As Addus HomeCare Corp (NASDAQ: ADUS) gears up for expansion, the company is focused on its workforce can absorb the growing capacity.
Addus has not been immune to the labor headwinds plaguing the industry. This includes shortages tied to the COVID-19 variant surge that persisted through the first half of the year, as well as rising inflation.
Industry-wide, these factors have contributed to wage hikes, higher turnover and large contingents of staff on quarantine.
Providers have also had to compete for new hires with travel nurse companies. Generally speaking, these have been able to offer nurses higher wages and more flexible as demand for their services increased during scheduling COVID.
Addus continued to see increased turnover early in the year. But the tide started to turn in March, accompanied by an uptick in recruitment.
“With some of the travel nursing contract rates that they can be getting elsewhere, we felt some of that just like everyone else. So it’s been competitive for us,” said Addus CFO and Executive Vice President Brian Poff at the Jefferies Healthcare Conference. “I think over the last few months as some of those contract rates have pulled back. Some of those travel assignments have started to subside. We’ve started to see some positive movement in our turnover on the clinical side.”
Hospice operators have relied on contract nursing to stay afloat a time of worsening labor pressures, elevated turnover and rising demand for care. A key factor has also been the virus itself as COVID infections and exposures have pushed full-time staff into quarantine.
Competition with travel nursing firms has been among the drivers of wage increases for hospice companies. Addus has increased some employee wages 4% to 5% this year to stem turnover, according to Poff.
Texas-based Addus provides personal care to upward of 42,000 patients across 22 states and roughly 210 locations. The company also provides home health and hospice services to more than 3,600 patients.
The company’s net service revenues rose 10.4% in Q1 to $226.6 million, up from $205.3 million in the prior year’s quarter. The hospice segment brought in $47.7 million, compared to $36 million in the same period last year.
The company also saw sequential improvement in average daily census, median length of stay and patient days.
Acquisitions remain an important part of the company’s growth strategy as it seeks to co-locate each of its three business lines in the markets it serves.
Since 2019, Addus has purchased seven personal care companies and four home health and hospice companies. This includes the $85 million acquisition of Illinois-based hospice provider JourneyCare Inc., in February.
The company last year acquired Armada Hospice of New Mexico and Armada Hospice of Santa Fe for $29 million. The transaction also included the affiliated Armada Skilled Home Health of New Mexico.
Addus expects to spend approximately $100 million annually on acquisitions in a typical year, Poff said at Jeffries.
“We’d like to continue to add clinical services in areas where we have strong personal care. Our primary focus is really on markets that we are in today,” said Poff. “We’re not opposed to doing additional deals in other markets where we don’t have a presence today, but I think that’s probably not definitely our focus.”