Addus HomeCare Corporation (NASDAQ:ADUS) Q2 2020 Earnings Conference Call - Final Transcript

Aug 11, 2020 • 09:00 am ET

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Addus HomeCare Corporation (NASDAQ:ADUS) Q2 2020 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions] Our first question comes from the line of Scott Fidel from Stephens. Your line is now open.

Analyst
Scott Fidel

First question, just in terms of thinking about gross margins in 3Q and 4Q and relative to what you called out. So would it just be as simple as taking the $1.2 million quarterly impact from Chicago and baking that into the gross margin's impact in 3Q or 4Q? Or are there any other factors that you think are worth calling out that we should be thinking about when modeling gross margins in the back half of the year?

Executive
Brian Poff

Yes, Scott, this is Brian. I think that's the right way to look at it. That would be the primary driver of change going into Q3 will be the $1.2 million that Dirk and I mentioned. We'll take additional cost above the gross margin line without additional reimbursement. So that will impact the gross margin percentage as well as EBITDA percentage.

Analyst
Scott Fidel

Okay. And second question, just interested if you could give us an update on the pacing of new caregiver recruitments in 2Q. I know that there's been an opportunity here, both from just higher unemployment, providing maybe some loosening in the labor market. And then also just around the opportunity to recruit family caregivers at home given the home-based dynamics here. So just interested in terms of what you guys are seeing in the 2Q on those fronts? And how you think that could influence organic growth trends in the back half of the year and then looking out to 2021?

Executive
Bradley Bickham

Scott, this is Brad Bickham. What we've seen -- as far as on the family caregiver front, we have seen the ability to bring on additional family caregivers in markets. However, our recruiting has been a little bit of a struggle, I think, primarily due to the additional unemployment benefits that are out there. Now, of course, we recently had a chase to reduce those numbers from the $600 down to $300 or $400 depending on whether or not the states pick up the funding. We'll have to see how big of an impact that has had. But we're getting a lot of inbounds, but frankly, we're also seeing a lot of folks that won't show up for training or for the interviews, so they file those applications. But recruiting is honestly a little down. I expect it to improve with the lower -- the reduction from the $600 down to a lower number.

Analyst
Scott Fidel

Understood. That makes sense. And then just last question for me, just in terms of anything to call out on Medicaid rates and budgets and early insights into FY '21 outside of the specific call-outs that you gave us for the Chicago cut and then for the New York cut. Just checking if there's anything else that you're seeing out there right now that we should be thinking about?

Executive
Brian Poff

Yes, Scott. I think just -- we're continuing to, obviously, watch anything happening with state budgets. Dirk mentioned,