Addus Primed for More Hospice Acquisitions Following Queen City Deal

Addus HomeCare Corporation (NASDAQ: ADUS) is actively pursuing additional hospice acquisitions in early 2021 even as it works to integrate its recent Queen City Hospice purchase in Ohio. In December 2020, the company bought Queen City and its affiliate Miracle City Hospice the private equity firm Stonehenge Partners for a cash purchase price of $192.0 million. 

The Queen City transaction was one of the larger hospice deals to occur last year. Also in December, Addus acquired personal care provider SunLife HomeCare in Tucson, Ariz., for an undisclosed amount. During 2019 and 2020, acquired companies have brought in more than a total $214 million for Addus.

“Our acquisition pipeline and liquidity position remains strong. While we are being appropriately cautious, we continue to believe that we can close additional acquisitions during the next several months,” Addus CEO Dirk Allison said in an earnings conference call. “We are primarily focused on acquisitions which strengthen our coverage in existing markets or add clinical services to our personal care business.”


Integration of Queen City and SunLife has been proceeding smoothly, according to Allison. The deals allowed to Addus to build density in markets in which they were already operating. While Addus had personal care operations in Ohio, the Queen City acquisition is their first entry into the hospice market in that state.

Addus provides hospice, home health, and personal care services to nearly 44,000 patients through 215 locations in 25 states. The company’s acquisition strategy hinges largely on building density in markets where it already has a presence, though plans exist to move into new states as opportunities arise.

The company’s full-year net service revenues for 2020 rose 17.9% to $764.8 million from $648.8 million for 2019. Fourth quarter hospice revenues topped $27.5 million, up from $26.4 million in the prior year’s quarter.


Despite the revenue growth, the company did take some financial punches from the COVID-19 pandemic. Addus saw a 2% to 3% decline from its pre-COVID run rate across each of its business lines. The saw the biggest drops in the New York personal care market and in its New Mexico hospice operations. Industry-wide struggles with restricted access to facility-bound patients were a significant contributing factor in New Mexico.

Due to the pandemic, Addus expects first quarter 2021 revenues to be adversely impacted compared to their pre-COVID performance, but expects some degree of normalization as more patients, families and staff become vaccinated.

Late in 2020 the company suffered from the surge that occurred in COVD cases. Between September and December the weekly average number of confirmed or suspected cases more than tripled among the Addus patients and staff. The rate of staff infections began to slow in mid December.

“While I expect the environment to remain operationally challenging over the next several months, we are encouraged by the progress being made with the COVID vaccine rollout and the steady reduction in COVID cases since the peak in late December,” Allison said.

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