 million of outstanding letters of credit and borrowing limits based on an advance multiple of adjusted EBITDA (as defined in the Credit Agreement), we had $632.9 million of capacity and $421.9 million available for borrowing under our credit facility. At December 31, 2024, we had a total of $223.0 million revolving credit loans, with an interest rate of 6.34%, outstanding on our credit facility.

Current wording

During the six months ended June 30, 2025, we used $3.4 million in cash to fund the Jacksonville Acquisition and the Great Lakes Acquisition and repaid $50.0 million under our revolving credit facility. As of June 30, 2025, we had a total of $173.0 million in revolving loans, with an interest rate of 6.07% outstanding on our credit facility and after giving effect to the amount drawn on our credit facility, approximately $8.0 million of outstanding letters of credit and borrowing limits based on an advance multiple of adjusted EBITDA (as defined in the Credit Agreement), we had $635.6 million of capacity and $454.6 million available for borrowing under our credit facility. At December 31, 2024, we had a total of $223.0 million revolving credit loans, with an interest rate of 6.34%, outstanding on our credit facility.

Previous wording

The ARPA provides for $350 billion in relief funding for eligible state, local, territorial, and Tribal governments to mitigate the fiscal effects of the COVID-19 public health emergency. Additionally, the law provided for a 10 percentage point increase in federal matching funds for Medicaid HCBS from April 1, 2021, through March 31, 2022, provided the state satisfied certain conditions. States were generally permitted to use the state funds equivalent to the additional federal funds through March 31, 2025, but CMS granted extensions to several states. States must use the monies attributable to this matching fund increase to supplement, not supplant, their level of state spending for the implementation of activities enhanced under the Medicaid HCBS in effect as of April 1, 2021.

Current wording

To mitigate the fiscal effects of the COVID-19 public health emergency, the ARPA provided for a 10 percentage point increase in federal matching funds for Medicaid HCBS from April 1, 2021, through March 31, 2022, provided the state satisfied certain conditions. States were generally permitted to use the state funds equivalent to the additional federal funds through March 31, 2025, but CMS granted extensions to several states, permitting some state spending plans to continue until as late as mid-2026. States must use the monies attributable to this matching fund increase to supplement, not supplant, their level of state spending for the implementation of activities enhanced under the Medicaid HCBS in effect as of April 1, 2021.

Previous wording

During the three months ended March 31, 2025, the Company did not received additional state funding provided by the ARPA. Of the total state funding received by the Company pursuant to the ARPA through March 31, 2025, the Company utilized $2.5 million during the three months ended March 31, 2025, primarily for caregivers and adding support to recruiting and retention efforts, included as a reduction of cost of service revenues in the Company’s Unaudited Condensed Consolidated Statements of Income. As of March 31, 2025, the deferred portion of ARPA funding of $8.7 million is included within Government stimulus advances on the Company’s Unaudited Condensed Consolidated Balance Sheets.

Current wording

During the three and six months ended June 30, 2025, the Company did not receive additional state funding provided by the ARPA. Of the total state funding received by the Company pursuant to the ARPA through June 30, 2025, the Company utilized $0.8 million and $3.3 million during the three and six months ended June 30, 2025, respectively, primarily for caregivers and adding support to recruiting and retention efforts, included as a reduction of cost of service revenues in the Company’s Unaudited Condensed Consolidated Statements of Income. As of June 30, 2025, the deferred portion of ARPA funding of $7.9 million is included within Government stimulus advances on the Company’s Unaudited Condensed Consolidated Balance Sheets.

Previous wording

Cash flows from operating activities represent the inflow of cash from our payors and the outflow of cash for payroll and payroll taxes, operating expenses, interest, and taxes. Net cash provided by operating activities was $18.9 million for the three months ended March 31, 2025, compared to net cash provided by operating activities of $38.7 million for the same period in 2024. The decrease in cash provided by operations was primarily due to the timing of receipts on accounts receivable and the timing of government stimulus funds. The changes in accounts receivable were primarily related to the growth in revenue and a decrease in days sales outstanding (“DSO”) during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The related receivables due from the Illinois Department on Aging represented 18.5% and 20.8% of the Company’s net accounts receivable at March 31, 2025 and March 31, 2024, respectively.

Current wording

Cash flows from operating activities represent the inflow of cash from our payors and the outflow of cash for payroll and payroll taxes, operating expenses, interest, and taxes. Net cash provided by operating activities was $41.5 million for the six months ended June 30, 2025, compared to net cash provided by operating activities of $57.5 million for the same period in 2024. The decrease in cash provided by operations was primarily due to the timing of receipts on accounts receivable and the timing of government stimulus funds. The changes in accounts receivable were primarily related to the growth in revenue and a decrease in days sales outstanding (“DSO”) during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. The related receivables due from the Illinois Department on Aging represented 18.6% and 21.7% of the Company’s net accounts receivable at June 30, 2025 and June 30, 2024, respectively.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2025, primarily consisted of $3.4 million of net cash used for the Jacksonville Acquisition and the Great Lakes Acquisition, $1.9 million of cash used for property and equipment purchases, primarily related to our ongoing investments in technology infrastructure fixed assets, offset by $3.8 million in proceeds received relating to the New York Asset Sale. Net cash used in investing activities for the three months ended March 31, 2024 primarily consisted of $0.4 million of net cash used for the Upstate acquisition and $1.4 million of cash used for property and equipment purchases.

Current wording

Net cash used in investing activities for the six months ended June 30, 2025, primarily consisted of $3.4 million of net cash used for the Jacksonville Acquisition and the Great Lakes Acquisition, $3.1 million of cash used for property and equipment purchases, primarily related to our ongoing investments in technology infrastructure fixed assets, offset by $3.8 million in proceeds received relating to the New York Asset Sale and $2.9 million in proceeds received relating to the Gentiva Acquisition. Net cash used in investing activities for the six months ended June 30, 2024 primarily consisted of $0.4 million of net cash used for the Upstate acquisition and $2.4 million of cash used for property and equipment purchases, offset by $4.6 million in proceeds received relating to the New York Asset Sale.

Previous wording

Net cash used in financing activities for the three months ended March 31, 2025, primarily consisted of a $20.0 million payment on our revolving credit facility, offset by cash received from the exercise of stock options of $0.5 million. Net cash used in financing activities for the three months ended March 31, 2024 primarily consisted of $25.0 million payment on our revolving credit facility.

Current wording

Net cash used in financing activities for the six months ended June 30, 2025, primarily consisted of a $50.0 million payment on our revolving credit facility, offset by cash received from the exercise of stock options of $0.5 million. Net cash used in financing activities for the six months ended June 30, 2024 primarily consisted of $126.4 million payment on our revolving credit facility, offset by $175.6 million in net proceeds received from the Public Offering.

Previous wording

Gross accounts receivable as of March 31, 2025 and December 31, 2024 were approximately $138.0 million and $126.4 million, respectively. Outstanding accounts receivable, net of allowance for credit losses, increased by $11.7 million as of March 31, 2025 as compared to December 31, 2024. Accounts receivable for the Illinois Department on Aging increased approximately $6.3 million during the quarter ended March 31, 2025. Our collection procedures include review of account aging and direct contact with our payors. We have historically not used collection agencies. An uncollectible amount is written off to the allowance account after reasonable collection efforts have been exhausted.

Current wording

Gross accounts receivable as of June 30, 2025 and December 31, 2024 were approximately$143.1 million and $126.4 million, respectively. Outstanding accounts receivable, net of allowance for credit losses, increased by $17.2 million as of June 30, 2025 as compared to December 31, 2024. Accounts receivable for the Illinois Department on Aging increased approximately $6.3 million during the six months ended June 30, 2025. Our collection procedures include review of account aging and direct contact with our payors. We have historically not used collection agencies. An uncollectible amount is written off to the allowance account after reasonable collection efforts have been exhausted.

Previous wording

We calculate our DSO by taking the trade accounts receivable outstanding, net of allowance for credit losses for doubtful accounts, divided by the net service revenues for the last quarter, multiplied by the number of days in that quarter. Our DSOs were 37 days and 39 days at March 31, 2025 and December 31, 2024, respectively. The DSOs for our largest payor, the Illinois Department on Aging, were 48 days and 40 days at March 31, 2025 and December 31, 2024, respectively.

Current wording

We calculate our DSO by taking the trade accounts receivable outstanding, net of allowance for credit losses for doubtful accounts, divided by the net service revenues for the last quarter, multiplied by the number of days in that quarter. Our DSOs were 38 daysand 39 days at June 30, 2025 and December 31, 2024, respectively. The DSOs for our largest payor, the Illinois Department on Aging, were 39 days and 40 days at June 30, 2025 and December 31, 2024, respectively.