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Operator: Good morning, and welcome to the Addus HomeCare’s First Quarter 2026 Earnings Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Drew Anderson. Please go ahead.

Darby Anderson: Thank you. Good morning, and welcome to the Addus HomeCare Corporation First Quarter 2026 Earnings Conference Call. Today’s call is being recorded. To the extent any non-GAAP financial measure is discussed in today’s call, you will find a reconciliation of that measure to the most directly comparable financial measure calculated according to GAAP by going to the company’s website and reviewing yesterday’s news release. This conference call may also contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding Addus’ expected quarterly and annual financial performance for 2026 or beyond. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements.

Without limiting the foregoing, discussions of forecasts, estimates, targets, plans, beliefs, expectations and the like are intended to identify forward-looking statements. You are hereby cautioned that these statements may be affected by important factors, among others, set forth in Addus’ filings with the Securities and Exchange Commission and in its first quarter 2026 news release. Consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements. The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. I would now like to turn the call over to the company’s Chairman and Chief Executive Officer, Mr. Dirk Allison.

Please go ahead, sir.

R. Allison: Thank you, Drew. Good morning, and welcome to our 2026 First Quarter Earnings Call. With me today are Brian Pop, our Chief Financial Officer; and Heather Dickson, our President and Chief Operating Officer. As we do on each of our quarterly earnings calls, I will begin with a few overall comments, and then Brian will discuss the first quarter results in more detail. Following our comments, the 3 of us would be happy to respond to any questions. As we announced yesterday afternoon, our total revenue for the first quarter of 2026 was $363.6 million, an increase of 7.7% and as compared to $337.7 million for the first quarter of 2025. This revenue growth resulted in an adjusted earnings per share of $1.62 and as compared to adjusted earnings per share for the first quarter of ’25 of $1.42, an increase of 14.1%.

Our adjusted EBITDA was $44.5 million compared to $40.6 million for the first quarter of 2025, an increase of 9.7%. For the first quarter of 2026, cash flow from operation was $52.4 million as compared to $18.9 million for the same period in 2025. As of March 31, 2026, we had cash on hand of approximately $103 million. With our strong cash flow in the first quarter, we reduced our bank debt to $94.3 million, leaving us with the financial flexibility to consider larger acquisitions as we continue to pursue expansion of our market reach and creating geographic density. During the first quarter, we saw an impact on revenue due to the widespread weather event that occurred towards the end of January. Our team did a good job of rescheduling affected personal care visits where possible.

However, we could not make up for every weather-impacted miss visit. While the amount of the revenue was immaterial to our company overall, we did see a loss of revenue of approximately $1.5 million as a result of these storms. However, February and March returned to our normalized revenue expectations. As we announced on May 1, we closed on the acquisition of the Personal Care operations of home court home care based in Fort Wayne, Indiana. This acquisition marks our entry into an attractive state, which is adjacent to our largest personal care market of Illinois. We have been interested in Indiana for some time as over the past 3 years, they increased rates and worked to eliminate client wait lists. I’m excited to welcome all of our new team members from home court home care.

We have also entered into a definitive purchase agreement for an additional personal care operation in Indiana, which will complement HomeCourt home care. We anticipate that this additional Indiana acquisition should close in the coming months subject to customary regulatory approvals. These 2 acquisitions continue our strategy of entering new markets with scale and where we have the ability to expand our services. As we mentioned on our last earnings call, the State of Illinois increased our rates in personal care service effective on January 1, 2026, adding approximately $17.5 million in annualized revenues. This most recent rate increase continues to show the important support we are receiving from our state partners as we continue to provide these much-needed services to our elderly and disabled clients.

We also understand the New Mexico legislature included increased funding of $10 million for home and community-based services in the budget for the upcoming fiscal year. We are waiting for communications from the New Mexico Medicaid department regarding how and to which programs the funding will be extended. As we have stated before, we continue to believe that the 80-20 provision of the CMS Medicaid access rule will be eliminated in the near future. While implementation is still several years away and has no current impact on our business or financial performance, we believe this outcome would be an encouraging development for both our industry and our company. All our recent communications indicate that this part of the Medicaid access rule is expected to be eliminated this year.

During the first quarter of 2026 we continued to experience positive current trends in our Personal Care segment. Our number of hires for [indiscernible] in the first quarter of 2026 was 108, up sequentially from 103 hires per day in the fourth quarter of last year and consistent with the first quarter of 2021. We achieved this number in spite of the impact of the weather event I mentioned earlier. As we have mentioned in the last few quarters, our clinical hiring remains consistent and has been mostly stable outside of a few of our urban markets. However, even in those markets, we have been able to staff our operations appropriately. Now let me discuss our same-store revenue growth for the first quarter of 2026. For our Personal Care segment, our same-store revenue growth was 6.5% compared to the first quarter of 2025.

During the first quarter of 2026, we saw personal care same-store hours increased by 2.2% compared to the same period in 2025 and while our percentage of authorized hours served in the first quarter remain consistent with what we experienced in the fourth quarter of 2025. On a sequential basis, Personal Care same-store census was down slightly, partially due to the weather we mentioned before. However, during the first quarter, we saw growth in clients served in Illinois, our largest market, which is something we had anticipated for a while. This is important as we look to achieve year-over-year census during 2026. Turning to our clinical operations. Our hospice same-store revenue increased 7.7% compared to the first quarter of 2025. Our average daily census increased to 3,804 for the first quarter up from 3,515 for the same period last year, an increase of 8.2%.

For the first quarter of 2026, our hospice medium length of stay was 23 days as compared to 25 days for the fourth quarter of 2025 and 19 days for the first quarter of 2025. We are very pleased by the continued growth in our hospice segment over the past several quarters. While our home health same-store revenue decreased when compared to the same quarter of 2025, our home health operating income improved over last year’s first quarter and sequentially versus the fourth quarter of 2025. It is also important to understand that over 25% of our hospice admissions in New Mexico and now in Tennessee are coming from our own Addus Home Health operations, which overlap in these 2 markets as we continue to focus on our bridge program. We are pleased to see more patients receiving the benefit of the full continuum of post-acute home-based care and anticipate seeing similar clinical teamwork developed in Illinois, where we also have both home health and hospice operations.

We continue to believe that size and scale are important to health care services and have been the focus of our strategy for the past 10 years. We continue to evaluate opportunities, which will increase both density and geographic coverage as well as seek to further strengthen our relationships with states and managed care organizations. Recently, we have begun to see an increasing number of personal care opportunities. Due to our focus on maintaining a conservative balance sheet, we have the ability to actively pursue these transactions. Recently, there appears to be more optimism around home health care due to the final home health rule for 2026 being more favorable than was originally proposed. While there is still some uncertainty about the future rate increases, there does seem to be more potential activity in home health care.

While we will be open to home health opportunities, we will continue to be diligent as we evaluate possible transactions to further our strategy. Before I turn the call over to Brian, it is important that I thank the Addus team for the care they are providing to our elderly and disabled consumers and patients. We all have come to understand that the majority of this population prefers to receive here at home, which not only remains one of the safest but also the most cost-effective places to receive this care. We believe the heightened awareness of the value of home-based care is favorable for our industry and will continue to be a growth opportunity for our company. We understand and appreciate that our operations and growth are dependent on both our dedicated caregivers and other employees who work so incredibly hard providing outstanding care and support to our clients, patients and their families.

With that, let me turn the call over to Brian.

Brian Poff: Thank you, Dirk, and good morning, everyone. The first quarter of 2026 marked a solid start to a new year for Addus. The results for the quarter reflect our continued ability to execute our strategy and deliver consistent growth. Results were highlighted by a 7.7% increase in top line revenue to $363.6 million and a 9.7% increase in adjusted EBITDA to $44.5 million when compared with the first quarter of 2025. Our Personal Care Services segment, which accounted for 77.3% of our revenues, was a key driver of our business. Revenues for the segment grew to $281.1 million, an increase of 8.8% overall and an increase of 6.5% on a same-store basis compared to the same quarter last year. We are continuing to see contributions from our acquisition of Gentiva’s Personal Care operations in late 2024 and the acquisitions of Helping Hands home care services and [indiscernible] Home Care, both of which were acquired in the back half of 2025.

The revenues of Gentiva’s Personal Care operations are included in our same-store numbers for the first time this quarter. In addition to higher volumes, we are continuing to benefit from rate support in some of our key state markets including our 2 largest in Illinois and Texas. Our first quarter results included the impact of the 3.9% rate increase in Illinois, which became effective on January 1, 2026, and as well as the 9.9% rate increase in Texas that became effective on September 1, 2025. Our hospice care business continued to perform well and accounted for 18.1% of revenues for the first quarter. Our hospice revenues were $65.8 million, with a same-store increase of 7.7% over the same period last year and year-over-year improvement in average daily census.

For the period, Home Health Services, our smallest segment, accounted for 4.6% of first quarter revenue at $16.7 million. We continue to look for ways to support and expand our home health service line, including through acquisitions, as we believe important synergies can be realized by offering multiple levels of home-based care in the markets we serve. Yesterday, we announced 2 transactions in Indiana, HomeCourt Home Care based in Fort Wayne which closed on May 1, and the signing of a definitive agreement to acquire additional operations of a similar size in the state. Currently, HomeCourt serves approximately 240 clients with annual revenues of approximately $9.7 million. We anticipate our second acquisition in the state will close later this year.

We believe our announced expansion into Indiana, a new market for Addus is aligned with our strategy of broadening our geographic coverage with density and scale. Our team looks forward to welcoming the clients and caregivers to the Addus family. We intend to provide additional details on the second acquisition when regulatory considerations permit. Strategic opportunities will continue to play a role in our long-term growth planning. Our primary focus will be on identifying opportunities where we can leverage geographic coverage and density providing us with a competitive advantage. We will also seek opportunities to add services to meet our ultimate objective of offering multiple levels of care in the markets we serve. With our size and expanding scale and the support of a strong balance sheet, we are well positioned to execute our strategy.

As Dirk noted, total net service revenues for the first quarter were $363.6 million. The revenue breakdown is as follows: Personal Care revenues were $281.1 million or 77.3% of revenue, Hospice care revenues were $65.8 million or 18.1% of revenue and home health revenues were $16.7 million or 4.6% of revenue. Other financial results for the first quarter of 2026 include the following: our gross margin percentage was 31.9%, consistent with the first quarter of 2025. As usual, our gross margin was affected in the first quarter by our annual merit increases and the annual reset of payroll taxes. Looking forward, we anticipate our gross margin percentage will remain relatively stable and consistent with our historical annual pattern. G&A expense was 21.4% of revenue compared with 21.7% of revenue for the first quarter a year ago.

Adjusted G&A expense for the first quarter was 19.6% and compared with 19.9% a year ago as we continue to generate leverage from our growing revenue base. The company’s adjusted EBITDA for the first quarter of 2026 was $44.5 million compared with $4.6 million a year ago, an increase of 9.7%. Adjusted EBITDA margin was 12.2% compared with 12% for the first quarter of 2025. Consistent with 2025, we anticipate our adjusted EBITDA margin percentage for the full year will remain above 12%. Adjusted net income per diluted share was $1.62 compared with $1.42 for the first quarter of 2025. The adjusted per share results for the first quarter of 2026 exclude the following: acquisition expense of $0.06 and noncash stock-based compensation expense of $0.20, including the impact of accelerated vesting for the previously announced retirement of our former President and COO.

The adjusted per share results for the first quarter of 2025 exclude the following: acquisition expenses of $0.13 and noncash stock-based compensation expense of $0.13. Our effective tax rate for the first quarter of 2026 was 22.7%, benefiting from the excess tax benefit related to our stock compensation. For the full year 2026, we expect our tax rate to be in the mid-20% range. DSOs were 63 days at the end of the first quarter of 2026 compared with 38.2 days at the end of the fourth quarter of 2025 with DSOs for the Illinois Department of Aging at 47.4 days compared with 54.7 days at the end of the fourth quarter of 2025. As expected, we saw a resolution in some of the normal timing differences in payment cycles we experienced around year-end.

Our net cash flow from operations was $52.4 million for the first quarter of 2026, a strong start to the year. As of March 31, 2026, the company had cash of $103.1 million with capacity and availability under our revolving credit facility of $650 million and $547.8 million, respectively. Total bank debt was $94.3 million at the end of the quarter a reduction of $30 million from the end of the fourth quarter of 2025. We have continued to reduce our revolver balance in the second quarter of 2026, with $10 million paid to date. We have a capital structure that supports continued pursuit of our strategic initiatives. Looking ahead, we expect to maintain our disciplined capital allocation strategy and continue to diligently manage our net leverage ratio while also focusing on enhancing shareholder value.

This concludes our prepared comments this morning, and thank you for being with us. I’ll now ask the operator to please open the line for your questions.

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Operator: [Operator Instructions] And our first question comes from Brian Tanquilut from Jefferies.

Brian Tanquilut: Maybe I’ll start, Dirk, when we think about the caregiver app rollout, I know that’s something that you’re working on in Texas. How do we think about the progress there? And what it will take to get it to where you want it to be as quickly as possible? And then what are the expected benefits for that? I mean, how do we think about the P&L translation of this app rollout and why it’s important.

Heather Dixon: Brian, I’ll start, and then Dirk can add to anything [indiscernible] that I say. So I’ll start with just the progress that we’re seeing. With that Caregiver app, we now have deployed it in all 3 of our 3 largest states, Illinois, as you know, has been deployed for a while, and we’re continuing to see really good utilization and uptick of that utilization throughout the state. In New Mexico, we have deployed it for a portion of our branches. We have some special nuances associated with the state EVV system there. So we’re going to roll it out in 2 tranches. But we have deployed it, and we expect to be deploying to the rest of the branches soon in the coming quarters. And then finally, in Texas, we rolled it out during Q1, and we’re seeing some really positive momentum in the utilization of that and caregivers actually downloading that app.

We saw even in the first few days to a week, we saw up over 10% of our caregivers had already adopted that app. So we’re seeing really good momentum. And as we think about where we go from here, there are a couple of things. One, continue to roll it out to other locations, and that’s really going to enable our caregivers and help us focus on increasing our service percentage. And then two, we can use that to really drive communication and really create a good engagement — positive engagement with our caregivers.

R. Allison: Yes, Brian, and I think what Heather just mentioned, there are the 2 aspects that we really focus on and why we invested in the caregiver app. You’ve seen positive momentum in Illinois for the percent of hours served that we believe a large part of that is directly attributed to the fact that there’s the caregiver app at the allows to be particular career to see how many hours are left on the authorization and make sure that we’re serving to an appropriate amount. Also, we think it can allow us to be a little more sticky, as Heather said, with our caregivers, make it easier for them to know what their paycheck is going to be to know their hours served and now also the ability for them if they want to pick up additional hours we have this app out there that allows them to be able to do that in an effective manner. So those are really the benefits that we’re looking for from this app.

Brian Tanquilut: That makes sense. And then maybe my follow-up, Heather, for you or maybe for Brian. As I think about the length of stay on the hospice side, you just gotten questions on cap risk and how you’re thinking about that. So just anything you care with us just on the hospice cap concern.

Brian Poff: Yes, Brian, right now, we don’t really have any cap consideration. We actually are managing, I think, our referral mix and our patient base pretty well. Discharge length of stay was a lite here this quarter. But again, those are just a factor of the people that actually discharged during the quarter and probably not indicative of you would pick a cap. Our median length of stay, as Dirk mentioned, was 23 days, which actually is probably a little bit low for us. I think we’ve got a really good mix and no cap concerns for us at the moment.

Operator: Our next question comes from Raj Kumar from Stephens.

Raj Kumar: Maybe just a date on the kind of from each states. I’m curious kind of Indiana, more specifically. I know when you guys went into Texas with Gentiva, that was kind of on the front of the state passing or kind of in the process of passing a rate update. So curious on the kind of Indiana rate backdrop and any commentary there?

Brian Poff: Yes. I think in India, specifically, I mean we talk about some other states as well, Raj. Indiana, as Dirk mentioned, we’ve seen some nice rate support from that over the past several years. I think if you went back about 5 years ago or so, I’m not sure it would have been probably quite as attractive for us, but we’ve seen nice support for them, a nice margin and that stay pretty consistent with where we are on a consolidated basis. I think the ability for us to do 2 acquisitions simultaneously or in close proximity gives us really good coverage. I think we’ve always wanted to have a pretty good footprint when we go into a new market. I think if we were to do one the other, it probably wouldn’t have been quite as attractive, but I think doing both gives us a nice — a nice place to start in Indiana and the ability to continue to add either additional services or more density there.

So we’re more placed on the map where we have opportunities. I think just thinking about it from a budgetary standpoint, Obviously, Texas is every other year. So they’re not going to meet this year. So nothing to really report on that in our kind of reference New Mexico, we just finalized their budget. There are dollars allocated for home and community-based services. We’re just trying to determine it gets the information on the logistics of how that will pass down to providers. Indiana — I mean, I’m sorry, Illinois, is our largest market is still [indiscernible] has not been finalized our budget this year. Our understanding is there’s conversations from the union as we would expect every year about our services and rates, but nothing to report.

We would expect them to probably finalize their budget over the next few weeks. So we’ll know more then. But those are probably the 3 largest obviously, that we keep our eye on.

Raj Kumar: Got it. And then maybe looking at home health, I guess there was a shift in the payer mix trend higher Medicaid year-over-year. I guess maybe anything to call out on that front, I guess, more intentional or just kind of how it played out. And I guess, has it been paying better than MA if it is intentional. I’m just kind of curious on the payer mix trend for home health in the quarter.

Brian Poff: Yes. I think [indiscernible] quarter probably a little bit of a mile, we had some rate updates, some positive rate updates in one of our programs that kind of falls into that other bucket that you saw in our press release yesterday. So we saw that in the quarter, we’ll probably revert back to more historical norms next quarter. Nothing intentional. I think, obviously, we’re focused on making sure we try to get the best rate possible in the business that we take in home health. I’m trying to make sure that it’s profitable. Our guys on the payer side are having conversations consistently with folks on trying to get as many episodic rates as we can and looking at taking cases that makes sense for us from a profitability perspective.

Operator: The next question comes from Matthew Gillmor from KeyBanc.

Matthew Gillmor: Maybe following up on some of the census comments for Personal Care. I think I saw the census was down a little sequentially you mentioned Illinois was up, which is encouraging. I just wanted to confirm I heard that correctly. And then maybe more broadly, I know census for personal care, oftentimes is lower in the first quarter. And if Illinois was stronger, does that imply there was weakness elsewhere? Or would you just sort of categorize it as sort of normal seasonal trends. Just wanted to see if there’s any other details to share on this topic.

Heather Dixon: Sure. I’ll take that. So as Dirk mentioned, we did have some weather impact of the quarter. and that impacted our sequential census growth. That’s what you saw as a slight sequential decline. But you did hear correctly, we had census improvements throughout the quarter, and we saw gains as we exited the quarter. And I think, very importantly, March since this exceeded January and February census. So we’re focused on those sequential gains. And going forward, that should lead to year-over-year gains as we move through the next couple of quarters. And then specifically in Illinois, we were very pleased to see that start the care exceeded discharges throughout the quarter, and that led to sequential monthly improvement there as well.

And so as we exited the quarter for Illinois, we saw a nice trajectory, and frankly, overall with census, and then we saw that trajectory really continue as we moved into the second quarter as well. There is nothing to point to. It’s not that Illinois is masking anything else. It’s just as our largest state and one that we’re very focused on. We wanted to be sure that we shared the positive improvement that we’ve seen there.

Matthew Gillmor: That’s great. Appreciate it. And then maybe following up on some regulatory topics. CMS has made some comments that have been skeptical of the self-directed care model within personal care and sort of home and community-based services. broadly, especially with some key states like New York, which I know you don’t have exposure to I was curious if the skepticism on the self-directed care model created opportunities for Addus more broadly, given your focus on the agency directed model?

R. Allison: Self-directed care does have an issue. You don’t have anybody in between the patient and the caregiver and the patient to make sure that the surface is actually being performed. So it’s — the state has a little more responsibility on themselves to do that. So we saw in New York that it was a program that was probably in our mind, going to have issues and not really sustainable. That’s why we left New York. There’s also issues out in California. There is a large issue out there because it’s self-directed care. We don’t participate in medical out there, most of the business we have is VA and private pay. But as you look at it, we’ve been saying for years, Personal Care is a great service and much needed and saves the states a lot of money but it needs to be done in the right way.

And one of the things that is an advantage to having the companies like Addus and others sit out there hiring the caregiver and matching them with the patient is that we have responsibilities to do a lot of extra things to make sure that service is being provided. Whether that’s supervisory visits, actually in person calls on the telephone, we have EVV. We have to make sure that the client shows up. I mean the caregiver shows up and stays the amount of time when they leave so that we’re billing a proper number of hours. So there’s a lot of compliance issues that are placed on companies like Addus as opposed to the self-directed care where there’s very little, if any, of those. So we think it’s a real encouragement to our industry. From our standpoint, we agree with the fact that there needs to be a look and make sure that when you’re paid for services, those services are being rendered.

We think that will benefit a company like Addus.

Operator: The next question comes from Sean Dodge from BMO Capital Markets.

Christopher Charlton: It’s Chris Charlton on for Sean here. Maybe back on Personal Care. You’ve again driven strong growth in same-store a billable hours even amid a declining census. Can you just share some more detail on some of the dynamics behind the strength here and continuing to fill a strong percentage of the authorized hours and kind of how you anticipate that evolving throughout the year as you expect to return to some census growth?

Heather Dixon: Sure. Sure. I’ll take that. Chris, I’ll start with talking about billable hours and sort of what we’re doing that really fuels that growth in billable hours. A couple of things specifically. One, we’re working on refining our operational processes from the support center and then also from the branch perspective, and that’s particularly with scheduling and utilization of our authorized hours. And then as we talked about just a couple of minutes ago, we’ve been focused on creating tools and deploying them that will help our providers, actually, the caregivers have access to those hours as well, and that’s in the form of the app. What we have seen is improvement in that service percentage or fill rate. So the hours that we are posting are really a higher utilization of the authorized hours.

We’re seeing that in most of our states, and we’re seeing that specifically where we have deployed the app and we’ve had some really good usage. And we would expect for that opportunity to improve the service percentage to improve as we move throughout the year, particularly as we deploy the app in Texas, one of our largest states. If you think about from Q4 to Q1, your question about even though census is down just a bit sequentially, billable hours are up. I think that’s just a function of the weather that we saw earlier in the quarter and nothing else really to point to there.

R. Allison: Let me jump in on census because I know everybody is focused on that number, and it is an important number. It’s not one that we get paid on billable hours. So we really focus on making sure we get the proper amount of hours per census as opposed to just census per se because you got to get the right census. You got to get the right hours from that patient coming on board to make sure that it’s something we can serve appropriately and profitably. That being said, we do understand that people are looking at that. And I think the important thing this quarter that’s very exciting to us is Illinois made the turn. And Illinois is one we really worked on the last 4 quarters to get it back into a growth mode. It just so happens this month, Texas was a little soft coming out in January, really.

And so we saw a little bit of effect in Texas for the census for the quarter. But by the end of the quarter, Texas was back. Illinois was continued to grow. So the important thing is we believe most of our states now are in the situation where starts of care are exceeding discharges. Sometimes you’re going to have a little bit of issue in a state maybe during a quarter. But the general trend is we think we’ve seen that change. And now we think all 3 of our big states are in that particular situation where we should grow census.

Christopher Charlton: Okay. That’s helpful. And then on home health, obviously, there was some encouraging adjustments to the final rate from CMS there last year. As you kind of come up on their initial proposal for 2027 rates in the coming months. Maybe just qualitatively, can you just share some thoughts on the backdrop and kind of what you would like to see initially just kind of give everyone some clarity that the environment might be starting to stabilize and might be looking just to be a more favorable backdrop for some opportunities there?

Brian Poff: Yes. I think I can take that one, and Dirk can add some color as well. I think in Dirk’s comments, I think, obviously saw some positivity in the final rule last year. I think we’re interested to see what the rule will look like this year. It feels like maybe there’s more appreciation coming out of CMS for what the industry has gone through the last few years, I think, in kind of focusing on some of the areas where there might have been some issues that might have impacted the way that they’ve looked at reimbursement in the last few years. And the industry, I think, has been lobbying for some time for them to see that in the way that some of the things in the fraud, waste and abuse area potentially have been used in the calculation.

And with those kind of maybe out of the mix and maybe identified, I think we’re hopeful that, that means maybe there’ll be more positivity in the rate that we’ll see coming up this year. So a small segment for us. We think there’s a lot of synergies of having multiple lines of care. So something that we’ll watch closely, but things that we’re still interested in looking at.

Operator: The next question comes from Andrew Mok from Barclays.

Unknown Analyst: This is Jeffrey on for Andrew. So I appreciate all the color around the Personal Care segment, but maybe I just wanted to better understand Addus’ exposure to self-directed personal care and the impact that’s had on recent Personal Care segment results.

R. Allison: Yes. We don’t really see an impact from self-directed care in most of our states. As we mentioned, there was some issues in New York. We left that state. California, we used to — if you go back 10, 15 years ago, we did business in California, and California really decided to go self-directed care, and it wasn’t something that we provided. So we focused on states that really understand the difference between sub-directed care and agency care. And that really goes back to what I said a few minutes ago, was what you get with agency care is a compliance program. You get companies like Addus that are making sure that, that care never who may or may not just because it’s called family caregiver. It may not actually be a family caregiver or a family member.

It may be somebody that knew the patient and is willing to serve in that market. So for that aspect, we still do all the things. We do all the training. We make sure that EVV is in place. We go through our complete compliance program to make sure that we are being paid appropriately and that we’re providing the appropriate care that per the plan of care. So really from us, the self-directed care does not have a direct impact, but we are glad to see that they’re looking at self-directed care to make sure that it is following the rules just like agency care.

Unknown Analyst: Okay. And maybe on the hospice side, I think revenue per patient day growth was negative for the first time while could you help us better understand the dynamics there? — including any trade-off with average length of stay?

Brian Poff: Yes. I think there’s 2 elements to that this quarter. I think primarily, we talked last year that we had some positive impact from the implicit price concession or revenue adjustment, whichever term you want to use. And I think we had indicated we expected that revert back to kind of historical norms. And I think that’s where we were this quarter. So that definitely was part of the consideration between last year and even Q4 rated into Q1. I think there’s a little bit of probably impact from just mix as well, but nothing really material there, but those are really the 2 factors.

Operator: The next question comes from Constantine Davides from Citizens.

Constantine Davides: Dirk, you highlighted your balance sheet strength and ongoing debt reduction both in the quarter and post the quarter and I guess can you just comment a little bit on the size of the opportunities in the M&A pipeline, whether that’s starting to skew up a little bit more in recent months?

R. Allison: Yes. What we’re starting to see this year, and there’s already 2 or 3 opportunities out there that are upside that we’re looking at. I think it’s really something that changed probably in the last 3 months or so where we’re seeing processes begin on these larger opportunities. And that’s one of the reasons, I think, constant team that we’ve worked very hard to keep our balance sheet clean. It’s the reason we were able to do Gentiva very quickly and bring it on board. So we’re looking at some of these bigger opportunities that because of our balance sheet, we could do and bring on fairly rapidly without having to stress our balance sheet. So again, they are out there. They’re in a process, and we’re more looking at them.

Constantine Davides: And when you say of size something along the size of — or scale of Gentiva.

R. Allison: Yes, they’re similar concise to Gentiva. That’s correct.

Constantine Davides: Great. And then a quick follow-up on India. You talked about that being — that state being attractive and good rate momentum, I guess, in recent periods. Where do rates kind of compare to either other states you’re in or your blended average?

R. Allison: The rates are a little higher than some of the Midwestern states. I mean, obviously, Illinois is going to be our highest market. But Indiana, if you look around the other states around there, the rates now are very — there are nice rates. There are rates that we can operate in very effectively. Also, there seems to be a little less competition in Indiana in the number of providers of our care. So it’s a state that we’ve been looking at. And with — I think it was in like 2023 time frame is when they really raise their rates to make them more competitive. Ever since then, we’ve been looking for opportunities to get into a state. And this [indiscernible] home court home care brought to us and the other acquisition that we announced allow us to that state and start looking for other opportunities to grow.

Operator: The next question comes from Ryan Langston from TD Cal.

Ryan Langston: Maybe just dovetailing off Indiana. Obviously, strategy to enter states the size and scale. Do you know if you combine the 2 assets where that would put you in terms of market share in the state. And I just caught your comments on decent rates and competition dynamics. But anything else in particular that made Indiana attractive?

Brian Poff: Yes. I can start and Dirk could add some color on. I don’t know that we have a detail of exactly where we stand. I think it’s going to be a good footprint for us from just a coverage standpoint. All in, the other acquisition is going to be similar size. So we’re going to be just under $20 million in revenue, which is a pretty good start for us in the state. I think one of the things that made it attractive for us in addition to what Dirk had kind of referenced is the managed Medicaid component. Obviously, a lot of the larger players there, I think United and those folks, we have good relationships with all of those guys, as everyone knows kind of nationally. So I think it is a good fit for us as it’s always been something that’s been part of the profile that we like as we get into states that have managed Medicaid where we can have those relationships in place. So I’m excited about that.

Ryan Langston: Okay. And then I appreciate the commentary and response to Matt’s question, but maybe just more broadly, obviously, this administration is really focused on fraud, waste and abuse and have made some statements to that quite a bit over the past several months to a year plus. Like I guess, just in general, what do you think any of that could mean for Addus? Is that potential benefit because you’re so large and sophisticated maybe versus some of your smaller competitors in your markets? Just maybe more broadly, what do you think this administration sort of stands on FWA, how that could affect that?

R. Allison: Yes. One of the things that Addus as did, we participated with the alliance in talking to the current administration about the fact that front abuse is out there, and it causes companies that are legitimate providers. It causes issues with various things you can talk about. And so from the standpoint of Addus, we’re glad to see the administration focus on fraud and abuse. We spend a lot of money on compliance. We have for the last 10 years, we want to make sure that when we operate in a state that we’re following the rules and we’re doing what’s proppant. And at times that you find that maybe something was built in properly, we pay it back very quickly to stay in compliance with the state. So the fact that we are large, we spend millions of dollars into the compliance aspect, we think — bodes very well for what the administration is trying to do, and that is take out the players — mostly smaller players, but take out the players that aren’t doing the right thing.

They’re just billing and not following through with what they need to do to make sure the rules are being followed. And more importantly, the most important thing is that the care is being given to the patient. There’s a reason that patient has a plan of care that has stayed approved, and that is they need that care. And so for us, calling out personal care, we’d rather than just call out home care and talk about the fact that there’s a lot of fraud and abuse in home health. There seems to be an in hospice. From a personal care standpoint, we believe that we’re a leader in the industry, and part of that being a leader is to lead the compliance effort. And so we’re pleased with the fact that we’re focused on that. And we believe long term, it will be a benefit to our company.

Operator: The next question comes from Jared Hasse from William Blair.

Jared Haase: Maybe just one for the model. I appreciate all the detail you guys have given as far as hiring and some of the initiatives you have going on like the caregiver application. That hours per se a month metric has been about 70% for a couple of quarters now. I guess, is there anything structurally that would cause that decline? I think the typical seasonality would have that sort of continue to grow sequentially over the rest of the year. But I just want to make sure that’s sort of the right expectation to level set how we’re thinking about things for the model, just given the moving parts as it relates to sort of census and volume trends.

Brian Poff: Yes, Jared, I wouldn’t expect to see that. There’s nothing structurally that’s going to cause that to decline. I think you’re always going to have a little bit of ebb and flow in mix in the states. But with the efforts that we’re using in the caregiver app and that rollout and thinking about our full rate, we would actually probably expect that longer term to actually continue to grow because we think there are hours that are available for clients under their care plan that we are currently not serving. So no, I wouldn’t expect from [indiscernible] I would not expect to see that decline for any structural reason.

Jared Haase: Okay. Got it. That’s helpful. And then maybe just another one on Indiana as a market for you guys. I’m just curious do you get any sort of regional leverage in a market like Indiana, just given obviously the proximity to your largest market, Illinois. I don’t know if there’s any sort of infrastructure that you’re able to leverage that would help you scale up and extract synergies a little bit more quickly than normal.

Brian Poff: Yes. If you look at it from where we have markets around India, obviously, we’re very large in Illinois. We’re in Michigan, we’re Ohio. So Indiana is kind of right in the middle of that geographically. So if you think about from just a regional or leadership perspective, there’s not going to be a need for us to add any additional layers there. They should be able to just talk under kind of what exists for us on the infrastructure today. Obviously, you’ll have people in those branch locations. But really that should be the limit of it. So from a — just from a lift perspective on G&A, that definitely should slide right into the operations that we have that kind of surround the state.

Operator: Next question comes from Clarke Murphy from Truist.

Clarke Murphy: I had a follow-up on labor. I appreciate all the commentary that you guys have around the caregiver app and hiring trends. But I wanted to see if you guys are seeing perhaps any benefit on labor availability, even some of the macro concerns that seem to have amplified over the last couple of months and the impact that, that’s had on kind of a broader consumer environment.

Heather Dixon: I’ll take that. The short answer is that we’re seeing positive hiring trends and we are seeing some of the leading indicators in terms of wage inflation and availability of candidate full trend in the right direction. And frankly, with wage inflation, we’re back to sort of that normal roughly 3% base, a little — some are a little higher, some are a little lower. But in terms of candidates, we’re seeing really good candidate flow across our markets. As Dirk mentioned, we’re always going to have small kits where it’s a little bit more difficult to staff, but that is really limited to mostly rural locations and frankly, just a couple of skilled categories in those rural locations, but we continue to [indiscernible] though those so that we can make sure we’re hiring the right staff to drive growth and to serve our patients and clients.

So really seeing some good trajectory there. Now whether it’s attributable to the macro environmental issues, that’s really hard to say, of course, but I can tell you that we are seeing positive trends.

Jared Haase: Got it. And then just switching gears to capital deployment. The other question I had was just if I think about your current pace of debt paydown relative to your debt balance suggests absent M&A be kind of largely paid off by the end of the year. Just wanted to see absent any large-scale M&A, how that would potentially impact your capital deployment priorities going forward?

R. Allison: We spent a lot of time talking about this at our Board meeting, as you would expect with the company in our position. I think the thing we see that maybe is not as apparent to outsiders is the number of deals that are now starting to come on board. We’re starting to see some larger transactions as we mentioned. And remember, with those large transactions, there still are a number of smaller transactions that we just announced that are out there that we consider in most cases, backfilled. And in this case, it was entering into a new market. So we believe that before our data is paid off, we will put to work, a great deal of our capital in these opportunities that are out there. So it led us to decide that that’s really what we understand we’re going to use our cap for today.

Now if that didn’t [indiscernible] over the next year, you would see us maybe come up with a different decision on how we use our capital. But we believe right now that with the opportunities that are there for us, and we’ll be able to use our debt and our cash and debt to grow the company.

Operator: The next question comes from Ben Hendricks from RBC Capital.

Michael Murray: This is Michael Murray on for Ben. You saw some pretty good leverage on adjusted SG&A even with the weather headwinds. Are there specific cost initiatives driving this improvement? Do you think the caregiver app is helping there? And how should we think about SG&A ratio as we move through the year?

Brian Poff: Yes. I would say, first, the caregiver app probably isn’t going to really have an impact on G&A. I think what we continue to see is kind of ongoing leverage, particularly on our corporate G&A as we grow our revenue base as we would expect. So we’re not having to obviously add incremental cost there. On the labor side, as we kind of mentioned earlier, this year in this cycle, we’re back to kind of a 3-ish percent kind of default rate there, so kind of back to norm. I think kind of going forward, we do give our merits on March 1. So we think sequentially into Q2, there’s going to be a little bit of additional dollars in G&A in Q2 as those kind of flow through for the full quarter. But nothing else really from a seasonal perspective. So I think we would expect it to maintain a pretty stable percentage of revenue and continue to see additional leverage as we grow.

Michael Murray: Okay. And then just shifting gears to home health. Organic revenue declined 6.6%. I think you previously indicated a return to growth in the second half of this year against some easier comps. So just wanted to get an update on admission trends, the impact of your new leadership and your confidence in achieving that time line.

Heather Dixon: Sure. Michael, I’ll take that one and talk about home health. Just start by reminding everybody, it’s less than 5% of our business. But that said, we’ve made changes from a leadership perspective and then also from a sales perspective and how we go to market for that business recently. In Q1, we saw our margins really where we want them to be. And so our focus is now on volume. We did see some positive trends in Q1. In fact, in Q1 2026 new admissions, total volume and total visits, all improved sequentially versus Q4 2025. So that is the trend that we would like to see. That’s part of what we’re focused on seeing and we continue to think that certainly later this year and feel good about that statement. Just to just step back a little bit at a higher level picking up on something that Dirk said earlier, the real value in our home health business is the interconnecting care that we provide and the correlation that we see in markets where we have multiple lines of service there and different levels of care between those lines of service.

So for example, I think it bears repeating in New Mexico and also Tennessee, where we have what we call the bridge program in place, and we really focus on creating referrals and admissions from home health into hospice for patients where that’s appropriate, we’ve seen those rates exceed 25%. And we’ve also now begun that program in Illinois. Obviously, Illinois Home Health is a little bit earlier for us, but there is great opportunity there and opportunity to continue that pattern

Operator: And our next question comes from A.J. Rice from UBS.

Albert Rice: First, I think at one point, you were — had said that you thought in the second quarter, you’d still see above average growth in personal care and hospice and then it would moderate in the second half. Just wanted to give you a chance if there’s any update. Are you thinking about seasonality, what that might be or if there’s any comments on thinking about the seasonal layout of the business for the rest of the year.

Brian Poff: Yes, A.J., this is Brian. I think maybe not so much seasonal, but I think you started thinking about comps over prior year and some of the rate impact, particularly in Personal Care. I think our prior comments that we expect it to be probably toward the high of our kind of normal 3% to 5% range, if not above. So starting this year, obviously, at 6.5% same-store basis. We would still expect that to be the case for the remainder of this year. I think once we kind of get confirmation on New Mexico and that flowing through as well, that will obviously benefit the back half of the year. So I think we still feel pretty comfortable with that commentary thinking about kind of where we’ll be on a same-store basis for each quarter going forward in [ BCS ].

Home health — I mean, sorry, hospice has been double-digit plus in same-store. I think we had guided people to think that’s probably not long-term sustainable. Our ultimate expectation is probably upper single digits, so we’re just under 8% this quarter. I think we’ve seen some nice trajectory in ADC coming out of the quarter. We were a little bit softer coming off of the holiday. So I think that sets us up pretty well. I think going forward to be in really good shape to continue to meet that as well for the remainder of this year.

Albert Rice: Okay. And then I guess your comments about M&A and the pipeline and so forth. Obviously, these deals are more in the personal care arena. You sound like you’re feeling a little better about the home health backdrop. Would that be something you would now sort of lean into again on M&A? Or is it still too early to do that?

R. Allison: I think we would look at home health deals today as opposed to maybe a year ago. As you can understand, we’d be very careful in what we did, make sure it’s strategically met. For us, the overlap with our hospice and personal care so that our [indiscernible] bridge program can work. But yes, we would start looking at home health care opportunities today.

Operator: The next question comes from Joanna Gajuk from Bank of America.

Joanna Gajuk: Full of questions here. So on personal care same-store hours per business day, I think grew, call it, 2%, 2.2% — so what was it excluding weather? I know you gave a revenue, I guess, impact from that? And what was it as you exited the quarter? So essentially what I’m trying to get at is kind of what was your growth in March? And do you expect sort of the acceleration and a little bit higher over the rest of the year on that metric?

Brian Poff: Yes. I think, Joanna, I think our target has always been and we’ve been talking about it for some time now. We can keep that same-store hours per business day between 2% and 2.5%, we’re probably going to be in a pretty good spot. We’ve been 2.4% each of Q3 and Q4 [indiscernible], but we were a little bit softer as we kind of mentioned in Heather — with some of the weather we saw in January. So we’re probably not going to go into kind of a month-by-month metric on that. I think we feel pretty comfortable coming out of the quarter with where we were from just a census perspective in hours in March and going into that 2% to 2.5% range still feels very, very solid for us going forward.

Joanna Gajuk: It’s great. 2.5%. And then the gross margins, so Q1 is seasonally low, right? But can you help us kind of call out anything as we think about Q2 from Q1?

Brian Poff: Yes. I think yes, seasonally is usually always our low watermark of the year with the reset of payroll taxes and our merits. I think traditionally, what we see is — usually you see a little bit of improvement with some of the payroll tax caps getting Q1 into Q2. So usually, there’s a little bit of benefit into Q2. Q2, Q3, usually pretty flat. I think Q4 usually is the best quarter for us from a margin perspective, just with some additional benefit from payroll tax caps but also our hospice rate increase kicks in, in that quarter as well. I think if you look at the mix of our business, personal care was a little over 77% this quarter. As a comparison, you think about that versus hospice and home health, hospice and wealth have a higher gross margin.

So if that mix gets back more to 75-25 on skilled and non-skilled that would benefit as well, but mix is going to potentially play in as well. So I think we feel really good coming out of the quarter on the track for [indiscernible] ADC. So if that were to be a bigger part of our mix going forward, that would benefit our gross margin percentage as well.

Joanna Gajuk: And the last one on the quarter. The stock comp was higher sequentially from Q4. Is there — was there something kind of onetime in nature? Is the $5 million a good run rate? Or is this something outside of [indiscernible]?

Brian Poff: Yes. That’s not a run rate. I mentioned in my comments. So with our former President and COO, retiring, there was some accelerated vesting as part of this retirement that impacted the quarter, but should be onetime and would not be continuing going forward.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Dirk Allison for any closing remarks.

R. Allison: Thank you, operator. I want to thank each of you for taking the time to join us today on our call, and we hope that you have a great week. Thank you.

Operator: The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.

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