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 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.

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 38.6% and 36.7% of our net service revenues during the three months ended June 30, 2026 and 2025, respectively, and 38.4% and 36.5% of our net service revenues during the six months ended June 30, 2026 and 2025, 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 37.0% of our net service revenues during the three months ended September 30, 2026 and 2025, respectively, and 38.4%and 36.7% of our net service revenues during the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

As of June 30, 2026, we provided our services in 24 states through 264 offices. Our personal care segment also includes staffing services, with clients including assisted living facilities, nursing homes, and hospice facilities.

Current wording

As of September 30, 2026, we provided our services in 24 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

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 was occurring over time. 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.

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 was occurring over time. In connection with this transaction, the Company ceased operations in New York. See Note 3 to the Notes to Unaudited Condensed Consolidated Financial Statements,Acquisition and Divestiture, for additional details regarding our divestiture.

Previous wording

The personal care segment derives a significant amount of its net service revenues in Illinois, which represented 32.1% and 33.0% of our net service revenues for the both the three and six months ended June 30, 2026 and 2025, respectively.

Current wording

The personal care segment derives a significant amount of its net service revenues in Illinois, which represented 31.2% and 32.0% of our net service revenues for the three months ended September 30, 2026 and 2025, respectively, and accounted for 31.8% and 32.6% of our net service revenues for the nine months ended September 30, 2026 and 2025, 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 17.7% and 18.6% of our net service revenues for the three months ended June 30, 2026 and 2025, respectively, and accounted for 17.8% and 18.6% of our net service revenues for the six months ended June 30, 2026 and 2025, 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 17.4% and 18.1% of our net service revenues for the three months ended September 30, 2026 and 2025, respectively, and accounted for 17.6% and 18.4% of our net service revenues for the nine months ended September 30, 2026 and 2025, respectively.

Previous 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. 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. These rates remain stable under the Illinois fiscal year 2027 budget. CMS approved an amendment to Illinois’ Persons Who are Elderly waiver program that included the 2026 rate increase, effective January 1, 2026. Illinois’ current Persons Who are Elderly waiver expires September 30, 2026, unless CMS approves a renewal.

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. 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. These rates remain stable under the Illinois fiscal year 2027 budget. CMS approved an amendment to Illinois’ Persons Who are Elderly waiver program that included the 2026 rate increase, effective January 1, 2026. Effective October 1, 2026, CMS approved a five-year renewal of the Persons Who are Elderly waiver, which currently maintains the $30.80 hourly in-home service rate.

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. Effective July 1, 2026, the rate was adjusted to $17.05 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, 2026, the rate was adjusted to $17.05 per hour based on the increase in the CPI.

Previous 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 in 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 in future fiscal years to offset increases in 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 included an increase in hourly rates to $17.13 for in-home care services effective September 1, 2025.

Current wording

The Texas fiscal year 2026-2027 biennial budget included an increase in hourly rates to $17.13 for in-home care services effective September 1, 2025.

Previous wording

Hospice services provided to Medicare beneficiaries are paid under the Medicare Hospice Prospective Payment System, under which CMS sets a daily rate for each day a patient is enrolled in the hospice benefit. The daily rate depends on the level of care provided to a patient (routine home care, continuous home care, inpatient respite care, or general inpatient care). Daily rates are adjusted for factors such as area wage levels. CMS updates hospice payment rates each federal fiscal year. Effective October 1, 2025, CMS increased hospice payment rates by 2.6%. This reflects a 3.3% market basket increase and a negative 0.7 percentage point productivity adjustment. Hospices that do not satisfy quality reporting requirements are subject to a 4-percentage point reduction to the market basket update.

Current wording

Hospice services provided to Medicare beneficiaries are paid under the Medicare Hospice Prospective Payment System, under which CMS sets a daily rate for each day a patient is enrolled in the hospice benefit. The daily rate depends on the level of care provided to a patient (routine home care, continuous home care, inpatient respite care, or general inpatient care). Daily rates are adjusted for factors such as area wage levels. CMS updates hospice payment rates each federal fiscal year. Effective October 1, 2026, CMS increased hospice payment rates by 2.36%. This reflects a 3.2% market basket increase and a negative 0.9 percentage point productivity adjustment. Hospices that do not satisfy quality reporting requirements are subject to a 4-percentage point reduction to the market basket update.

Previous wording

Overall payments made by Medicare to each hospice provider number are subject to an inpatient cap and an aggregate cap. The inpatient cap limits the number of days of inpatient care for which Medicare will pay to no more than 20% of total patient care days. Days in excess of the limitation are paid at the routine home care rate. The aggregate cap limits the total Medicare reimbursement that a hospice may receive in a cap year (typically the federal fiscal year) based on an annual per-beneficiary cap amount, which is set each federal fiscal year, and the number of Medicare patients served. The per-beneficiary cap amount was updated to $35,361.44 for federal fiscal year 2026. If a hospice’s Medicare payments exceed its inpatient or aggregate caps, it must repay Medicare the excess amount.

Current wording

Overall payments made by Medicare to each hospice provider number are subject to an inpatient cap and an aggregate cap. The inpatient cap limits the number of days of inpatient care for which Medicare will pay to no more than 20% of total patient care days. Days in excess of the limitation are paid at the routine home care rate. The aggregate cap limits the total Medicare reimbursement that a hospice may receive in a cap year (typically the federal fiscal year) based on an annual per-beneficiary cap amount, which is set each federal fiscal year, and the number of Medicare patients served. The per-beneficiary cap amount was updated to $36,174.75 for federal fiscal year 2027. If a hospice’s Medicare payments exceed its inpatient or aggregate caps, it must repay Medicare the excess amount.

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, 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.

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 have resulted in and are expected to continue to result in Medicaid spending reductions and changes in the structure and 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

In addition, the President has issued executive orders that impact or may impact the healthcare industry. Further, some members of Congress and the presidential administration have raised potential measures intended to accelerate the shift from traditional Medicare to Medicare Advantage or eliminating some or all of the consumer protections established by the ACA.

Current wording

In addition, the President has issued executive orders that impact or may impact the healthcare industry. Further, some members of Congress and the presidential administration have raised potential measures intended to accelerate the shift from traditional Medicare to Medicare Advantage or eliminate some or all of the consumer protections established by the ACA.

Previous wording

CMS has increased program integrity efforts within the Medicare and Medicaid programs, including by withholding or deferring federal Medicaid funding in states that federal administrators determine do not have sufficient anti-fraud systems, which may delay or otherwise affect the reimbursement providers in affected states receive. In May 2026, CMS issued a six-month nationwide moratorium on new Medicare enrollments for hospices and home health agencies, temporarily restricting all new applications and branch expansions. The moratorium may also indirectly affect Medicaid enrollment in states requiring Medicare certification for Medicaid enrollment. The rule also requires a home health or hospice to submit an initial Medicare application if it experiences a change in majority ownership within 36 months after its initial enrollment or most recent change in majority ownership.

Current wording

CMS has increased program integrity efforts within the Medicare and Medicaid programs, including by withholding or deferring federal Medicaid funding in states (currently, California and Minnesota) that federal administrators determine do not have sufficient anti-fraud systems, which may delay or otherwise affect the reimbursement providers in affected states receive. In May 2026, CMS issued a six-month nationwide moratorium on new Medicare enrollments for hospices and home health agencies, temporarily restricting all new applications and branch expansions. The rule also effectively limits transactional activity requiring a new application under the existing 36-month rule, which requires a home health or hospice to submit an initial Medicare application if it experiences a change in majority ownership within 36 months after its initial enrollment or most recent change in majority ownership. The moratorium may also indirectly affect Medicaid enrollment in states requiring Medicare certification for Medicaid enrollment. In addition, some states have imposed similar temporary Medicaid moratoria for specific provider types, including home health, hospice, and personal care providers.

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 26.9% and 26.4% for the three months ended June 30, 2026 and 2025, respectively. The effective income tax rates were 25.0% and 24.0% for the six months ended June 30, 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 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 26.9%and 24.7% for the three months ended September 30, 2026 and 2025, respectively. The effective income tax rates were 25.7% and 24.3% for the nine months ended September 30, 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 and non-deductible compensation, partially offset by the use of federal employment tax credits and excess tax benefit.

Previous wording

Net service revenues increased by 8.0% to$377.4 million for the three months ended June 30, 2026 compared to$349.4 million for the three months ended June 30, 2025. Revenue increased by$26.8 million in our personal care segment, increased by$2.0 million in our hospice segment and decreased by $0.9 million in our home health segment during the three months ended June 30, 2026, compared to the same period in 2025. The increase in our personal care segment was primarily attributable to organic growth in billable hours combined with the HomeCourt Acquisition, the Gold Horses Acquisition and the Helping Hands Acquisition. The increase in our hospice segment revenue was due to organic growth. The decrease in our home health segment was primarily attributed to lower patient volumes.

Current wording

Net service revenues increased by 7.0% to$387.7 million for the three months ended September 30, 2026 compared to$362.3 million for the three months ended September 30, 2025. Revenue increased by$25.2 million in our personal care segment, increased by$0.1 million in our hospice segment and increased by $0.1 million in our home health segment during the three months ended September 30, 2026, compared to the same period in 2025. The increase in our personal care segment was primarily attributable to organic growth in billable hours combined with the HomeCourt Acquisition, the Gold Horses Acquisition and the Helping Hands Acquisition. Net service revenues in our hospice and home health segments remained relatively consistent with the prior year period.

Previous wording

General and administrative expenses increased to$78.5 million for the three months ended June 30, 2026, compared to$77.1 million for the three months ended June 30, 2025. The increase in general and administrative expenses was primarily due to acquisition activity, including the HomeCourt Acquisition, the Gold Horses Acquisition and the Helping Hands Acquisition, which contributed to an increase in administrative employee wage, bonus, tax, and benefit costs of $4.0 million, partially offset by a $1.7 million decrease in professional fees and other decreases in general and administrative expenses. General and administrative expenses, expressed as a percentage of net service revenues, were 20.8% for the three months ended June 30, 2026, compared to 22.1% for the three months ended June 30, 2025.

Current wording

General and administrative expenses increased to$80.4 million for the three months ended September 30, 2026, compared to$79.4 million for the three months ended September 30, 2025. The increase in general and administrative expenses reflected a $2.4 million increase in administrative employee wage, bonus, tax and benefit costs associated in part with the HomeCourt Acquisition, the Gold Horses Acquisition and the Helping Hands Acquisition, as well as a $1.9 million increase in acquisition expenses. These increases were partially offset by a $1.7 million decrease in professional fees, a $1.3 million decrease in stock-based compensation and other decreases in general and administrative expenses. General and administrative expenses, expressed as a percentage of net service revenues, were 20.7% for the three months ended September 30, 2026, compared to 21.9% for the three months ended September 30, 2025.

Previous wording

Interest expense decreased to$1.7 million for the three months ended June 30, 2026 from$3.5 million for the three months ended June 30, 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 June 30, 2026, compared to the three months ended June 30, 2025.

Current wording

Interest expense decreased to $1.3 million for the three months ended September 30, 2026 from$3.3 million for the three months ended September 30, 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 September 30, 2026, compared to the three months ended September 30, 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 26.9% and 26.4% for the three months ended June 30, 2026 and 2025, respectively. Our higher effective income tax rate for the three months ended June 30, 2026 was principally due to a lower excess tax expense with a lower benefit from the use of federal employment tax credits. For the three months ended June 30, 2026 and 2025, the excess tax benefit and federal employment tax credits were 1.2% and 2.6%, 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 26.9% and 24.7% for the three months ended September 30, 2026 and 2025, respectively. Our higher effective income tax rate for the three months ended September 30, 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 September 30, 2026 and 2025, the excess tax benefit and federal employment tax credits were 0.7% and 6.5%, respectively.

Previous wording

Net service revenues increased by 7.8% to$741.0 million for thesix months ended June 30, 2026 compared to$687.2 million for thesix months ended June 30, 2025. Revenue increased by$49.6 million in our personal care segment, increased by$6.4 million in our hospice segment and decreased by $2.1 million in our home health segment during thesix months ended June 30, 2026, compared to the same period in 2025. The increase in our personal care segment was primarily attributable to organic growth in billable hours combined with the HomeCourt Acquisition, the Gold Horses Acquisition and the Helping Hands Acquisition. The increase in our hospice segment revenue was due to organic growth. The decrease in our home health segment was primarily attributed to lower patient volumes.

Current wording

Net service revenues increased by 7.6% to$1,128.8 million for thenine months ended September 30, 2026 compared to$1,049.5 million for thenine months ended September 30, 2025. Revenue increased by$74.9 million in our personal care segment, increased by$6.5 million in our hospice segment and decreased by $2.1 million in our home health segment during thenine months ended September 30, 2026, compared to the same period in 2025. The increase in our personal care segment was primarily attributable to organic growth in billable hours combined with the HomeCourt Acquisition, the Gold Horses Acquisition and the Helping Hands Acquisition. The increase in our hospice segment revenue was due to organic growth. The decrease in our home health segment was primarily attributed to lower patient visits.

Previous wording

Gross profit, expressed as a percentage of net service revenues, was 32.0% for thesix months ended June 30, 2026, compared to 32.2% for the same period in 2025.

Current wording

Gross profit, expressed as a percentage of net service revenues, was 32.1% for thenine months ended September 30, 2026, compared to 32.2% for the same period in 2025.

Previous wording

General and administrative expenses increased to$156.3 million for thesix months ended June 30, 2026, compared to$150.3 million for thesix months ended June 30, 2025. The increase in general and administrative expenses was primarily due to acquisition activity, including the HomeCourt Acquisition, the Gold Horses Acquisition and the Helping Hands Acquisition, which contributed to an increase in administrative employee wage, bonus, tax, and benefit costs of $7.4 million, partially offset by a $1.9 million decrease in professional fees and other decreases in general and administrative expenses. General and administrative expenses, expressed as a percentage of net service revenues, were 21.1% for thesix months ended June 30, 2026, compared to 21.9% for thesix months ended June 30, 2025.

Current wording

General and administrative expenses increased to$236.7 million for thenine months ended September 30, 2026, compared to$229.7 million for thenine months ended September 30, 2025. The increase in general and administrative expenses reflected a $9.8 million increase in administrative employee wage, bonus, tax and benefit costs associated in part with the HomeCourt Acquisition, the Gold Horses Acquisition and the Helping Hands Acquisition, partially offset by a $3.6 million decrease in professional fees. General and administrative expenses, expressed as a percentage of net service revenues, were 21.0% for thenine months ended September 30, 2026, compared to 21.9% for thenine months ended September 30, 2025.

Previous wording

Interest expense decreased to$3.9 million for thesix months ended June 30, 2026 from$7.5 million for thesix months ended June 30, 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 six months ended June 30, 2026, compared to thesix months ended June 30, 2025.

Current wording

Interest expense decreased to$5.1 million for thenine months ended September 30, 2026 from$10.9 million for thenine months ended September 30, 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 thenine months ended September 30, 2026, compared to thenine months ended September 30, 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 25.0% and 24.0% for the six months ended June 30, 2026 and 2025, respectively. Our higher effective income tax rate for the six months ended June 30, 2026, was principally due to a lower excess tax benefit with a lower benefit from the use of federal employment tax credits. For the six months ended June 30, 2026 and 2025, the excess tax benefit and federal employment tax credits were 3.1% and 4.8%, 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 25.7% and 24.3% for the nine months ended September 30, 2026 and 2025, respectively. Our higher effective income tax rate for the nine months ended September 30, 2026, was principally due to a lower excess tax benefit with a lower benefit from the use of federal employment tax credits. For the nine months ended September 30, 2026 and 2025, the excess tax benefit and federal employment tax credits were 2.3% and 5.4%, respectively.

Previous 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 both the three and six months ended June 30, 2026 and 2025, respectively. One payor, the Illinois Department on Aging, accounted for 17.7% and 18.6% of net service revenues for the three months ended June 30, 2026 and 2025, respectively, and accounted for 17.8% and 18.6% of net service revenues for the six months ended June 30, 2026 and 2025, respectively.

Current wording

The personal care segment derives a significant amount of its net service revenues from operations in Illinois, which represented 31.2% and 32.0% of our net service revenues for the three months ended September 30, 2026 and 2025, respectively, and accounted for 31.8% and 32.6% of our net service revenues for the nine months ended September 30, 2026 and 2025, respectively. One payor, the Illinois Department on Aging, accounted for 17.4% and 18.1% of net service revenues for the three months ended September 30, 2026 and 2025, respectively, and accounted for 17.6% and 18.4% of net service revenues for the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

Net service revenues from state, local, and other governmental programs accounted for 50.3% and 51.4% of net service revenues for the three months ended June 30, 2026 and 2025, respectively. Managed care organizations accounted for 47.1% and 45.3% of net service revenues for the three months ended June 30, 2026 and 2025, 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 50.0% and 51.4% of net service revenues for the six months ended June 30, 2026 and 2025, respectively. Managed care organizations accounted for 47.3% and 45.3% of net service revenues for the six months ended June 30, 2026 and 2025, 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 50.2% and 50.5% of net service revenues for the three months ended September 30, 2026 and 2025, respectively. Managed care organizations accounted for 47.3% and 46.2% of net service revenues for the three months ended September 30, 2026 and 2025, 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 50.1% and 51.1% of net service revenues for the nine months ended September 30, 2026 and 2025, respectively. Managed care organizations accounted for 47.3% and 45.6% of net service revenues for the nine months ended September 30, 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 10.0% and 9.4% for the three and six months ended June 30, 2026 respectively, compared to the three and six months ended June 30, 2025. Net service revenues reflected a 5.6% and 5.4% increase in billable hours and a 4.2% and 3.7% increase in revenues per billable hour for the three and six months ended June 30, 2026, respectively.

Current wording

Net service revenues increased by 9.2% and 9.3% for the three and nine months ended September 30, 2026 respectively, compared to the three and nine months ended September 30, 2025. Net service revenues reflected a 4.0% and 4.9% increase in billable hours and a 5.0% and 4.2% increase in revenues per billable hour for the three and nine months ended September 30, 2026, respectively.

Previous wording

Gross profit, expressed as a percentage of net service revenues, was 28.9% for the three months ended June 30, 2026 from 28.2% for the three months ended 2025 and increased to 28.3% for thesix months ended June 30, 2026 from 27.9% for the six months ended June 30, 2025. The increases primarily reflected higher revenues per billable hour.

Current wording

Gross profit, expressed as a percentage of net service revenues, increased to 28.3% for the three months ended September 30, 2026 from 27.4% for the three months ended September 30, 2025 and increased to 28.3% for thenine months ended September 30, 2026 from 27.7% for the nine months ended September 30, 2025. The increases primarily reflected higher revenues per billable hour.

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, were 8.5% and 9.0% for the three months ended June 30, 2026 and 2025, respectively, and 8.7%and 9.1%for thesix months ended June 30, 2026 and 2025, 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, were 8.4% and 8.9% for the three months ended September 30, 2026 and 2025, respectively, and 8.6%and 9.0%for thenine months ended September 30, 2026 and 2025, respectively.

Previous wording

Net service revenues from Medicare accounted for 93.4% and 93.0% for the three months ended June 30, 2026 and 2025, respectively, and 93.9% and 92.7% for the six months ended June 30, 2026 and 2025, respectively. Net service revenues from managed care organizations accounted for 3.0% and 3.2% for the three months ended June 30, 2026 and 2025, respectively, and for 2.6% and 3.3% for the six months ended June 30, 2026 and 2025, respectively.

Current wording

Net service revenues from Medicare accounted for 94.3% and 93.1% for the three months ended September 30, 2026 and 2025, respectively, and 94.1% and 92.9% for the nine months ended September 30, 2026 and 2025, respectively. Net service revenues from managed care organizations accounted for 2.7% and 3.2% for the three months ended September 30, 2026 and 2025, respectively, and for 2.6% and 3.2% for the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

Net service revenues increased by 3.3% and 5.2% for the three and six months ended June 30, 2026, respectively, compared to the three and six months ended June 30, 2025. Net services revenues included organic growth in average daily census and higher revenues per patient day.

Current wording

Net service revenues increased by 0.2% and 3.4% for the three and nine months ended September 30, 2026, respectively, compared to the three and nine months ended September 30, 2025. Net service revenues included organic growth in average daily census during both periods, partially offset by lower revenues per patient day during the three months ended September 30, 2026.

Previous wording

Gross profit, expressed as a percentage of net service revenues, was 44.0% and 47.9% for the three months ended June 30, 2026 and 2025, respectively, and 45.2% and 47.7% for the six months ended June 30, 2026 and 2025, respectively. The decreases were primarily attributable to an increase in direct wages, taxes and benefit costs as a percentage of net service revenues.

Current wording

Gross profit, expressed as a percentage of net service revenues, was 45.7% and 49.4% for the three months ended September 30, 2026 and 2025, respectively, and 45.4% and 48.3% for the nine months ended September 30, 2026 and 2025, respectively. The decreases were primarily attributable 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 25.2% and 24.1% for the three months ended June 30, 2026 and 2025, respectively, and 24.6% and 23.9% for the six months ended June 30, 2026 and 2025, 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 23.7% and 22.1% for the three months ended September 30, 2026 and 2025, respectively, and 24.3% and 23.2% for the nine months ended September 30, 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 63.5% and 69.4%, managed care organizations accounted for 25.7% and 23.6%, and state, local, and other governmental programs accounted for 7.7% and 4.4% for the three months ended June 30, 2026 and 2025, respectively. Net service revenues from Medicare accounted for 62.3% and 69.7%, managed care organizations accounted for 24.7% and 22.4%, and state, local, and other governmental programs accounted for 9.9% and 5.2% for the six months ended June 30, 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.

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 63.3% and 65.9%, managed care organizations accounted for 25.0% and 25.5%, and state, local, and other governmental programs accounted for 8.0% and 5.6% for the three months ended September 30, 2026 and 2025, respectively. Net service revenues from Medicare accounted for 62.7% and 68.4%, managed care organizations accounted for 24.8% and 23.4%, and state, local, and other governmental programs accounted for 9.3% and 5.3% for the nine months ended September 30, 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

Net service revenues decreased by 4.8% and 5.9% for the three and six months ended June 30, 2026, respectively, compared to the three and six months ended June 30, 2025. Net service revenues primarily reflected lower patient visits, partially offset by a favorable payor mix.

Current wording

Net service revenues increased by 0.4% and decreased by 3.8% for the three and nine months ended September 30, 2026, respectively, compared to the three and nine months ended September 30, 2025. Net service revenues remained relatively consistent for the three months ended September 30, 2026, compared to the prior year period. The decrease in net service revenues for the nine months ended September 30, 2026 primarily reflected lower patient visits, partially offset by a favorable payor mix.

Previous wording

Gross profit, expressed as a percentage of net service revenues, was 44.5% and 45.9% for the three months ended June 30, 2026 and 2025, respectively, and 44.9% and 42.9% for the six months ended June 30, 2026 and 2025, respectively. The decrease for the three months ended June 30, 2026 was primarily attributable to an increase in direct wages, taxes and benefit costs as a percentage of net service revenues. The increase for the six months ended June 30, 2026 was primarily attributable to a decrease in direct wages, taxes and benefit costs as a percentage of net service revenues.

Current wording

Gross profit, expressed as a percentage of net service revenues, was 43.2% and 39.8% for the three months ended September 30, 2026 and 2025, respectively, and 44.3% and 41.9% for the nine months ended September 30, 2026 and 2025, respectively. The increase for both the three and nine months ended September 30, 2026 was primarily attributable to a decrease in direct wages, taxes and benefit costs as a percentage of net service revenues.

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, were 25.4% and 21.6% for the three months ended June 30, 2026 and 2025, respectively, and 25.9% and 22.4% for the six months ended June 30, 2026 and 2025, 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 25.9% and 25.4% for the three months ended September 30, 2026 and 2025, respectively, and 25.9% and 23.4% for the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

Our primary sources of liquidity are cash on hand and cash from operations and borrowings under our credit facility. At June 30, 2026 and December 31, 2025, we had cash balances of $99.6 million and $81.6 million, respectively. At June 30, 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.

Current wording

Our primary sources of liquidity are cash on hand and cash from operations and borrowings under our credit facility. At September 30, 2026 and December 31, 2025, we had cash balances of $98.5 million and $81.6 million, respectively. At September 30, 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. This credit facility matures on July 30, 2028.

Previous wording

During the six months ended June 30, 2026, we repaid$60.0 million under our revolving credit facility. As of June 30, 2026, we had a total of $64.3 million in revolving loans, with an interest rate of 5.40% 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$577.8 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.

Current wording

During the nine months ended September 30, 2026, we repaid $100.0 million under our revolving credit facility. As of September 30, 2026, we had a total of $24.3 million in revolving loans, with an interest rate of 5.65%, 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 $617.8 million available for borrowing under our credit facility. At December 31, 2025, we had a total of $124.3 million in revolving credit loans, with an interest rate of 5.48%, outstanding on our credit facility.