Addus HomeCare Corporation (ADUS) Earnings Call Transcript

Good morning, and welcome to Addus HomeCare's Second Quarter 2026 Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Dru Anderson, Senior Partner, FIN Partners. Please go ahead.

Thank you. Good morning, and welcome to the Addus HomeCare Corporation Second Quarter 2026 Earnings Conference Call. Today's call is being recorded. To the extent any non-GAAP financial measure is discussed in today's call, you will also find a reconciliation of that measure to the most directly comparable financial measure calculated according to GAAP by going to the company's website and reviewing yesterday's news release. This conference call may also contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding Addus' expected quarterly and annual financial performance for 2026 or beyond. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, discussions of forecasts, estimates, targets, plans, beliefs, expectations and the like are intended to identify forward-looking statements. You are hereby cautioned that these statements may be affected by important factors, among others, set forth in Addus' filings with the Securities and Exchange Commission and in its second quarter 2026 news release. Consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements. The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. I would now like to turn the call over to the company's Chairman and Chief Executive Officer, Mr. Dirk Allison. Please go ahead, sir.

Thank you, Dru. Good morning, and welcome to our 2026 second quarter earnings call. With me today is Brian Poff, our Chief Financial Officer. As we do on each of our earnings call, I will begin with a few overall comments, and then Brian will discuss the second quarter results in more detail. Following our comments, we would be happy to respond to any questions. As we announced yesterday afternoon, our total revenue for the second quarter of 2026 was $377.4 million, an increase of 8% as compared to the $349.4 million for the second quarter of 2025. This revenue growth resulted in adjusted earnings per share of $1.73 as compared to adjusted earnings per share for the second quarter of 2025 of $1.49, an increase of 16.1%. Our adjusted EBITDA was $49.2 million compared to $43.9 million for the second quarter of 2025, an increase of 11.9%. For the second quarter of 2026, cash flow from operations was $40 million as compared to $22.5 million for the same period in 2025. As of March 31, 2026, we had cash on hand of approximately $100 million. With our strong cash flow in the second quarter, we reduced our bank debt to $64.3 million, leaving us with the financial flexibility to consider larger acquisition opportunities as we continue to pursue expansion of our market reach and increasing our geographic density. As we announced on May 1, we closed on the acquisition of the personal care operation of HomeCourt home care based in Fort Wayne, Indiana. This acquisition marks our entry into an attractive state, which is adjacent to our largest personal care market of Illinois. We have been interested in Indiana for some time as we look to enter new markets that fit our strategic profile. As we announced last quarter, we have also entered into a definitive purchase agreement to acquire certain operating assets of a similarly sized personal care provider based in Indianapolis, Indiana area, which will complement our HomeCourt home care operation. We anticipate closing this acquisition subject to satisfaction of customary closing conditions, including regulatory review and approval. These 2 acquisitions continue our strategy of entering new markets with some scale and the ability to expand our services. On July 1 of this year, CMS issued a proposed 2027 home health payment rule. CMS proposed to increase payments to home health agencies by 2.4% or $420 million, which reflects the impact of a 2.1% update in payments due to the statutory required annual payment update and a 0.3% increase in payments related to the proposed update to the fixed dollar loss ratio used for outlier payments. CMS is also proposing to implement a negative 3% temporary adjustment, the same as was applied last year. The net result is a proposed payment rate increase of 2.1% compared to last year's rate decrease of 1.3%. While we are pleased with a positive rate increase for 2027, we are concerned about the continuing effect of the temporary adjustment, and we support the industry's ongoing efforts to eliminate these adjustments. Comments on the proposed rules are due by August 31, 2026, with the final rule expected around the end of October 2026. On July 30, CMS published the final fiscal 2027 hospice rate, which will be effective on October 1, 2026. The final rate equates to a 2.3% increase versus the 2.4% proposed rate increase. While we are appreciative of this increase, it does reflect an approximate 30 basis point decrease from the fiscal 2026 final hospice rate increase of 2.6%. While as of today, there has been no additional movement to announce, we continue to believe that the 80/20 provision of the CMS Medicaid access rule will be eliminated in the near future, potentially by year-end. While implementation is still several years away and has no current impact on our business or financial performance, we believe this outcome would be an encouraging development for both our industry and our company. Our team continues to work with CMS to eliminate this portion of the Medicaid access rule. During the second quarter of 2026, we continue to experience positive hiring trends in our Personal Care segment. Our number of hires per business day in the second quarter of 2026 was 104, which was down modestly from the prior quarter, but approximately the same rate we saw in the second quarter of 2025. Our team continues to do a nice job making sure we keep our hiring numbers at the level needed to meet our organic growth targets. Now let me discuss our same-store revenue growth for the second quarter of 2026. For our Personal Care segment, our same-store revenue growth was 6.8% compared to the second quarter of 2025. During the second quarter of 2026, we saw Personal Care same-store hours increase by 2.2% compared to the same period in 2025, while our percentage of authorized hours served in the second quarter saw incremental improvement into the mid-80s as expected. On a sequential basis, personal care same-store census increased 1.2% as we are seeing growth in the majority of our markets. During the second quarter, we saw growth in clients served in Illinois, our largest markets, which is something we had anticipated for several quarters. This is important as we look to achieve year-over-year same-store census growth during the last half of 2026. Turning to our clinical operations. Our hospice same-store revenue increased 11.1% compared to the same quarter of 2025. We did experience some impact from Medicare Cap this quarter, primarily in our Ohio market, which, as previously noted, is excluded from our same-store calculation. We continue to focus on maintaining a balanced mix of patients and operating within the Medicare Cap. We typically have some marginal cap exposure in a few provider locations each year and consistent with our approach, have mitigation strategies in place to reduce the ultimate impact. We are pleased to see our same-store average daily census increased to 3,964 for the second quarter, up from 3,720 for the same period last year, an increase of 6.5%. Our growth in hospice has continued in July with our average daily census exceeding 4,000. For the second quarter of 2026, our hospice median length of stay was 24 days as compared to 23 days for the fourth quarter of 2025 and 22 days for the second quarter of 2025. Overall, our hospice segment has continued to generate consistent growth over the past several quarters. While our home health same-store revenue decreased 2.8% when compared to the same quarter of 2025, it was an improvement from the decrease of 6.6% we saw in the first quarter of this year. Importantly, we also saw sequential improvement in revenue, operating income and admissions. We continue to focus on upgrading leadership, conversion of referrals to admissions and focusing on timeliness of admissions. We continue to believe that creating size and scale are important in post-acute health care services. And as you know, we have been focused on the development strategy for the past 10 years. Our development team continues to evaluate opportunities, which would increase both density and geographic coverage as we seek to further strengthen our relationship with states and managed care organizations. Recently, we have begun to see an increasing number of personal care opportunities, which we will be actively pursuing. Since the announcement of the 2027 proposed home health rule rate, there is more optimism around potential deals in skilled home health care. While there is still some uncertainty around the temporary adjustment and its impact on future rate increases, there does seem to be more potential activity in home health care. While we will be open to considering home health opportunities, we will continue to be diligent as we evaluate possible transactions to further our strategy. Before I turn the call over to Brian, it is important to thank our Addus team for the care they are providing to our elderly and disabled consumers and patients. We have all come to understand that the overwhelming majority of the population prefers to receive care at home, which not only remains one of the safest but also the most cost-effective places to receive this care. We believe the heightened awareness of the value of home-based care is favorable for our industry and will continue to be a growth opportunity for our company. We understand and appreciate that our operations and growth are dependent on both our dedicated caregivers and our other employees who work so incredibly hard providing outstanding care and support to our clients, patients and their families. With that, let me turn the call over to Brian.

Thank you, Dirk, and good morning, everyone. The company continued its trajectory of solid growth and consistent operational execution during the second quarter of 2026. We delivered an 8% top line revenue increase, bringing total net service revenues to $377.4 million, alongside a strong 11.9% year-over-year rise in adjusted EBITDA to $49.2 million. Our Personal Care segment accounted for 78.4% of revenues, achieving a 6.8% organic revenue increase compared to the second quarter of last year. Growth was bolstered by higher volume trends with an increase of 2.2% in same-store hours per business day within our target range of 2% to 2.5%. The second quarter also included 2 months of the operations of HomeCourt home care, our Indiana acquisition, which closed on May 1. Additionally, we continue to realize positive contributions from state level rate support, including the 9.9% reimbursement rate enhancement in Texas enacted late last year as well as a 3.9% increase in Illinois that took effect January 1 of this year. Our hospice operations delivered steady performance, representing 17% of overall second quarter revenue with an 11.1% organic revenue increase over the same period from last year. The steady expansion was powered by favorable year-over-year metrics across our average daily census and revenue per patient day. Turning to home health. Our operations accounted for 4.6% of second quarter revenues, and we are encouraged by strengthening volume and admission trends. As we have noted previously, home health remains an important component of our comprehensive care continuum strategy, allowing us to offer all 3 levels of care to patients in select markets, which strengthens our value-based care capabilities and our relationships with payers. We continue to generate strong cash flow from operations through the first 6 months of the year, which leaves us very well capitalized. Our balance sheet management and low leverage profile provide us the flexibility to strategically pursue targeted nonclinical and clinical acquisitions designed to deepen our market density and expand regional reach. As Dirk noted, total net service revenues for the second quarter were $377.4 million. The revenue breakdown is as follows: Personal Care revenues were $296 million or 78.4% of revenue. Hospice care revenues were $64.2 million or 17% of revenue. Home health revenues were $17.2 million or 4.6% of revenue. Other financial results for the second quarter of 2026 include the following: our gross margin percentage was 32.2% compared with 32.6% for the second quarter of 2025. Sequentially, our gross margin percentage reflects an expansion of 30 basis points from the first quarter of 2026. As expected, we saw improvement in our gross margin percentage as employees begin to meet annual payroll tax thresholds and anticipate our gross margin percentage will continue following our historic annual pattern. G&A expense was 20.8% of revenue compared with 22.1% of revenue for the second quarter a year ago. Adjusted G&A expense for the second quarter was 19.2% compared with 20% a year ago as we continue to generate leverage on higher revenues and maintain cost discipline. The company's adjusted EBITDA for the second quarter of 2026 was $49.2 million compared with $43.9 million a year ago, an increase of 11.9%. Adjusted EBITDA margin was 13% compared with 12.6% for the second quarter of 2025. We continue to expect our full year adjusted EBITDA margin percentage to remain between 12% and 13%. Adjusted net income per diluted share was $1.73 compared with $1.49 for the second quarter of 2025. The adjusted per share results for the second quarter of 2026 exclude the following: acquisition expenses of $0.06, noncash stock-based compensation expense of $0.17 and restructure and other nonrecurring costs of $0.01. The adjusted per share results for the second quarter of 2025 exclude the following: acquisition expenses of $0.11 and noncash stock-based compensation expense of $0.18. Our tax rate for the second quarter of 2026 was 26.9%, slightly higher than our historical average, primarily due to the lack of an extension for the Work Opportunity Tax Credit or WOTSE program, which expired at the end of 2025. While traditionally, this program has been extended as part of broader legislation retroactively if necessary, without a further extension, we expect our tax rate to be in the upper 20% range. DSOs were 35.5 days at the end of the second quarter of 2026 compared with 36.3 days at the end of the first quarter of 2026. We have continued to experience consistent cash collections from the majority of our payers. Our DSOs for the Illinois Department of Aging for the second quarter were 26.8 days compared with 47.4 days at the end of the first quarter of 2026 as we saw strong collections at the end of the second quarter. Our net cash flow from operations was $40 million for the second quarter of 2026, continuing our trend of consistently strong performance. As of June 30, 2026, the company had cash of $99.6 million with capacity and availability under our revolving credit facility of $650 million and $577.8 million, respectively. Total bank debt was $64.3 million at the end of the quarter, a reduction of $30 million from the first quarter of 2026. We have also continued to reduce our revolver balance with $10 million paid to date in the third quarter. Our capital structure and strong balance sheet continue to support our ability to invest in our business and pursue strategic growth initiatives, including targeted acquisitions. Looking ahead, we will selectively pursue acquisitions that complement our organic growth and align with our strategy while maintaining our disciplined capital allocation and managing our net leverage ratio through ongoing debt reduction. This concludes our prepared comments this morning, and thank you for being with us. I'll now ask the operator to please open the line for questions.

[Operator Instructions] The first question comes from Raj Kumar with Stephens.

I appreciate all the color on the census commentary for PCS. Maybe kind of thinking about the back half here, kind of maybe thinking about the big 3 states, Illinois, New Mexico and Texas. Just curious on what you're seeing quarter-to-date there on that trajectory. And then also specifically towards New Mexico and Texas, I would appreciate any additional color on the caregiver app rollout and what inning you guys kind of see that being in right now?

Raj, I'll start first on the first part of the question. I think we're seeing nice momentum so far, I think particularly Illinois and New Mexico on just patient census. I think Texas for us has been not declining, but it has been kind of holding steady. So I think we're trying to see if we can get that accelerating at the same level that we're seeing in Illinois and New Mexico. I think both of those states are performing very well. And I think on your question around the fill rate and the caregiver app. So we actually saw a nice uptick this quarter. Our fill rate on a consolidated basis was between 84% and 85%, so up a little bit from kind of the lower 80s where we've been lately. I think the big driver of that has been Texas. So we've rolled out the caregiver app. We talked about it last quarter, probably expected it to take a few months to really see some traction. I think that actually is actually ahead of schedule, has ramped a little quicker than we probably even expected. So Texas has gotten up in kind of that mid sling toward the upper 80% range and fill rate. New Mexico, as we kind of expected with that rollout, having to work through the state's EBV app has been a little bit slower. We've seen a little bit of progress there, but not to the same level so far that we've seen in Texas.

Great. And as my follow-up, as you kind of think about the margin profile of the business kind of trending towards the upper end, it seems like towards the 12% to 13% kind of guide. I guess it would be helpful to kind of go through the color commentary on sequential movements in the back half. And then ultimately, also kind of thinking about the Gentiva integration and synergies there. I think you spoke more to that in the back half of this year. So curious on progress on that front as well.

Yes. I think on margin profile, I think we typically see Q3 -- sorry, Q2 to Q3 remaining pretty consistent. So somewhere in a similar range. Q4 is usually a higher percentage quarter for us to get the hospice rate increase. We don't have additional costs to go with that. So that's usually impactful. Plus we see, I think, some additional relief on payroll tax thresholds being met. So our expectation would be Q2 to Q3, probably pretty consistent, maybe a slight tick up and then a higher jump going into Q4. I think you kind of put all that together, that's probably going to put us toward the higher end of the 12%, pushing to 13% for the full year. I think really nice for us to see 13% in Q2. I think it sets us up well to be at that or above that for the remainder of this year, which we really like to see. I think on Gentiva and synergies, I think the one thing that we've kind of consistently talked about there is kind of some duplication of cost in their EMR. I think right now, we always talked about that as being a transition that we'll probably see in 2027. Right now, we're in the midst of doing our conversion of our legacy business into Homecare Homebase. That's going very well so far, but that will probably get us into early '27. We'll probably see the Gentiva business come off their EMR into that system sometime in that year. But we've always, I think, kind of indicated we expect to see probably close to probably $1 million in synergy as we eliminate some of those duplicate costs at that time.

I do think -- let me just add what Brian said. I do think the fact that the true transition of Gentiva has occurred. We're very comfortable with where we are in that process. I think the interesting thing in Texas right now is the rollout of our app. And as we have great hope that as we continue to roll that out and more people use that app, we'll continue to see growth in that particular market.

The next question comes from Ben Hendrix with RBC Capital Markets.

I wanted to jump over to hospice real quick and talk about the CA issue. I was wondering if you could elaborate a little bit more on kind of what your target balance is for long and short-stay patients and types of referrals in your Ohio and other markets? And if there are any impediments or competitive pressures that are kind of impeding you reaching those -- that balance?

Ben, yes, I think as Dirk kind of mentioned in his comments, we did have some cap this quarter that we recorded primarily in our Ohio market. I think we feel pretty comfortable that we're not going to have any additional exposure to CA for the remainder of this year. I think we've got some mitigation strategies in place that hopefully actually will help us mitigate some of the expense that we've taken to date as we get closer to the end of the cap year. But for us, I think it's always the key just operationally to make sure we have a good balanced mix of patients and making sure we're calling on the right referral sources. We typically have some programs, you're trying to kind of maximize ADC growth, but also making sure that you're operating within the cap. And we typically have some programs every year that might slip in slightly, but we kind of saw that in Q2. So I think we feel pretty comfortable with where we are going forward the rest of this year. I think for us, the key is just making sure we maintain kind of that balanced kind of mix. But to the second part of your question, we're not necessarily seeing any operational or competitive pressures that are maybe limiting certain type of admissions. That's not really a factor that we're seeing.

Okay. And just a follow-up to one of Dirk's comments. You mentioned the final rule of 2.3%, a little bit below your expectations there, a little less than what you've seen prior. Just wondering how that 2.3% translates to the actual rate update you'll see in your markets and if that is going to create any incremental cap cushion or going into fourth quarter and into fiscal 2027.

Yes. I think initial modeling for us based on kind of wage index and where we operate, we'll probably be a little bit less than the 2.3% national average. We're kind of waiting for the finalized calculation through Homecare Homebase typically models that for us in a pretty detailed fashion. But initially, I think we'll be a little under that. But I don't think it really impacts kind of our view on where we think we'll be with cap through the end of this year. Again, I think we don't anticipate having any additional cap expense exposure through the end of this year.

And I think one of the things we did, we always have our leadership working on trying to make balance between, as Brian said, long and short-stay patients to manage your cap. Right now, our focus is on Ohio. Our team is working on that. They have a plan. And so as Brian said, we don't expect any more cap. In fact, there could be some mitigation before the end of the cap year. So we'll continue to work on that. There's nothing that should keep that from occurring.

The next question comes from Matthew Gillmor with KeyBanc.

I wanted to follow up on some of the M&A comments. Just seeing if there's any more details to share. And more specifically, I was curious if there's anything causing the uptick that Dirk mentioned in terms of personal care opportunities and some of the optimism around home health as well. So any additional details on the M&A front would be great.

Well, I think part of what we're seeing is that in the personal care segment, people are getting used to the fact that the changes that the administrative make on Medicaid is not really affecting our business or our industry near as much as people thought. So I think owners are now comfortable in considering putting their business up for sale. We've seen a number of businesses out there we're looking at. And we continue to be very active. It's just -- sometimes it takes a while to get some of these things over the finish line. As it relates to the home health, realistically, probably starting about 4, 5, 6 months ago, there started to be optimism in the industry. If you listen to people, they started talking about we feel like the proposed rate coming out will be better than what we've seen in the last few years. I think that optimism actually increased when the proposed rule came out. The fact that some of the issues we were fearful of were not there. So really, the real issue out there is still the temporary adjustment. But I think people have gotten comfortable with that to believe that, that's going to be handled in the next year or 2. And so that's why I think you're seeing some of the opportunities in the home health starting to come about.

Got it. And then following up on just the state budget topic. Anything to report in terms of where things have landed across some of your key states, especially Illinois now that we're towards the tail end of the typical budgetary cycle?

I think most states that have finalized their budgets, I think a lot of people had some concerns that, hey, you might see some pressure. I think all the states that have finalized have maintained our rates. In fact, we've had a couple of states, particularly Oregon and Michigan, smaller states have actually given us increase going into this next cycle. So I think some of the concerns people had about some of the impact of OB3 coming in 2027, at least don't seem to be resonating with states that impact their view of us, our services or our reimbursement at this time. So I think we feel it's pretty stable. I think we announced on the last call that Illinois has finalized their budget. We're not going to get a rate increase this next cycle, but everything else is going to remain consistent. So just keep in mind, when we don't get reimbursement increases in states, we don't have wage inflation in those markets either. It kind of goes hand-in-hand. So margin profile should remain consistent.

The next question comes from Sean Dodge with BMO Capital Markets.

Dirk, you mentioned hiring has continued to progress. In the states where the caregiver app has been rolled out the longest, so I guess, primarily Illinois, have you seen that have any impact on retention or churn within those caregiver bases there? Has that had any kind of quantifiable benefit on that yet? And then just what percentage of your caregivers are using the app in Illinois now?

Yes. I'll take the second part, and I'll let Dirk talk about the hiring piece, Sean. But in Illinois, I think we're at probably into the 90-plus percent range of people that have downloaded and are using the app. I think we were hopeful to see similar adoption rates as we move into other states, Texas and Mexico. I think we're seeing Texas is not at that level at this point, but like I said, has ramped probably quicker than we had anticipated. So we'll be continuing to roll that out in additional states as we move forward. But I'll let Dirk talk a little bit about kind of just the impact from the app on recruiting and retention.

Yes. I think what we're seeing from the app is that our turnover is down slightly, which I think is exciting because, again, that's part of the aspect of making sure you have enough caregivers to take care of the clients that are out there and needing of care. So our team does a great job, our recruiting team, our operations team in the field does a great job of making sure they're doing the things to get people on board, narrowing the time between when we actually hire somebody and when they get them their first client. And so that along with -- and maintaining that [indiscernible] per business day target that we have, that along with the slightly lower turnover, I think, has certainly helped us as we try to continue to maintain the growth targets that we've given in PCS. And I do think that part of that is the reason why the turnover is slightly lower.

Okay. Great. And then on the bridge program, you've rolled that out in New Mexico and Tennessee. It sounds like putting a little bit more muscle behind it in Illinois now. What's actually involved in rolling that bridge program out? Is it mostly just some type of like technology implementation? Or is there a lot of market education you have to do? And what I want to understand a little bit better is just the lead time from when you roll that out in the market, how quickly you can start to move the needle on volumes toward your clinical assets there?

Well, I think right now, a lot of it is internal marketing to our teams, making sure that they're talking from a standpoint of home health to hospice, it's a lot easier because we're on Homecare Homebase. And so making sure that the leadership of the markets understand the bridge program. We do have some limitations as to marketing outside of our team in certain states. There's things you can and cannot do. So we have to be very careful with that. But we are seeing progress in Tennessee. As you know, New Mexico has been a great market for us. Now we're moving into Illinois with it. And one of the aspects that's really encouraging to us, Brian mentioned in his comments or one of the answers to the question that we are in the middle of our conversion of our personal care business to Homecare Homebase. That is going very well. We are right now scheduled to be through by the end of the first quarter of 2027. Once that occurs, then the bridge program inclusive of PCS all the way up through home health and hospice will be much easier because it will be on one EMR. So that's a time frame that we're very excited and something we're looking forward to as we try to expand the Bridge program more into the PCS world at that time.

The next question comes from Brian Tanquilut with Jefferies.

Maybe Dirk or Brian, as I think about some of the headlines we're seeing about the federal government withholding payments on Medicaid to certain states because of audits and whatnot. Just curious what you're seeing and how you're thinking about the states that you operate in, given this environment.

Well, I think there's a very political environment now, obviously, with the fraud and abuse out there, the focus by the current administration. I think the things we're seeing in most of the states, the 2 big states that we've seen are Minnesota and California. And if you look at our business, we don't do business in Minnesota. In California, almost our entire business is VA or private pay. So it really hasn't affected us. If you think about the other states in which we operate in, we really haven't seen a lot of issues or concerns at least today from the state around the withholding of monies due to fraud and abuse. I do want to make the added statement, Brian, we've always said as a company, we are very supportive of the appropriate focus on fraud and abuse in the personal care and in the clinical side of the business. We believe very strongly that companies need to be focused on making sure that we're following the rules and we're doing everything we can to make sure that we've ourselves taken care of any fraud waste and abuse. So we're very supportive of the action. But to your main point, we have not seen that in any of our markets to any degree.

Appreciate that, Dirk. And then as I think about your press release and your prepared remarks, it sounds to me like we've really seen this pickup in M&A on the pipeline. So when I think about your appetite for platform deals or bigger transactions, what does that look like today, especially given what we're hearing in terms of assets that are potentially coming up for sale that are very, very well scaled. So just curious how you're thinking about sizing and your appetite there.

One of the things we've done over the last few years, Brian, is we've really tried to maintain that disciplined balance sheet to allow us to take advantage of opportunities like you saw with Gentiva a couple of years ago when we were able to go out and do that. There are some scaled assets out there today. We are very interested in looking at those scaled assets. Of course, we'll always be careful and make sure that we've done our work, our due diligence work beforehand. But you can assume that our appetite for deals, whether they're small or large, that's part of what we do, and we have our team out there really pushing forward to try to get to success in some of those particular opportunities.

The next question comes from Joanna Gajuk with Bank of America.

So a quick follow-up first. Would you be able to quantify the Medicare cap accrual in hospice and where -- and can you talk about the margins in that segment, operating margins?