Increased state Medicaid reimbursements will provide a tailwind to home care agencies emerging from the COVID-19 pandemic, Addus HomeCare Chairman and CEO Dirk Allison told analysts Friday.
“We are seeing a number of states consider raising rates, which will allow us to pass that through,” Allison said during an earnings call with analysts.
Allison was referencing the 10% increase in Federal Medical Assistance Percentages (FMAP) rates that was part of the Biden administration’s $1.9 trillion American Rescue Plan last year. FMAP rates are used to determine the amount of matching funds allocated to states for home- and community-based services. The FMAP increase is time-limited and must be spent before March 31, 2024. Some states have already increased Medicaid reimbursement rates to home care providers, while others have yet to announce how the increased funds will be spent.
“I would say that we are very comfortable and confident in our states today,” Allison said. “A lot of them are looking at ways to use that money for the next year or two and so we are excited to see those programs come about in the next few months.”
Allison made his comments following the release of the company’s fourth quarter 2021 and full-year earnings. The company bucked headwinds from the COVID-19 pandemic earning $0.97 a diluted share on $224.6 million in revenues in the final quarter of last year compared to $0.82 a share on $196 million in revenues for the same period in 2020. For the full year, Addus earned $3.63 a share on revenues of $864.5 million compared to $3.08 a share on revenues of $764.8 million for 2020. 270
Allison said the company is hoping to do more mergers and acquisition deals this year like the one it just completed earlier this month with the JourneyCare Hospice and Summit Home Health last fall. The two deals helped Addus expand its footprint in Illinois and offer a full continuum of services, including home care, home healthcare and hospice. While Allison told analysts the pipeline for deals looks strong, he said the company would take a measured approach based on what agencies are demanding in a given market.
“We are in the market today, but if multiples remain higher than we feel justified the return we’ll get for our shareholders, we’re not opposed to stepping back,” Allison said.
