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Summary

  • Addus HomeCare grew revenues 17% in Q2 and EPS beat expectations by $0.01.
  • After a strong Q1 and Q2, Addus is on track to post a record year.
  • In my last article, I said its business remained strong and the selloff over financial reporting issues was a non-issue.

Addus HomeCare (NASDAQ:ADUS) posted a revenue increase of 17% y/y to $77 million in Q2. EPS came in at $0.25 compared to $0.21 in Q1. Adjusted EBITDA increased almost 28% to $5.9 million. New acquisitions contributed $0.02 to EPS in Q2. Its transition to becoming a sales culture is working. In my prior article, I said Addus was going to be running a sales contest to add more customers. Same-store customers increased by 581 and acquisitions added 1,026 new consumers since the end of Q1.

Addus was able to increase billable hours per business day by over 20%. Addus did have the same problem in Q2 as Q1 where average revenues per billable hour posted a slight decline. The company's newest acquisitions charge less per hour and that's the reason for the slight decline. The good news is that the new acquisitions have a higher gross margin due to lower expenses and that increased the overall gross margin by 140 basis points to 26.7%.

While the overall market fell last week, shares of Addus popped 2.3% after earnings. I still see Addus as a good defensive play in this market. Addus will continue to benefit from aging baby boomers needing in-home care. Furthermore, the latest quarter further solidified that its growth via acquisitions and getting its employees to become more sales-oriented is working. All in all, I was generally pleased with the Q2 report and Mr. Market was too.

Disclosure: The author is long ADUS. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

Source: Update: Addus HomeCare Earnings