Addus HomeCare Corporation (NASDAQ:ADUS) Q3 2023 Earnings Call Transcript

I think our expectation is we’re not going to see that with this particular rate increase when we make some of these adjustments. Illinois is a decent part of our business. So we’ll probably have a very slight impact on the margin rate, but not, I would say, overly material from a percentage basis, but probably a slight impact.

Scott Fidel: Okay. Great. Thank you.

Operator: The next question we have is from Ben Hendricks with RBC Capital Markets. Please go ahead.

Ben Hendrix: Great. Thank you very much. I appreciate the commentary about the PC hiring momentum. I was wondering if you could give us some your take on how retention has been trending, especially after the special Illinois rate increase that you saw or the extra Illinois rate increase you saw last year if that’s having an impact on retention. Then on the hospice side, the ADC sequentially on a same-store basis. I’m wondering how that trended through the quarter and kind of what’s giving you confidence in seeing some pickup in 4Q? Thanks.

Brad Bickham: Ben, this is Brad. With respect to the PCS, just kind of looking at the turnover and retention rates there. We have seen continued improvement in our retention and our turnover rates on the PCS side. I think a lot of us, as we pointed out earlier, is a lot of the enhanced unemployment benefits ended last year, which certainly helped on the retention side and getting people to work. But then more importantly, I think as you point out, some of these rate enhancements have certainly helped keep people engaged to help with hiring numbers helped keep them – I think we’re doing a better job, honestly, of giving them more hours, that’s one of our focuses is we’re doing a good job on the hiring front. But what we really need to, I think, focus on this year and next is really maximizing our existing workforce because it’s there’s a lot of employees there that want more hours, and it’s really a matter of matching those caregivers with open shifts, and that’s where we’re spending a lot of our efforts now and into next year is really focused on technology enhancements that would allow us to do a better job, which I think one helps us get cases started faster, as Dirk alluded to, but then more importantly, allows us to get more hours out of our existing workforce, which helps with the retention.

When you look at the hospice trends, we saw pretty good hospice numbers when you looked at July and particularly August, tailed off a little bit in September, but then picked up again in October. So I think we’ve got some good momentum on the hospice front. There’s still some pockets where we had some challenges on the staffing side, primarily in some urban markets like Chicago and Portland, Oregon. Those have improved. So I think that gives us some optimism heading into Q4, but as Brian pointed out, you typically have a little bit of seasonality around the holiday season, particularly with respect to hospice.

Ben Hendrix: Thank you.

Operator: The next question will come from Joanna Gajuk with Bank of America. Please go ahead.

Joanna Gajuk: Good morning. Thank you so much for taking my question here. So I guess maybe first I’ll start with a follow-up question, and then I have my question. But on the follow-up, so just talking about the Illinois rate increase and how you expect a onetime, I guess, impact to gross margin because of the lower, I guess, flow through. But you also said in the prepared remarks, you expect to see some offsets from volume increases in the market. So could you talk about that a little bit more? Like when would you see those volume, I guess, increases materializing? Is it immediately? Or is it more of a comment over time?