The COVID-19 public well being emergency has solidified the house as a viable and efficient care setting. That, in flip, has led to significant alternatives for home-based care suppliers, particularly these with diversified service traces.
Addus HomeCare Company (Nasdaq: ADUS) is a chief instance. The corporate’s management staff mentioned the pandemic and its lasting impacts throughout William Blair’s annual progress inventory convention on Wednesday.
“Pre-COVID, there was an ever-increasing transfer to the house atmosphere,” Dirk Allison, CEO and chairman of Addus, stated through the occasion. “COVID has definitely accelerated that momentum.”
Addus is particularly seeing loads of new alternatives on the house well being aspect of its enterprise, which continues to attract extra referrals, Allison defined.
“I feel there are a whole lot of alternatives,” he stated. “I don’t assume that’s going to decelerate.”
Headquartered in Frisco, Texas, Addus is a supplier of house well being, hospice and private care providers, the latter of which make up nearly all of its total enterprise. The corporate presently supplies in-home care providers to roughly 44,000 individuals throughout 208 areas in practically two dozen states.
When considering of alternatives, Addus is monitoring the red-hot M&A market, which has heated up for the reason that begin of 2021. Over the following 12 to 24 months, the corporate might be centered on offers within the private care and residential well being area, in line with Allison.
Specifically, Addus’s technique revolves round sourcing house well being acquisitions in markets the place the corporate already has a powerful private care presence. It’s a key play within the fashionable aging-in-place firm’s playbook — and a technique actively pursued by Addus friends Amedisys Inc. (Nasdaq: AMED), LHC Group Inc. (Nasdaq: LHCG), AccentCare Inc. and others.
“You received’t actually see us exit and make an enormous scientific acquisition in a market the place we don’t have private care providers,” Allison stated. “It doesn’t match our technique.”
Broadly, Addus believes that by including scientific providers, it’s capable of higher look after sufferers, making it a greater companion for accountable care organizations (ACOs) and managed Medicaid organizations.”
“And doubtlessly the Medicare Benefit gamers in these markets, as we transfer ahead from only a strictly fee-based service into one thing that possibly is extra value-based,” Allison added.
Addus has been comparatively quiet on the M&A entrance since its $192 million acquisition of Queen Metropolis Hospice and affiliate Miracle Metropolis Hospice in December. The corporate additionally closed on SunLife Dwelling Care, a private care supplier, on the finish of final 12 months.
Brad Bickham, president and COO of Addus, stated that the corporate is at about 20% scientific house well being income at this time. It’s probably that this can bump up within the subsequent couple of years.
When it comes to geographic footprint, Addus has pinpointed a lot of markets the place the corporate hopes to develop sooner or later. The corporate needs to develop in Ohio, in addition to in Pennsylvania, Virginia and Tennessee.
Illinois — a serious private care marketplace for Addus — additionally stays an space of focus for the corporate. Allison famous that roughly 36% of Addus’ income comes from this market. Going ahead, the corporate goals to determine scientific providers within the state.
Previously, Illinois has been a troublesome marketplace for Addus to navigate on account of challenges round funds and fee will increase.
Through the presentation, Addus’ management additionally touched on the constructive momentum the corporate is seeing on the staffing aspect.
Total, the corporate has seen a lower in applicant quantity, however one brilliant spot has been an enchancment in applicant conversion, in line with Bickham.
“Our hiring numbers have been pretty constant by way of Could of this 12 months,” he stated. “I feel the stimulus tax and the improved unemployment advantages beginning to part out this summer season — and towards the top of the summer season — ought to definitely assistance on the hiring entrance. We’re lucky on the private care aspect that we do have a powerful demand for our providers. Our greatest problem has all the time been success.”
Bickham famous that Addus expects to see an inflow of individuals returning to the workforce.