With reimbursement rate increases in key states, executives at Adas Homecare Corporation (Nasdaq: ADUS) offered a positive outlook.
Texas and Illinois, two states where Adas operates, have announced price increases for personal care services. Texas' rate hike went into effect on October 1 of this year. Illinois' tax increase goes into effect on January 1, 2026.
“We believe the rate increases in Illinois and Texas and favorable reimbursement support from many of the states in which we operate are a recognition of the value that personal care services provide to both state Medicaid programs and managed care partners through lower overall costs of care,” CEO Dirk Allison said Tuesday during Adas' third quarter earnings call.
Allison noted that Adus is well-positioned due to the benefits associated with home care as various states' Medicaid programs change.
Addus, based in Frisco, Texas, provides a variety of home care services, including personal care, hospice, and home health. The company currently serves approximately 62,000 patients and consumers through 260 locations in 23 states.
Allison said the company is continuing to work in other states to convince lawmakers of the importance of supporting home care services by enforcing future rate increases.
Payment rules for the 2026 home health proposal were also a top priority for Adus leaders.
In June, the U.S. Centers for Medicare and Medicaid Services (CMS) released a proposal that would reduce total home health care costs by 6.4%.
“As you can imagine, the home health care industry has worked with CMS to make a number of arguments that could impact this potential rate reduction. While the final home health rates for 2026 have not yet been determined, we expect these efforts to have a positive impact on the final rates, which will be announced in the coming weeks,” Allison said.
In addition to the rate hike victory, Addus' strong hiring performance, particularly in the personal care sector, was also one of the highlights of the third quarter. The company added 113 people per business day, an increase of 6.6% sequentially.
Allison also noted that clinician hiring is consistent with what the company has experienced over the past two years and has been stable outside of some challenging urban markets.
Adas also announced that it acquired the personal care business of Alice, Texas-based Del Cielo Home Care Services for $7.4 million on October 1, 2025.
“This transaction continues our acquisition and development strategy to enhance our geographic coverage and density in Texas,” Allison said. “Our team is excited about this acquisition and look forward to officially welcoming the Del Cielo Home Care team to the Adus family. Going forward, our development team will continue to focus on both clinical and non-clinical acquisition opportunities to increase both our density and geographic reach into our current states.”
In general, Allison said he expects the proposed payment rules to delay “meaningful” home health acquisition opportunities, but added that Adas will also evaluate smaller clinical deals along with personal care services deals that fit the company's overall strategy.
Addus' net service revenue for the third quarter of 2025 was $362.3 million, compared to $289.8 million for the third quarter of 2024, an increase of 25.0%.
“The third quarter marked another strong financial and operating performance for Adas into 2025 as we delivered consistent organic growth and continued to benefit from recent acquisitions,” Brian Poff, Adas' chief financial officer, said in a conference call.
Mr. Poff credited Addus' personal care services division, which delivered organic revenue growth of 6.6%, as a key driver of the company's business.
“This growth trend has remained well above our normal expected range of 3% to 5% over the past several quarters, supported by strong employment trends and favorable rate support for personal care services in some large markets,” he said.
