This article is part of the HHCN+ membership
Publicly traded home care providers aren't shying away from addressing some of the concerns facing the industry. From Medicaid budget cuts to Medicare home health payment rules, the companies outlined some of the pressures plaguing the industry.
But their third-quarter earnings report paints a picture of one way home health providers can succeed through legislative policy that results in meaningful increases in Medicaid rates. Interest gains are expected to continue through 2026, and the publicly traded company's success with Medicaid could give hope to home health providers who accept Medicaid across the industry.
The financial results also showed that despite pressure from the industry, the provider is not ceasing to trade. In October, Adas Home Care Corporation (NASDAQ: ADUS) spent $7.4 million to acquire the personal care business of Alice, Texas-based Del Cielo Home Care Services. Avianna Healthcare (NASDAQ: AVAH), BrightSpring Health Services (NASDAQ: BTSG), and Pennant Group (NASDAQ: PNTG) have all consolidated or consolidated acquisitions completed this year.
As 2025 draws to a close, the latest home care earnings reports show that industry providers have reason to be optimistic, with the largest home care providers showing success and continued growth.
In this week's members-only HHCN+ update, I'll be sharing my take on the Q3 earnings release and providing analysis and key takeaways, including:
– Reasons why Medicaid reimbursement rates can be increased
– Home care M&A continues despite headwinds
– Why a 2026 deal will reflect the third quarter of 2025
Reimbursement rate victory shows glimmer of hope for Medicaid
At a time when interest rate pressures are increasing, it is easy to feel that there is no hope for providers operating on thin margins. However, the third quarter earnings release revealed that the provider was successful in negotiating some rate increases.
Both Adus and Aveanna highlighted significant increases in Medicaid rates in the third quarter.
Avianna announced it achieved 10 wins in Medicaid rates in 2025, which it said is in line with its expectations. Chief Executive Officer Jeff Shaner said he expected a similar rate hike in 2026, but it would be smaller than in 2025.
“As we reset our legislative goals for 2026, we will probably still set a goal of double-digit rate wins,” Shaner said. “We expect (Private Mission Service) (PDS) rate increases to be smaller overall than they have been over the past two-and-a-half years. The great thing is we're ready for that.”
Governor Shaner said he expected rate hikes in 2026 to be closer to the 2% to 3% range.
During the earnings call, Adas executives highlighted price increases for personal care services in Texas and Illinois, which Allison attributed to payers recognizing the ability of personal care services to reduce overall costs of care. The company estimates these rate hikes are worth $35 million.
Deep cuts to the federal Medicaid budget are causing states to renegotiate their priorities, putting home-based services at risk. Negotiating rate increases is more important than ever for Medicaid home health providers to protect access to these services.
The rate victories for Avianna and Adus show that hope exists for providers who can prioritize legislative challenges and drive rate improvements. This is important for some home care operations that exceed margins. Aveanna's management said it is optimistic about the company's ability to attract care workers in areas where it has achieved acceptable rate increases. These success stories give home health care providers who accept Medicaid more hope, but they should keep in mind that Aveanna is projecting a further modest increase in 2026.
Providers refine their deals and expect more
Several publicly traded home care companies have closed or are planning to close high-profile deals.
In its earnings call, Adus highlighted its acquisition of the personal care business of Alice, Texas-based Del Cielo Home Care Services on October 1 for $7.4 million.
BrightSpring's CEO said the company expects to close in the fourth quarter the acquisition of home health and hospice assets sold as part of UnitedHealth Group's (NYSE:UNH) acquisition of Amedisys, and that the company expects the transaction to expand by 2026.
Pennant has completed the acquisition of the assets sold as part of the UnitedHealth-Amedisys transaction and is now beginning to reap the benefits of its expansion.
“The United and Amedisys process created a unique opportunity to add high-quality assets in desirable markets at attractive valuations, something rarely seen in large transactions with sophisticated carriers,” Pennant CEO Brent Gerisoli said on the company's third-quarter earnings call. “Our excitement only grows as we close the transaction and move into business.”
Aveanna executives said the company is on track to fully integrate its recent acquisition, Thrive Skilled Pediatric Care, by the end of the year. Company executives said the company expects to complete more transactions like this one in 2026.
Martz Taggart said potential acquirers are concerned about home health deals because of the apparent potential for significant rate cuts for Medicare home health. Even if the final rule includes a slower rate cut than most expected, a period of uncertainty in 2025 will alarm growth-oriented providers and dampen overall home health deals. Still, 2026 earnings releases are likely to continue to include acquisition and consolidation news, as the largest home care companies are better able to absorb pricing pressure than smaller organizations. More deals like Adus' acquisition of Del Cielo Home Care Services are almost certain to follow, as personal care services organizations continue to attract investor interest. These trends suggest that Q3 will likely set the standard for trading in coming quarters.
