| PART I | | 5 |
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| Item 1. | Business | 5 |
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| Item 1A. | Risk Factors | 22 |
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| Item 1B. | Unresolved Staff Comments | 40 |
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| Item 1C. | Cybersecurity | 40 |
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| Item 2. | Properties | 41 |
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| Item 3. | Legal Proceedings | 41 |
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| Item 4. | Mine Safety Disclosures | 41 |
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| PART II | | 42 |
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| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 42 |
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| Item 6. | [Reserved] | 42 |
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| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 43 |
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| Item 7A. | Quantitative and Qualitative Disclosures about Market Risk | 63 |
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| Item 8. | Financial Statements and Supplementary Data | 63 |
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| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 63 |
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| Item 9A. | Controls and Procedures | 63 |
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| Item 9B. | Other Information | 64 |
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| Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 64 |
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| PART III | | 65 |
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| Item 10. | Directors, Executive Officers and Corporate Governance | 65 |
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| Item 11. | Executive Compensation | 65 |
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| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 65 |
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| Item 13. | Certain Relationships and Related Transactions, and Director Independence | 65 |
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| Item 14. | Principal Accounting Fees and Services | 65 |
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| PART IV | | 66 |
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| Item 15. | Exhibits and Financial Statement Schedules | 66 |
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SPECIAL CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
When included in this Annual Report on Form 10-K, or in other documents that we file with the Securities and Exchange Commission (“SEC”) or in statements made by or on behalf of the Company, words like “believes,” “belief,” “expects,” “plans,” “anticipates,” “intends,” “projects,” “estimates,” “may,” “might,” “would,” “should,” and similar expressions are intended to be forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to:
| • | the impact of macroeconomic conditions, including inflation and interest rates, legislative and political developments, including federal government shutdowns, any lapse in appropriations and any hold on or cancellation of congressionally authorized spending or interruptions in the distribution of government funds, trade policies and tensions, including changes in, or the imposition of, tariffs and/or trade barriers and the economic impacts, volatility and uncertainty resulting therefrom, and the potential adverse effects of current conditions; |
| • | business disruptions due to inclement weather, natural disasters, acts of terrorism, military conflicts, pandemics, civil insurrection or social unrest; |
| • | changes in operational and reimbursement processes and payment structures at the state or federal levels; |
| • | changes in Medicaid, Medicare, other government program and managed care organizations’ policies and payment rates, and the timeliness of reimbursements received under government programs; |
| • | the implementation of new, and possible changes to existing federal and state laws or regulations, or our failure to comply with such laws or regulations or comply on a timely basis; |
| • | the impact of decisions of the U.S. Supreme Court regarding the actions of federal agencies; |
| • | changes in the executive branch of the federal government; |
| • | changes in the structure and administration of, and funding for, federal and state agencies and programs; |
| • | competition in the healthcare industry; |
| • | the geographical concentration of our operations; |
| • | changes in the case mix of consumers and payment methodologies; |
| • | operational changes resulting from the assumption by managed care organizations of responsibility for managing and paying for our services to consumers; |
| • | the nature and success of future financial and/or delivery system reforms; |
| • | changes in estimates and judgments associated with critical accounting policies; |
| • | our ability to maintain or establish new referral sources; |
| • | our ability to renew significant agreements or groups of agreements; |
| • | our ability to attract and retain qualified personnel; |
| • | federal, state and city minimum wage pressure, including any failure of any governmental entity to enact a minimum wage offset and/or the timing of any such enactment; |
| • | changes in payments and covered services due to the overall economic conditions and deficit or spending reduction measures by federal and state governments, and our expectations regarding these changes; |
| • | cost containment initiatives undertaken by federal and state governmental and other third-party payors; |
| • | our ability to access financing through the capital and credit markets; |
| • | our ability to meet debt service requirements and comply with covenants in debt agreements; |
| • | our ability to integrate and manage our information systems; |
| • | any security breaches, cyber-attacks, loss of data, or cybersecurity threats or incidents, and any actual or perceived failures to comply with legal requirements related to the privacy of confidential consumer data and other sensitive information; |
| • | the size and growth of the markets for our services, including our expectations regarding the markets for our services; |
| • | eligibility standards and limits on services imposed through legislation or by governmental agencies or other third-party payors; |
| • | the potential for litigation, audits and investigations; |
| • | discretionary determinations by government officials; |
| • | our ability to successfully implement our business model to grow our business; |
| • | our ability to continue identifying, pursuing, consummating and integrating acquisition opportunities and expanding into new geographic markets; |
| • | the impact of acquisitions and dispositions on our business, including the potential inability to realize the benefits of potential acquisitions; |
| • | the effectiveness, quality and cost of our services; |
| • | our ability to successfully execute our growth strategy; |
| • | changes in tax rates; and |
| • | various other matters, many of which are beyond our control. |
Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on any forward-looking statement as a prediction of future events. We expressly disclaim any obligation or undertaking, and we do not intend to release publicly any updates or changes in our expectations concerning the forward-looking statements or any changes in events, conditions or circumstances upon which any forward-looking statement may be based, except as required by law. For a discussion of some of the factors discussed above as well as additional factors, see Part I, Item 1A—“Risk Factors” and Part II, Item 7—”Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates.”
Summary Risk Factors
You should carefully read and consider the risk factors set forth under the Item 1A, “Risk Factors,” as well as all other information contained in this Annual Report on Form 10-K. Additional risks and uncertainties are not presently known to us or that we currently deem immaterial may also affect us. If any of these risks occur, our business, financial position, results of operations, cash flows or prospects could be materially and adversely affected. Our business is subject to the following principal risks and uncertainties:
| • | Our growth strategy depends on our ability to manage growing and effectively integrating operations and we may not be successful in managing this growth. |
| • | Completed or future acquisitions, or growth initiatives, may be unsuccessful and could expose us to unforeseen liabilities. |
| • | We may be unable to pursue acquisitions or expand into new geographic regions without obtaining additional capital or consent from our lenders. |
| • | Our financial results have been, and may continue to be, adversely impacted by negative macroeconomic conditions. |
| • | Timing differences in reimbursement may cause liquidity problems. |
| • | We have been and may become the subject of surveys, audits and investigations by governmental agencies and private payors, which could have adverse findings that may negatively impact our business. |
| • | Our revenues are concentrated in a small number of states, which makes us particularly sensitive to regulatory and economic changes in those states. |
| • | Future efforts to reduce the costs of the Illinois Department on Aging programs could adversely affect our service revenues and profitability. |
| • | Failure to renew a significant payor agreement or group of related payor agreements may materially impact our revenue. |
| • | Negative publicity or changes in public perception of our services may decrease consumer volumes and adversely affect our ability to receive referrals, obtain new agreements and renew existing agreements, any of which could adversely affect our business. |
| • | Our business may be harmed by labor relations matters. |
| • | If we were required to write down all or part of our goodwill and/or our intangible assets, our net earnings and net worth could be materially adversely affected. |
| • | If we fail to maintain an effective system of internal control over financial reporting, such failure could adversely impact our business and stock price. |
| • | Any increase in the volume of self-pay patients or deterioration in the collectability of patient responsibility accounts could adversely affect our financial condition or results of operations. |
| • | Our hospice operations are subject to annual Medicare caps. If we exceed the caps, our business and consolidated financial condition, results of operations and cash flows could be materially adversely affected. |
| • | Reductions in reimbursement and other changes to Medicare, Medicaid, and other federal, state and local medical and social programs could adversely affect our consumer caseload, units of service, revenues, gross profit and profitability. |
| • | Federal and state regulation may impair our ability to consummate acquisitions or open new agencies. |
| • | The implementation of alternative payment models and any increases in enrollment in Medicare Advantage or Medicaid managed care plans may limit our market share and could adversely affect our revenues. |
| • | Our industry is highly competitive, fragmented and market-specific. |
| • | If we fail to comply with the extensive laws and regulations governing our business, we could be subject to penalties or be required to make changes to our operations, which could negatively impact our business and profitability. |
| • | We are subject to federal, state and local laws and regulations that govern our employment practices, including minimum wage, living wage, and paid time-off requirements. Failure to comply with these laws and regulations, or changes to these laws and regulations that increase our employment-related expenses, could adversely impact our operations. |
| • | Our business may be adversely impacted by changes and uncertainty in the healthcare industry, including healthcare public policy developments and other changes to laws and regulations. |
| • | The industry trend toward value-based payment models may negatively impact our revenues. |
| • | Our operations subject us to risk of litigation. |
| • | Our insurance liability coverage may not be sufficient for our business needs. |
| • | Our business depends on the proper functioning, availability, and security of our information systems. Our operations may be disrupted if we are unable to effectively integrate, manage and maintain the security of our information systems. |
| • | A cyber-attack or security breach could cause a loss of confidential consumer data, give rise to remediation and other expenses, expose us to liability under privacy laws, consumer protection laws, common law and other legal theories, subject us to litigation and federal and state governmental inquiries, damage our reputation, result in interruptions or delays to services, adversely impact our financial results, and otherwise be disruptive to our business. |
| • | We may not be able to attract and retain qualified personnel or we may incur increased costs in doing so. |
| • | The departure of any member of our executive team may materially adversely affect our operations, and any replacement for a departed member of our executive team may be unable to execute our strategies at the same level. |
| • | Restrictive covenants in the agreements governing our indebtedness may adversely affect us. |
| • | Factors beyond our control, including inclement weather, natural disasters, acts of terrorism, pandemics, riots, civil insurrection or social unrest, looting, protests, strikes and street demonstrations, may impact our ability to provide services. |
| • | The emergence and effects related to a potential future pandemic, epidemic, or outbreak of infectious disease could adversely impact our business and future results of operations and financial condition, and we may be more vulnerable to the effects of a public health crisis than other businesses due to the nature of our business and consumers. |
Unless otherwise provided, “Addus,” “we,” “us,” “our,” and the “Company” refer to Addus HomeCare Corporation and our consolidated subsidiaries and “Holdings” refers to Addus HomeCare Corporation. When we refer to 2025, 2024 and 2023, we mean the twelve-month period then ended December 31, unless otherwise provided.
A copy of this Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the SEC, including all exhibits, is available on our internet website at http://www.addus.com on the “Investors” page link. Information contained on, or accessible through, our website is not a part of, and is not incorporated by reference into, this Annual Report on Form 10-K.
