Addus’ Growing Home Health, Hospice M&A Appetite

Addus HomeCare Corporation (Nasdaq: ADUS) is anticipating slow-churning growth across its trifecta of home-based services. The company projected evolving hospice industry dynamics over the next year. 

Texas-headquartered Addus provides personal care, home health and hospice services in 23 states. The company anticipates scalable expansion of its hospice segment to be driven by a mix of organic and strategic growth, though with some challenges on the horizon.

Recent trends in hospice merger and acquisition activity have left a barren landscape of available large-scale opportunities to choose from, according to Brian Poff, executive vice president and CFO at Addus. But the tides may be turning toward more favorable market conditions for buyers, Poff said at the virtual Oppenheimer Healthcare MedTech & Services Conference on Tuesday.

“If it’s strategic and it makes the right sense at the right price, we’re always willing to look and have an appetite to do something that makes sense for us,” Poff said during the conference. “[We’re] always open to those opportunities as they come along, but those larger scale acquisitions … [there] are quite a bit fewer of those out there than potential for the smaller tuck-in operations. We’ll take that into consideration when we look at potential targets and the size and scale there.”

Addus’ acquisition strategy focuses on pairing its clinical services with its personal care business across its existing markets. Its $350 million purchase of Gentiva’s personal care business line in December 2024 marked one of the biggest deals in recent years for the home-based care provider. The Gentiva acquisition “significantly expanded” not only Addus’ geographic footprint in Texas, but also its potential for other growth opportunities in 2025, Poff previously stated in a recent earnings call.

Addus has taken a more conservative strategic approach, joining the pool of hospice providers scaling back on large purchases. Many buyers are waiting for the proverbial dust to settle from the flurry of M&A activity in recent years. The hospice industry in 2019 and 2020 began to see climbing valuations and transaction volumes that reached record-highs, largely fueled as an influx of private equity investors stepped into the space.

More “payviders” have also been plucking up larger hospice assets. UnitedHealth Group’s (NYSE: UNH) health care arm Optum has made recent moves toward two of the industry’s largest providers. The health insurance giant purchased LHC Group in 2023 for $5.4 billion, and is awaiting the pending close of its acquisition of Amedisys (Nasdaq: AMED) for $3.3 billion.

Hospice M&A cooling periods followed the rampant activity, with some operators wondering about what’s next on the horizon. Sustainable and scalable growth in the hospice space will involve being open to a potentially more diverse range of possible opportunities, with M&A evaluation looking “a little different” than in the past, according to Poff.

“Focus today for us is probably more primarily centered around personal care operations, and then complimentary home health,” Poff said. “We like hospice as a business … but those [assets] tend to be on the expensive side. We’ll be focused on smaller acquisitions at reasonable multiples. We’re usually pretty disciplined when it comes to price.”

Addus is anticipating “ample opportunities” for tuck-in home health and hospice acquisitions, according to Brad Bickham, president and COO at Addus. The company has seen boosted hospice admission daily census volumes thus far in the first quarter of 2025 compared to slumps in previous periods, in part driven by its Gentiva acquisition alongside increased strategic referral efforts.

The home-based company is expanding its sales leadership teams to help fuel its hospice and home health growth, seeing promise in return on its staffing investments as its potential patient reach expands, Bickham indicated.

“We’re very optimistic on the hospice side,” Bickham said during the conference. “Home health is our smallest segment and we haven’t spent as much time as we have on personal care and the hospice side. We’re in a pretty good place on the home health side as a jumping point going into 2025.”