Addus HomeCare Corp

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 federal government shutdowns, any lapse in appropriations and 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 w…

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 inflation and interest rates, legislative and political developments, including federal government shutdowns, any lapse in appropriations and 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 the executive branch of the federal government; 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 wit…

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 37.0% and 34.3% of our net service revenues during the three months ended September 30, 2025 and 2024, respectively, and 36.7% and 35.1% of our net service revenues during the nine months ended September 30, 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 38.3% and 36.4% of our net service revenues during the three months ended March 31, 2026 and 2025, respectively.

Previous wording

As of September 30, 2025, we provided our services in 23 states through 265 offices. We served approximately 96,000 and 80,000 discrete individuals, respectively, during the nine months ended September 30, 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 March 31, 2026, we provided our services in 23 states through 263 offices. Our personal care segment also includes staffing services, with clients including assisted living facilities, nursing homes, and hospice facilities.

Previous wording

On January 1, 2025, the Company completed the Jacksonville Acquisition for approximately $0.8 million, with funding provided by available cash. With the Jacksonville Acquisition, the Company expanded its personal care segment in Florida and recorded goodwill of $0.8 million.

Current wording

On January 1, 2025, the Company completed its acquisition of its Jacksonville affiliate (the “Jacksonville Acquisition”) for approximately $0.8 million, with funding provided by available cash. With the Jacksonville Acquisition, the Company expanded its personal care segment in Florida and recorded goodwill of $0.8 million.

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.

Current wording

On March 1, 2025, the Company completed its acquisition of the assets of Great Lakes Home Care Unlimited, LLC (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

On August 1, 2025, the Company completed the Helping Hands Acquisition, for approximately $21.4 million, with funding through the Company’s revolving credit facility and available cash. With the purchase of Helping Hands, the Company expanded its services within its personal care segment and entered the hospice and home health markets in Pennsylvania and recognized goodwill in its personal care segment of $19.0 million.

Current wording

On August 1, 2025, the Company completed its acquisition of Helping Hands Home Care Service, Inc. (the “Helping Hands Acquisition”), for approximately $21.4 million, with funding through the Company’s revolving credit facility and available cash. With the purchase of Helping Hands, the Company expanded its services within its personal care segment and entered the hospice and home health markets in Pennsylvania and recognized goodwill in its personal care segment of $19.0 million.

Previous wording

Effective May 20, 2024, we entered into the New York Asset Sale. The Company entered into a consulting agreement with the purchaser, as the transfer of clients and caregivers and payment for assets pursuant to the New York Asset Sale is occurring over time as regulatory approvals are received, coordination of the transfer of clients and caregivers occurs, and the change of control takes place. In connection with this transaction, the Company ceased operations in New York. See Note 3 to the Notes to Unaudited Condensed Consolidated Financial Statements,Divesture, for additional details regarding our divestiture.

Current wording

Effective May 20, 2024, we entered into the New York Asset Sale. The Company entered into a consulting agreement with the purchaser, as the transfer of clients and caregivers and payment for assets pursuant to the New York Asset Sale is occurring over time as regulatory approvals are received, coordination of the transfer of clients and caregivers occurs, and the change of control takes place. In connection with this transaction, the Company ceased operations in New York. See Note 3 to the Notes to Unaudited Condensed Consolidated Financial Statements,Divestiture, for additional details regarding our divestiture.

Previous wording

Our payors are principally federal, state, and local governmental agencies and managed care organizations. The federal, state, and local programs under which the agencies operate are subject to legislative and budgetary changes and other risks that can influence reimbursement rates. We are experiencing a transition of business from government payors to managed care organizations, which we believe aligns with our emphasis on coordinated care and the reduction of the need for acute care.

Current wording

Our payors are principally federal, state, and local governmental agencies and managed care organizations. The federal, state, and local programs under which the agencies operate are subject to legislative and budgetary changes and other risks that can influence reimbursement rates. We have experienced a transition of business from government payors to managed care organizations, which we believe aligns with our emphasis on coordinated care and the reduction of the need for acute care.

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 18.1% and 21.4% of our net service revenues for the three months ended September 30, 2025 and 2024, respectively, and accounted for 18.4% and 21.1% of our net service revenues for the nine months ended September 30, 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 17.8% and 18.5% of our net service revenues for the three months ended March 31, 2026 and 2025, respectively.

Previous wording

The Illinois fiscal year 2025 budget included an increase in hourly rates for in-home care services to $29.63, effective January 1, 2025, and required a minimum wage of $18.00 per hour for direct service workers. CMS approved an amendment to Illinois’ Persons Who are Elderly waiver program that included this rate increase, effective January 1, 2025.

Current wording

As noted above, we derive a significant amount of our net service revenues in Illinois. Changes to reimbursement rates and minimum wage requirements may materially impact our revenues. For example, the Illinois fiscal year 2026 budget included an increase in hourly rates for in-home care services to $30.80, effective January 1, 2026, and required a minimum wage of $18.75 per hour for direct service workers. CMS approved an amendment to Illinois’ Persons Who are Elderly waiver program that included this rate increase, effective January 1, 2026.

Previous wording

Our business will benefit from the rate increases noted above as planned for 2025, but there is no assurance that there will be additional rate increases in Illinois for fiscal years beyond fiscal year 2025 to offset increases to minimum wage, and our financial performance will be adversely impacted for any periods in which an additional offsetting reimbursement rate increase is not in effect.

Current wording

Our business will benefit from the rate increases noted above for 2026, but there is no assurance that there will be additional rate increases in Illinois for fiscal years beyond fiscal year 2026 to offset increases to minimum wage, and our financial performance will be adversely impacted for any periods in which an additional offsetting reimbursement rate increase is not in effect.

Previous wording

The Texas fiscal year 2026 budget includes an increase in hourly rates to $17.13 for in-home care services effective September 1, 2025.

Current wording

The Texas fiscal year 2026 budget included an increase in hourly rates to $17.13 for in-home care services effective September 1, 2025.

Previous wording

CMS updates the HHPPS payment rates each calendar year. For calendar year 2025, CMS estimates that Medicare payments to home health agencies will increase by 0.5%. This is based on a home health payment update percentage of 2.7%, which reflects a 3.2% market basket update, reduced by a productivity adjustment of 0.5 percentage points, and an estimated 1.8% decrease associated with the transition to the PDGM, among other changes. Home health providers that do not comply with quality data reporting requirements are subject to a 2-percentage point reduction to their market basket update. In addition, Medicare requires home health agencies to submit a one-time Notice of Admission (“NOA”) for each patient that establishes that the beneficiary is under a Medicare home health period of care. Failure to submit the NOA within five calendar days from the start of care will result in a reduction to the 30-day period payment amount for each day from the start of care date until the date the NOA is submitted.

Current wording

CMS updates the HHPPS payment rates each calendar year. For calendar year 2026, CMS estimates that Medicare payments to home health agencies will decrease by 1.3%. This is based on a home health payment update percentage of 2.4%, which reflects a 3.2% market basket update, reduced by a productivity adjustment of 0.8 percentage points, among other changes. Home health providers that do not comply with quality data reporting requirements are subject to a 2-percentage point reduction to their market basket update. In addition, Medicare requires home health agencies to submit a one-time Notice of Admission (“NOA”) for each patient that establishes that the beneficiary is under a Medicare home health period of care. Failure to submit the NOA within five calendar days from the start of care will result in a reduction to the 30-day period payment amount for each day from the start of care date until the date the NOA is submitted.

Previous wording

In certain states, payment of claims may be impacted by the Review Choice Demonstration for Home Health Services, a program intended to identify and prevent fraud, reduce the number of Medicare appeals and improve provider compliance with Medicare program requirements. The program is currently limited to home health agencies in Illinois, Ohio, Oklahoma, North Carolina, Florida, and Texas. Providers in states subject to the Review Choice Demonstration for Home Health Services may initially select either pre-claim review or post-payment review. Home health agencies that maintain high compliance levels are eligible for additional options that may be less burdensome. This program has not had a material impact on our results of operations or financial position.

Current wording

Payment of claims may be impacted by the Review Choice Demonstration for Home Health Services, a program intended to identify and prevent fraud, reduce the number of Medicare appeals and improve provider compliance with Medicare program requirements. The program is currently limited to home health agencies in Illinois, Ohio, Oklahoma, North Carolina, Florida, and Texas. Providers in states subject to the Review Choice Demonstration for Home Health Services may initially select either pre-claim review or post-payment review. Home health agencies that maintain high compliance levels are eligible for additional options that may be less burdensome. This program has not had a material impact on our results of operations or financial position.

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 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.

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. Some states have adopted or may consider adopting similar caregiver compensation requirements.

Previous wording

Changes resulting from legislation and administrative actions at the federal and state levels, may impact home care and other healthcare providers. Federal and state 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 budget reconciliation legislation enacted on July 4, 2025, commonly known as the “One Big Beautiful Bill Act” (“OBBBA”), includes policy changes that are expected to reduce federal healthcare spending, including through changes to the Medicaid program, if the law is implemented as enacted. The OBBBA requires changes to Medicaid financing mechanisms such as provider taxes and state-directed payment arrangements. These changes may prohibit states from establishing new provider taxes or increasing rates of existing provider taxes, and may limit the structure and applicability of such taxes, with greater restrictions in states that have expanded Medicaid. Some of these changes, which will be phased in over time, are intended to reduce the federal matching funds received by state Medicaid programs. In addition, the OBBBA limits Medicaid eligibility and increases administrative and financial obligations for states and enrollees, although most of these reforms are focused on adults in the Medicaid expansion population. Future Medicaid reform initiatives at the federal and state levels may further reduce 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 home care businesses, including our business, will be less significant than the impact on other healthcare businesses.

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, waiver programs and other aspects of state Medicaid programs at the state level. For example, the budget reconciliation legislation enacted on July 4, 2025, commonly known as the “One Big Beautiful Bill Act” (“OBBBA”), includes provisions that are expected to result in Medicaid spending reductions and changes in administration of state Medicaid programs. Among other changes, the law requires changes to Medicaid financing mechanisms, including restrictions intended to reduce the federal matching funds received by state Medicaid programs, with greater restrictions in states that have expanded Medicaid. In addition, some members of Congress and the executive branch have raised, and Congress in the future may adopt, other proposals intended to reduce Medicaid expenditures such as restructuring the Medicaid program to give states a “block grant” or fixed amount of overall funding for their respective Medicaid programs or to impose spending caps such as per Medicaid beneficiary limits on federal contributions. Reductions in federal funding or changes to the federal funding formula for Medicaid under the OBBBA or future initiatives could have a significant impact, particularly in states that expanded Medicaid under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “ACA”), and especially if federal contributions for Medicaid expansion populations decrease and states are unable to offset the reductions. Decreased federal funding and increased state obligations and administrative burden could strain state budgets, which could result in state limitations on Medicaid eligibility or coverage, payment rate reductions, and changes to Medicaid waiver programs, among other effects.

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 rates were 24.7% and 26.1% for the three months ended September 30, 2025 and 2024, respectively. The effective income tax rates were 24.3% and 26.1% for the nine months ended September 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.

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 22.7% and 21.4% for the three months ended March 31, 2026 and 2025, 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

Net service revenues increased by 25.0% to$362.3 million for the three months ended September 30, 2025 compared to$289.8 million for the three months ended September 30, 2024. Revenue increased by$60.3 million in our personal care segment, by$11.6 million in our hospice segment and by $0.6 million in our home health segment during the three months ended September 30, 2025, compared to the same period in 2024. The increase in our personal care segment was primarily due to the completion of the Gentiva Acquisition on December 2, 2024 and the Helping Hands Acquisition on August 1, 2025. The increase in our hospice segment revenue was due to organic growth.

Current wording

Net service revenues increased by 7.7% to$363.6 million for the three months ended March 31, 2026 compared to$337.7 million for the three months ended March 31, 2025. Revenue increased by$22.8 million in our personal care segment, by$4.3 million in our hospice segment and decreased by $1.3 million in our home health segment during the three months ended March 31, 2026, compared to the same period in 2025. The increase in our personal care segment was primarily due to organic growth in billable hours combined with the Gold Horses Acquisition and the Helping Hands Acquisition. The increase in our hospice segment revenue was due to organic growth in average daily census. The decrease in our home health segment was primarily attributed to lower volumes.

Previous wording

Gross profit, expressed as a percentage of net service revenues, increased to 32.2% for thenine months ended September 30, 2025, compared to 31.9% for the same period in 2024 due to growth in our higher margin hospice segment and the New York Asset Sale.

Current wording

Gross profit, expressed as a percentage of net service revenues, was 31.9% for the three months ended March 31, 2026, compared to 31.9% for the same period in 2025.

Previous wording

General and administrative expenses increased to$79.4 million for the three months ended September 30, 2025, as compared to$62.8 million for the three months ended September 30, 2024. The increase in general and administrative expenses was primarily due to a non-recurring $1.5 million recruitment expense as well as the Gentiva and Helping Hands Acquisitions that resulted in an increase in administrative employee wage, bonus, tax, and benefit costs of $10.3 million. General and administrative expenses, expressed as a percentage of net service revenues, marginally increased to 21.9% for the three months ended September 30, 2025, from 21.7% for the three months ended September 30, 2024.

Current wording

General and administrative expenses increased to$77.8 million for the three months ended March 31, 2026, compared to$73.2 million for the three months ended March 31, 2025. The increase in general and administrative expenses was primarily due to acquisition activity, including the Gold Horses Acquisition and Helping Hands Acquisition, which contributed to an increase in administrative employee wage, bonus, tax, and benefit costs of $3.3 million. General and administrative expenses, expressed as a percentage of net service revenues, were 21.4% for the three months ended March 31, 2026, compared to 21.7% for the three months ended March 31, 2025.

Previous wording

Interest expense increased to$3.3 million for the three months ended September 30, 2025 from$0.6 million for the three months ended September 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 September 30, 2025,compared to the three months ended September 30, 2024.

Current wording

Interest expense decreased to$2.2 million for the three months ended March 31, 2026 from$4.0 million for the three months ended March 31, 2025. The decrease in interest expense was primarily due to lower average outstanding borrowings and a lower weighted average interest rate under our credit facility for the three months ended March 31, 2026,compared to the three months ended March 31, 2025.

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 24.7% and 26.1% for the three months ended September 30, 2025 and 2024, respectively. Our lower effective income tax rate for the three months ended September 30, 2025, was principally due to a higher excess tax benefit with a higher benefit from the use of federal employment tax credits. For the three months ended September 30, 2025 and 2024, the excess tax benefit and federal employment tax credits were 6.5% and 3.1%, 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 22.7% and 21.4% for the three months ended March 31, 2026 and 2025, respectively. Our higher effective income tax rate for the three months ended March 31, 2026, was principally due to a lower excess tax benefit with a lower benefit from the use of federal employment tax credits. For the three months ended March 31, 2026 and 2025, the excess tax benefit and federal employment tax credits were 5.3% and 7.2%, respectively.

Previous wording

The personal care segment derives a significant amount of its net service revenues in Illinois, which represented 32.0% and 38.6% of our net service revenues for the three months ended September 30, 2025 and 2024, respectively, and accounted for 32.6% and 38.5% of our net service revenues for the nine months ended September 30, 2025 and 2024, respectively.

Current wording

The personal care segment derives a significant amount of its net service revenues from operations in Illinois, which represented 32.1% and 33.0% of our net service revenues for the three months ended March 31, 2026 and 2025, respectively. One payor, the Illinois Department on Aging, accounted for 17.8% and 18.5% of net service revenues for the three months ended March 31, 2026 and 2025, respectively.

Previous wording

Net service revenues from state, local, and other governmental programs accounted for 50.5% and 54.2% of net service revenues for the three months ended September 30, 2025 and 2024, respectively. Managed care organizations accounted for 46.2% and 43.3% of net service revenues for the three months ended September 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 51.1% and 53.0% of net service revenues for the nine months ended September 30, 2025 and 2024, respectively. Managed care organizations accounted for 45.6% and 44.3% of net service revenues for the nine months ended September 30, 2025 and 2024, respectively, 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 49.7% and 51.5% of net service revenues for the three months ended March 31, 2026 and 2025, respectively. Managed care organizations accounted for 47.6% and 45.3% of net service revenues for the three months ended March 31, 2026 and 2025, respectively, with commercial insurance, private pay, and other payors accounting for the remainder of net service revenues.

Previous wording

Net service revenues increased by 28.0% for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. Net service revenues included a 8.2% decrease in revenues per billable hour for the three months ended September 30, 2025, due to lower reimbursement rates attributable to the Gentiva and Helping Hands Acquisitions, as well as the New York Asset Sale, compared to the three months ended September 30, 2024.

Current wording

Net service revenues increased by 8.8% for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Net service revenues included a 5.2% increase in billable hours and a 3.3% increase in revenues per billable hour for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

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 9.0% and 7.8% for the nine months ended September 30, 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 8.9%and 9.2%for thethree months ended March 31, 2026 and 2025, respectively.

Previous wording

Net service revenues from Medicare accounted for 93.1% and 91.5% for the three months ended September 30, 2025 and 2024, respectively, and 92.9% and 91.1% for the nine months ended September 30, 2025 and 2024, respectively. Net service revenues from managed care organizations accounted for 3.2% for both the three months ended September 30, 2025 and 2024, and 3.2% and 3.3% for the nine months ended September 30, 2025 and 2024, respectively.

Current wording

Net service revenues from Medicare accounted for 94.4% and 92.4% for the three months ended March 31, 2026 and 2025, respectively. Net service revenues from managed care organizations accounted for 2.3% and 3.3% for the three months ended March 31, 2026 and 2025 respectively.

Previous wording

Net service revenues increased by $11.6 million and $23.3 million for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024, primarily attributed to organic growth in average daily census.

Current wording

Net service revenues increased by$4.3 million for thethree months ended March 31, 2026 compared to thethree months ended March 31, 2025, primarily attributed to organic growth in average daily census, partially offset by a decrease in revenue per patient day.

Previous wording

Gross profit, expressed as a percentage of net service revenues, was 39.8% and 36.4% for the three months ended September 30, 2025 and 2024, respectively, and 41.9% and 36.2% for the nine months ended September 30, 2025 and 2024, respectively. For the three and nine months ended September 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 nine months ended September 30, 2024.

Current wording

Gross profit, expressed as a percentage of net service revenues, was 46.3% and 47.5% for the three months ended March 31, 2026 and 2025, respectively. For thethree months ended March 31, 2026, the decrease was mainly attributed to an increase in direct wages, taxes and benefit costs as a percentage of net service revenues.

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 22.1% and 24.6% for the three months ended September 30, 2025 and 2024, respectively, and 23.2% and 24.2% for the nine months ended September 30, 2025 and 2024, respectively.

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 23.7% for the three months ended March 31, 2026 and 2025, 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 65.9% and 70.6%, managed care organizations accounted for 25.5% and 24.7%, and state, local, and other governmental programs accounted for 5.6% and 0.0% for the three months ended September 30, 2025 and 2024, respectively. Net service revenues from Medicare accounted for 68.4% and 69.6%, managed care organizations accounted for 23.4% and 25.6%, and state, local, and other governmental programs accounted for 5.3% and 0.0% for the nine months ended September 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.

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 61.1% and 69.9%, managed care organizations accounted for 23.7% and 21.2%, and state, local, and other governmental programs accounted for 12.2% and 6.0% for the three months ended March 31, 2026 and 2025, 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

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 25.4% and 25.5% for the three months ended September 30, 2025 and 2024, respectively, and 23.4% and 25.9% for the nine months ended September 30, 2025 and 2024, respectively.

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, were 26.4% and 23.2% for the three months ended March 31, 2026 and 2025.

Previous wording

Our primary sources of liquidity are cash on hand and cash from operations and borrowings under our credit facility. At September 30, 2025 and December 31, 2024, we had cash balances of $101.9 million and $98.9 million, respectively. At September 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.

Current wording

Our primary sources of liquidity are cash on hand and cash from operations and borrowings under our credit facility. At March 31, 2026 and December 31, 2025, we had cash balances of $103.1 million and $81.6 million, respectively. At March 31, 2026, 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 nine months ended September 30, 2025, we used $3.4 million in cash to fund the Jacksonville Acquisition and the Great Lakes Acquisition, drew $11.3 million on the revolver portion of our credit facility to fund, in part, the purchase price paid in connection with the Helping Hands Acquisition, and repaid $80.0 million under our revolving credit facility. As of September 30, 2025, we had a total of $154.3 million in revolving loans, with an interest rate of 5.92% outstanding on our credit facility and after giving effect to the amount drawn on our credit facility, approximately$7.9 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 $650.0 million of capacity and $487.7 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 three months ended March 31, 2026, we repaid $30.0 million under our revolving credit facility. As of March 31, 2026, we had a total of $94.3 million in revolving loans, with an interest rate of 5.43% outstanding on our credit facility and after giving effect to the amount drawn on our credit facility, approximately$7.9 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 $650.0 million of capacity and$547.8 million available for borrowing under our credit facility. At December 31, 2025, we had a total of $124.3 million revolving credit loans, with an interest rate of 5.48%, outstanding on our credit facility.

Previous 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.

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 must submit periodic HCBS spending plans to CMS regarding the federal and state funds tied to the increase in federal matching funds. Although states were generally permitted to use the associated state funds by March 31, 2025, CMS granted extensions to several states and some state spending plans continue through September 30, 2026.

Previous wording

During the three and nine months ended September 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 September 30, 2025, the Company utilized $2.2 million and $5.5 million during the three and nine months ended September 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 September 30, 2025, the deferred portion of ARPA funding of $5.8 million is included within Government stimulus advances on the Company’s Unaudited Condensed Consolidated Balance Sheets.

Current wording

During the three months ended March 31, 2026, the Company received additional state funding provided by the ARPA of $6.2 million. Of the total state funding received by the Company pursuant to the ARPA through March 31, 2026, the Company utilized $3.2 million during the three months ended March 31, 2026, 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, 2026, the deferred portion of ARPA funding of $14.6 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 $92.7 million for the nine months ended September 30, 2025, compared to net cash provided by operating activities of $106.0 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 receipt and utilization 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 thenine months ended September 30, 2025 as compared to thenine months ended September 30, 2024. The related receivables due from the Illinois Department on Aging represented 16.6% and 21.7% of the Company’s net accounts receivable at September 30, 2025 and September 30, 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 $52.4 million for the three months ended March 31, 2026, compared to net cash provided by operating activities of $18.9 million for the same period in 2025. The increase in cash provided by operations was primarily due to the timing of receipts on accounts receivable and the timing of receipt and utilization 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, 2026 as compared to the three months ended March 31, 2025. The related receivables due from the Illinois Department on Aging represented 23.1% and 18.5% of the Company’s net accounts receivable at March 31, 2026 and March 31, 2025, respectively.

Previous wording

Net cash used in investing activities for the nine months ended September 30, 2025, primarily consisted of $24.2 million of net cash used for the Helping Hands Acquisition, the Jacksonville Acquisition and the Great Lakes Acquisition, $5.1 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 nine months ended September 30, 2024 primarily consisted of $0.4 million of net cash used for the Upstate acquisition and $4.4 million of cash used for property and equipment purchases, offset by $4.6 million in proceeds received relating to the New York Asset Sale.

Current wording

Net cash used in investing activities for the three months ended March 31, 2026, primarily consisted of $1.7 million of cash used for property and equipment purchases, primarily related to our ongoing investments in technology infrastructure fixed assets. 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.

Previous wording

Net cash used in financing activities for the nine months ended September 30, 2025, primarily consisted of an $80.0 million payment on our revolving credit facility, offset by borrowings of $11.3 million on the revolver portion of our credit facility to fund, in part, the Helping Hands Acquisition and cash received from the exercise of stock options of $1.5 million. Net cash provided by financing activities for the nine months ended September 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, and also included cash received from the exercise of stock options of $3.0 million.

Current wording

Net cash used in financing activities for the three months ended March 31, 2026, primarily consisted of $30.0 million payment on our revolving credit facility, offset by cash received from the exercise of stock options of $0.8 million. Net cash provided by financing activities for the three months ended March 31, 2025 primarily consisted of $20.0 million payment on our revolving credit facility, offset by cash received from the exercise of stock options of $0.5 million.

Previous wording

Gross accounts receivable as of September 30, 2025 and December 31, 2024 were approximately$136.9 million and $126.4 million, respectively. Outstanding accounts receivable, net of allowance for credit losses, increased by $11.2 million as of September 30, 2025 as compared to December 31, 2024. Accounts receivable for the Illinois Department on Aging decreased approximately $3.6 million during the nine months ended September 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.

Current wording

Outstanding accounts receivable, net of the allowance for credit losses as of March 31, 2026 and December 31, 2025 were approximately $144.8 million and $151.7 million, respectively, decreased by $6.9 million as of March 31, 2026 as compared to December 31, 2025. Accounts receivable for the Illinois Department on Aging decreased approximately $4.2 million during the three months ended March 31, 2026. 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.