Home health care provider Addus HomeCare is well-positioned for growth as the U.S. faces a shortage of high-priced skilled clinicians: Analyst – Addus HomeCare (NASDAQ:ADUS)

JMP Securities begins coverage of Addus HomeCare Corp. ADUSa provider of home personal care and clinical services.

JMP analysts believe Addus HomeCare has a uniquely strong and established presence in personal care services across multiple states due to its size and experienced management team.

The analyst wrote that personal care is a cost-effective way to provide home-based services, especially as the United States faces a shortage of expensive and skilled clinicians.

This approach can also help delay the need for more expensive treatment options. Because the personal care sector is highly fragmented, Addus has an opportunity to expand by adding complementary home health and hospice services to its existing market.

Analysts expect this strategy to support the company's sustained double-digit revenue growth in the coming years.

Addus HomeCare's revenue for the third quarter was $289.8 million in the third quarter of 2024, compared to $270.7 million in the third quarter of 2023, an increase of 7.0%.

JMP started with a Market Perform rating and a $150 price target.

Addus HomeCare recently acquired Gentiva's PC business. The acquisition, the company's largest in its history, gives Adas Homecare significant scale in Texas and allows it to add personal care services in six other states, three of which are new to the company. This is a promising prospect.

Gentiva's PC platform is expected to contribute $275 million to $280 million in annual revenue and drive 29% year-over-year growth in Adas Homecare's personal care division in 2025. This is higher than the sector's five-year CAGR (2019-2024E) of 8%.

JMP writes that Addus HomeCare has expanded into value-based care (VBC) arrangements in some markets in recent years through its “Care Advantage” program.

The company is well-positioned to grow in this space due to its large scale operations and robust case management system, as well as its combined clinical and non-clinical care resources.

Price Action: ADUS stock was up 5.14% at $131.42 at last check on Monday.

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