As US Faces Shortage Of Expensive Skilled Clinicians, Home-Based Health Service Provider Addus HomeCare Is Well-Positioned To Grow: Analyst

JMP Securities initiated coverage on Addus HomeCare Corp ADUS, a provider of home-based personal care and clinical services.

JMP analysts see Addus HomeCare as having a uniquely strong and well-established presence in personal care services across multiple states, thanks to the company's scale and experienced management team.

The analyst writes that personal care is a cost-effective way to provide home-based services, especially as the U.S. faces a shortage of expensive skilled clinicians.

This approach also helps delay the need for more costly care options. With the highly fragmented personal care sector, Addus has opportunities to expand by adding complementary home health and hospice services to its existing markets.

The analysts expect this strategy to support sustained double-digit revenue growth for the company in the coming years.

In the third quarter, Addus HomeCare revenues were $289.8 million for the third quarter of 2024, a 7.0% increase compared with $270.7 million for the third quarter of 2023.

JMP has initiated with a price target of $150, with a Market Perform rating.

Addus HomeCare recently acquired Gentiva's PC operations. The deal, the largest acquisition in the company's history, is expected to allow Addus HomeCare to enter Texas with critical mass and add personal care services in six other states, three of which are new to the company.

Gentiva's PC platform is expected to contribute annual revenue of $275 million-$280 million, prompting 29% year-over-year personal care growth for Addus HomeCare in 2025, above the segment's five-year CAGR (2019-2024E) of 8%.

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

The company is well-positioned to grow in this area thanks to its combination of clinical and non-clinical care resources, along with its large-scale operations and robust case management systems.

Price Action: ADUS stock is up 5.14% at $131.42 at the last check Monday.

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