Addus HomeCare Corp (ADUS): what the price requires
At today's price, Addus HomeCare Corp (ADUS) is priced for +5.4% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-19 · Source: https://boothcheck.com/report/ADUS
Headline
| Field | Value |
|---|---|
| Ticker | ADUS |
| Company | Addus HomeCare Corp |
| Current price | $109.34/sh |
| Composition | Personal Care 77% / Hospice 18% / Home Health 5% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 1.6% |
| Operating margin today | 9.2% |
| Margin compression implied | -7.6pp |
| Implied growth | 5.4% |
| Multiple paid | 16x operating income |
The operating-margin requirement is derived from the framework's value band at year 9, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 8.6% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6.4pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.63σ |
| cohort percentile (of 113 peers) | 30 |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.91x | 5 | expensive |
| Earnings | 1.61x | 5 | expensive |
| Relative | 0.88x | 5 | justifies |
| Growth | 0.91x | 3 | justifies |
Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.7%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $198.13 | 0.55x | yes | FCF base $0.2B, growth 20% (input: historical growth), terminal g 4.0%, WACC 8.7%, 6yr projection |
| DCF Exit Multiple | Growth | $119.68 | 0.91x | yes | Exit EV/EBITDA: 11.0x / 13.0x / 15.0x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $108.85 | 1.00x | yes | P/E 18x (static sector reference · 2026-04), scenarios: 14.7x / 18.0x / 21.3x (bear / base = reference held flat / bull), EV/EBITDA 12x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $58.34 | 1.87x | yes | BV/sh $60.38, ROE (TTM) 8.9%, ke 9.3% |
| Two-Stage Excess Return | Asset | $57.35 | 1.91x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $90.26 | 1.21x | yes | Rev $1.4B, growth 20% (input: historical growth; tapered), Terminal P/S: 1.1x / 1.4x / 1.7x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $124.51 | 0.88x | yes | EPS $5.42, growth 23% (input: historical EPS growth), PEG=0.88 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $32.92 | 3.32x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.10B × (1−23%) / WACC 8.7% → EPV (no growth) |
| Residual Income | Asset | $57.18 | 1.91x | yes | BV $60.38 + 5yr PV of (ROE (TTM) 8.9% − Kₑ 9.3%) × BV; BV grows 5.8%/yr |
| Graham Number | Asset | $85.81 | 1.27x | yes | √(22.5 × EPS $5.42 × BVPS $60.38) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $101.07 | 1.08x | yes | EBITDA $0.16B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $78.41 | 1.39x | yes | FCF $137.4M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $67.73 | 1.61x | yes | SBC-adj FCF $0.12B (FCF $0.14B − SBC $0.02B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $174.89 | 0.63x | yes | EPS $5.42 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $15.81 | 6.92x | yes | BV $60.38 × (ROIC 2.3% / WACC 8.7%) |
| P/Sales Sector | Relative | $195.88 | 0.56x | yes | Revenue $1.45B × sector P/S 2.5x |
| PEG Fair Value | Relative | $186.77 | 0.59x | yes | EPS $5.42 × (PEG 1.5 × growth 23.0% (input: historical EPS growth)) → PE 34.5x |
| Earnings Yield | Earnings | $58.59 | 1.87x | yes | EPS $5.42 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $5.7m |
| Net debt / NOPAT (after-tax) | -0.06x (net cash) |
| Net debt / operating income (pre-tax) | -0.04x (net cash) |
| Interest coverage | 10.0x |
| Share count CAGR (dilution) | 3.5% |
| Burning cash | no |
Bullet Takeaways
At $94.32 the market pays about 14x company-wide operating income for Addus, which works out to an embedded assumption of roughly 1.5% annual operating-profit growth for five years. That is a low bar for a business that has been compounding revenue in the high teens to low twenties through acquisitions.
The mix is overwhelmingly personal care (77%), with hospice at 18% and home health at 5%. Personal care grew 8.8% to $281.1M in Q1 2026, and the segment serves a mostly dual-eligible population, which ties the revenue base to Medicaid rate policy more than to the consumer economy.
The balance sheet is a genuine asset here: Addus is in a net cash position with interest coverage above 12x and roughly $103M of cash plus a large undrawn revolver. That capacity is what funds the roll-up, which is also the source of the chief risk: the model depends on continued acquisitions and on reimbursement rates holding.
Bull Case
The loudest objection to Addus is reimbursement risk, so start there and then test whether the data supports the fear. The worry is that a government-funded home-care company is one rate cut away from a re-rating, and the proposed roughly 6.4% Medicare home health payment cut for 2026 is the kind of headline that drives that worry. But look at where the revenue actually sits: home health is only about 5% of the mix, and it shrank 7.0% to $16.7M in Q1 2026 even as the company kept growing overall. The 77% that is personal care runs through Medicaid and managed-Medicaid programs, not the Medicare home health rate the cut targets, and personal care grew 8.8% to $281.1M in the same quarter. The filing describes personal care as "a significant component of home and community-based services, which have grown in significance and demand in recent years" (FY2025 10-K, accession 0001437749-26-005352). The most-feared cut lands on the smallest, already-shrinking leg.
The second pillar is the demographic tailwind and the company's position in it. Addus serves people who "require long-term care and assistance with activities of daily living to maintain their independence at home," a population growing as the country ages and as states push care out of facilities and into the home to save money (FY2025 10-K). Personal care is labor-intensive and locally fragmented, which is why a disciplined consolidator with scale in caregiver recruiting and payer relationships can keep buying small operators accretively. Management has been explicit that states with supportive Medicaid rates, like Indiana, are the targets, and the post-quarter HomeCourt acquisition (about 240 clients, roughly $9.7M of annual revenue, for around $12.5M) is the small-deal template.
The third pillar is balance-sheet firepower against a low implied bar. Addus carries net cash, interest coverage above 12x, about $103.1M of cash, and a revolver with roughly $547.8M of availability. CEO Dirk Allison has indicated the balance sheet can support deals at the scale of the Gentiva personal-care acquisition that closed in late 2024. Against that capacity, the price embeds only about 1.5% annual operating-profit growth, well inside what the company has recently delivered.
Bear Case
The bear case is fundamentally a narrative-dependency case: strip out the assumptions baked into the price and ask which one is most fragile. The price is justified by the relative-multiple and growth-DCF families; the asset-based methods say the stock is already expensive. Book value per share is about $60.38 against a $94.32 price (June 27, 2026), and the excess-return and residual-income models, which anchor to book and a TTM ROE of 8.9% that sits just below the 9.3% cost of equity, all land in the high $50s. The earnings-power value, which asks what the business is worth at current earnings with no growth, comes in near $33. In other words, the premium over book and over zero-growth earnings exists only because the market is underwriting continued growth, and that growth is acquisition-fueled rather than organic.
That dependency on M&A is the fragile assumption. The roll-up math works only as long as Addus can keep finding personal-care operators at sensible multiples in rate-friendly states and integrate them without margin slippage. Each deal consumes the balance-sheet capacity that is currently a strength, and a roll-up that pauses, because targets get expensive or a large deal stumbles, would see growth decelerate toward the low single digits the price assumes, removing the upside the higher multiple is paying for. The historical revenue growth in the high teens is not organic volume growth; Q1 2026 organic volumes were described as roughly flat, with growth coming from price and acquired revenue.
The second fragility is reimbursement, which is real even if mis-located. The entire payer base is government-funded, and the filing details a Medicare home health framework where "the daily home health payment rate is adjusted for case-mix and area wage levels" under the Patient-Driven Groupings Model and where payment can be impacted by quality-measure performance and the Review Choice Demonstration (FY2025 10-K, accession 0001437749-26-005352). The larger personal-care book depends on state Medicaid budgets, which tighten in recessions and can be cut without much notice. A business whose entire top line is set by government rate decisions carries a tail risk no operating excellence can fully hedge, and the modest premium the stock carries gives little cushion if a rate cycle turns against it.
Valuation
Inverting the $94.32 price, the market is paying about 14x company-wide operating income, which implies operating growth of roughly 1.5% per year for five years at an 8.7% cost of capital with 4% terminal growth. That is a single solve under fixed assumptions, so it is approximate, and each percentage point of cost of capital moves the implied growth by about six points. The headline read is that the implied near-term pace is within what Addus has recently delivered; the stretch, as the engine frames it, is in how long the growth must persist, not the rate.
The model families split in a familiar pattern for a profitable consolidator. The relative methods are mixed, with sector P/E and EV/EBITDA implying about $101 to $109, close to today's price, while the P/S method on a 2.5x sector multiple implies a much higher $196. The asset and earnings families are the conservative voice: excess-return and residual-income land in the high $50s, earnings-power value near $33, and ROIC-justified book near $16, all below price, because the business does not yet earn well above its cost of capital on a reported basis.
The practical takeaway is that the modest 14x operating-income multiple is not demanding heroics, but it is paying a premium over what the asset base and current earnings power alone would support. The price is reasonable if the acquisition engine keeps running and rates hold; it is full if either stalls.
Catalysts
Addus reported Q1 2026 results in early May 2026 with revenue up 7.7% to $363.6M and diluted EPS of $1.36 versus $1.16, an EPS beat, though the stock dipped on the print as the market weighed flat organic volumes against the acquisition-driven top line. Personal care led at +8.8%, hospice grew 7.1%, and home health declined 7.0%. The next quarterly report is the key checkpoint on whether organic volume reaccelerates or the growth stays acquisition-dependent.
The live catalyst is the M&A pipeline. After the quarter Addus acquired HomeCourt Home Care in Indiana for about $12.5M, and management has signaled appetite for larger deals on the scale of the late-2024 Gentiva personal-care acquisition, funded by net cash and a roughly $547.8M revolver. Any sizable accretive deal in a rate-supportive state would be the clearest upside catalyst; conversely, a quiet acquisition stretch would weigh on the growth narrative the multiple depends on.
The overhang to watch is reimbursement policy. The proposed roughly 6.4% Medicare home health payment cut for 2026 is the headline risk, though it lands on the smallest segment, while the larger personal-care and hospice books depend on Medicaid and Medicare hospice rates set by CMS and the states. Analyst sentiment is constructive: JMP Securities initiated coverage at Outperform with a $150 price target, well above the current $94.32, framing the setup as scale plus balance-sheet optionality against regulatory risk.
Peer Cohorts (Per Segment, With Filing Citations)
Personal Care (reported)
- AVAH (Aveanna Healthcare Holdings Inc.)
- FY2025 10-K: …to patients including private duty nursing and therapy services, (ii) adult home health and hospice services (collectively "patient revenue"); and (iii) from the delivery of enteral nutrition and other products to patients ("product revenue"). The services provided by the Company have no fixed duration and can be…
- FY2025 10-K: …Duty Services ("PDS"); Home Health & Hospice ("HHH"); and Medical Solutions ("MS"). This presentation aligns our financial reporting with the manner in which we manage our business operations, with a focus on the strategic allocation of resources and separate branding strategies between the business divisions.…
- AHCO (AdaptHealth Corp.)
- FY2025 10-K: …of sensitive personal information, such as protected health information could cause a loss of confidential data, give rise to remediation and other expenses, expose us to liability under applicable laws and regulations, including the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), consumer…
- FY2025 10-K: …policies and procedures with respect to protected health information that is used or disclosed. The HITECH Act includes notification requirements for breaches of patient-identifiable health information, restricts certain disclosures and sales of patient-identifiable health information and provides a tiered system for…
- BKD (BROOKDALE SENIOR LIVING INC.)
- FY2025 10-K: …areas of compensation, leadership, career growth, and meaningful work. • Earn resident and family trust and satisfaction by providing valued, high-quality care and personalized service. We believe that fostering the continued trust of our residents and their families will allow us to build relationships that create…
- FY2025 10-K: …their changing needs. Assisted Living and Memory Care. The Company's Assisted Living and Memory Care segment includes owned or leased communities that offer housing and 24-hour assistance with activities of daily living for the Company's residents. The Company's assisted living and memory care communities include…
- EHC (Encompass Health Corporation)
- FY2025 10-K: $2,190,000 for multiple identical violations in a single calendar year depending on an entity's level of culpability. Importantly, HHS-OCR has indicated that the failure to conduct a security risk assessment or adequately implement HIPAA compliance policies could qualify as willful neglect. In addition, there are…
- FY2025 10-K: …expense includes all costs associated with supplies used while providing patient care. Specifically, these costs include personal protective equipment ("PPE"), pharmaceuticals, food, syringes, bandages, and other similar items. S upplies increased during 2025 compared to 2024 primarily due to higher costs resulting…
Hospice (reported)
- CHE (CHEMED CORPORATION)
- FY2025 10-K: …to settlements of audits and reviews, as well as certain hospice-specific revenue capitations. Amounts are generally billed monthly or subsequent to patient discharge. Subsequent changes in the transaction price initially recognized are not significant. Hospice services are provided on a daily basis and the type of…
- FY2025 10-K: …to hospices will not decrease. Reductions in amounts paid by government programs for services or changes in methods or regulations governing payments could cause VITAS' net patient service revenue and profits to materially decline. 15% to 20% of VITAS' days of care are provided to patients who reside in nursing…
- AVAH (Aveanna Healthcare Holdings Inc.)
- FY2025 10-K: …services and durable medical equipment, some of which may have greater financial and other resources and may be more established in their respective communities. Competing companies may offer newer or different services from those offered by us and may thereby attract customers who are presently receiving our home…
- FY2025 10-K: …can help our patients recover after a hospitalization or surgery and assist patients in managing chronic illnesses. We also help our patients manage their medications. Through our care, we help our patients recover more fully in the comfort of their own homes, while remaining as independent as possible. HH Services…
- AHCO (AdaptHealth Corp.)
- FY2025 10-K: …price, such that net revenue is recorded only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in the future. If actual amounts of consideration ultimately received differ from the Company's estimates, the Company adjusts these estimates,…
- FY2025 10-K: …necessity determinations. AdaptHealth cannot currently predict the adverse impact these measures might have on its financial condition and results of operations, but such impact could be material. Federal and state budgetary and other cost-containment pressures will continue to impact the home respiratory care…
- EHC (Encompass Health Corporation)
- FY2025 10-K: …by CMS causing the facility to be paid under the acute-care payment system which would result in reduced reimbursement per discharge. If one or more of our hospitals fails to demonstrate compliance with the 60% Rule and CMS re-classifies it as an acute-care hospital, our revenue and profitability may be materially…
- FY2025 10-K: …to repurchase shares. • We may be unable or unwilling to continue to declare and pay dividends on our common stock. The cautionary statements referred to in this section also should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on…
Home Health (reported)
- AVAH (Aveanna Healthcare Holdings Inc.)
- FY2025 10-K: …Episodic Admissions Home health total admissions represents the number of new patients who have begun receiving services. We review the number of home health admissions on a daily basis as we believe it is a leading indicator of our growth. We measure home health admissions by reimbursement structure, separating them…
- FY2025 10-K: …wage, this has not historically been a source of risk to our margins, as our non-clinical reimbursement rates generally have mechanisms to adjust commensurate with state and local changes in applicable minimum wages. Pediatric Therapy We provide physical, occupational and speech therapy services to assist pediatric…
- AHCO (AdaptHealth Corp.)
- FY2025 10-K: …respiratory failure. Diabetes Health The Diabetes Health segment provides medical devices, including continuous glucose monitors and insulin pumps, and related services to patients for the treatment of diabetes. Wellness at Home The Wellness at Home segment provides home medical equipment and services to patients in…
- FY2025 10-K: …due to a shift in payor mix from commercial insurance to government payors, partially offset by growth in patient census for insulin pumps and supplies. Adjusted EBITDA Adjusted EBITDA from the Diabetes Health segment decreased by $34.5 million, or 56.9%, for the year ended December 31, 2025 compared to the year…
- EHC (Encompass Health Corporation)
- FY2025 10-K: …and may include exclusion from federal health care programs such as Medicare and Medicaid. The penalties are adjusted annually to account for inflation. Sanctions under this law are in addition to the other statutory remedies discussed above. Available Information We make available through our website,…
- FY2025 10-K: …a monetary reward for providing information on Medicare fraud and abuse that leads to the recovery of Medicare funds. Penalties for violations of HIPAA include civil and criminal monetary penalties. The United States Department of Health and Human Services Office of Civil Rights ("HHS-OCR") implemented a permanent…
- CHE (CHEMED CORPORATION)
- FY2025 10-K: …for a short period for pain control or symptom management which cannot be managed in other settings. General inpatient care services must be provided in a Medicare or Medicaid certified hospital or long-term care facility or at a freestanding inpatient hospice facility with the required registered nurse staffing.…
- FY2025 10-K: …General Inpatient Care occurs when a patient requires services in a controlled setting for a short period of time for pain control or symptom management which cannot be managed in other settings. General inpatient care services must be provided in a Medicare or Medicaid certified hospital or long-term care facility…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.