Addus HomeCare Corporation (Nasdaq: ADUS) may slow down on mergers and acquisitions in the near term as it absorbs Gentiva’s personal care business.

The Texas-headquartered personal care, home health and hospice provider is taking a “conservative approach” to its merger and acquisition strategies, said Addus CEO and Chairman Dirk Allison in an earnings call on Thursday. Addus has pulled back on deals while the company awaits the close of its recent purchase of Gentiva’s personal care segment, set to complete in the fourth quarter, Allison indicated.

The Gentiva acquisition propelled Addus’ census and revenue growth, Allison stated. Other growth levers include more favorable market opportunities in home health and personal care, with hospice a smaller, albeit important, part of the company’s future outlook, he previously indicated.

“We will continue to be focused on using our capital to find additional acquisition targets that meet our strategic criteria while we await the closing of the Gentiva transaction,” Allison said during the earnings call. “Over the past couple of years, the acquisition opportunities that meet our strategic objectives have been somewhat limited due to some unfavorable general market conditions. However, we are starting to see a few more opportunities that could strengthen all three of our segments in markets where we currently operate. We remain committed to making future acquisitions that will help us to achieve our overall growth targets while maintaining a conservative approach to our capital deployment.”

Addus provides personal care, home health and hospice to more than 48,500 patients across 22 states.

The company acquired Gentiva’s personal care business for $350 million in June, which provides services to more than 16,000 clients daily across seven states. The purchase marked the entry of Addus’ personal care segment into the Texas and Missouri markets.

Post-transaction, the transaction will result in $280 million in annualized revenue to its personal care segment, according to Brian Poff, executive vice president and CFO at Addus. The company projects a leverage ratio of less than 3x, with the ability to further that amount with the influx of revenue resulting from the Gentiva deal.

The acquisition “fits squarely” into Addus’ three-pronged strategy to expand in markets where the company has an existing presence, Poff said.

“We will continue to have the financial flexibility to invest in our business and pursue our strategic growth initiatives, including acquisitions,” Poff stated. “At the same time, we will continue to be disciplined with our capital spending and diligently manage our net leverage ratio.”

The company’s third quarter adjusted EBITDA margin reached 11.1%, which was +2.1% above market projections, reported the investment banking and M&A advisory firm Stephens.

Addus’ total revenue reached $289.8 million in the Q3 of 2024, a 7% year-over-year increase. Its personal care revenues reached $215.4 million that period.

Its hospice service line brought in $57.3 million in revenue during the third quarter, a 3.5% rise from $53.1 million in the prior year’s period. The company reported a “modest increase” in its hospice average daily census, which reached 3,534 in Q3, driven in part by 2.1% in organic growth. Hospice average length of stay reached 96.3 days during this period.

While hospice patient admission volumes have consecutively decreased for the last couple of quarters, the company has leveraged some corrective operational changes, according to Allison.

“We have implemented changes to our operations, which we believe will have a positive impact on our ongoing admissions trend,” Allison said. “Overall, we are pleased by the steady improvement in our hospice segment.”

Addus’ hospice revenue growth was above market forecasts, while its home health revenues fell -7% below projections, according to the Stephens report.

Additional hospice growth factors include recent leadership changes to Addus’ hospice sales and marketing teams during the third quarter, which the company believes will help fuel improved public outreach and referral partner education, Poff said. The company is optimistic about the new team’s potential to bring forth “significant changes” in hospice admission volume, he added.

The company as of September 30 had $222.9 million in cash flow, with capacity and availability under its revolving credit facility of $511.5 million and $503.5 million, respectively. Subsequent to the end of the quarter, Addus entered into an amended and restated credit agreement to increase its revolving credit line to $650 million, up from $600 million previously.