ADUS 10-K & 10-Q changes, risk factors and insider trading

We fund operations primarily through the collection of accounts receivable, but there is a delay between the time that we provide services and the time that we receive reimbursement or payment for these services. These delays may result from such factors as changes by payors to data submission requirements, billing or audit procedures or other payor policies; requests by fiscal intermediaries for additional data or documentation,documentation; delays or issues implementing reimbursement-related rules, such as periodic payment updates from government programs; other Medicare or Medicaid issues, orissues; information system problems.problems; or a government shutdown, failure to enact annual appropriations or other lapse in appropriations, holds on congressionally authorized spending or interruptions in the distribution of governmental funds. Further, state budgets could be impacted by federal actions, including the OBBBA, and to the extent economic conditions in the United States are challenging in 2025.2026. ToAs addressa result of fiscal challenges, various states may in the future delay reimbursement, which would adversely affect our liquidity. In addition, from time to time, procedural issues require us to resubmit claims before payment is remitted, which contributes to our aged receivables. Additionally, we may experience unanticipated delays in receiving reimbursement from state programs due to changes in their policies or billing or audit procedures. Delays in receiving reimbursement or payments from Medicare, Medicaid and other payors, including as a result of delays or issues implementing reimbursement-related rules, such as periodic payment updates for government programs,payors may adversely impact our working capital. As a result, working capital management, including prompt and diligent billing and collection, is an important factor in our results of operations and liquidity. Our working capital management procedures may not successfully negate this risk.

We facehave routinebeen and periodicmay 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.

We are and have been subject to routine and periodic surveys, audits and investigations by various governmental agencies.agencies and their agents. In addition to surveys to determine compliance with the conditions of participation, CMS has engaged a number of contractors (including Medicare Administrative Contractors (“MACs”), RACs and UPICs) to conduct audits and investigations to evaluate billing practices and identify overpayments. In addition, individual states have similar integrity programs, including Medicaid RAC Programs. In certain states,states in which we operate, payment of home health claims may be impacted by the Review Choice Demonstration for Home Health Services, a program intended to identify and prevent fraud, reduce the number of Medicare appeals, and improve provider compliance with Medicare program requirements.

Private third-party payors may also conduct audits and investigations, and we also perform internal audits and monitoring. These audits and investigations can result and have resulted in recoupments by Medicare, state programs and other payors of amounts previously paid to us if it is determined that we failfailed to comply with applicable lawslaws, regulations or program requirements. Depending on the nature of the conduct found in such audits and investigations and whether the underlying conduct could be considered systemic, the resolution of these audits and investigations could have a material, adverse effect on our financial position, results of operations and liquidity.

Our revenues are particularly sensitive to regulatory and economic changes in states in which we generate a significant portion of our revenues including IllinoisIllinois, New Mexico and Texas. In 2025, we derived approximately 37.0% of our net service revenues from services provided in Illinois, 13.1% from services provided in New Mexico.Mexico Weand expect15.2% tofrom deriveservices provided in Texas. Because a significantsubstantial portion of our revenuesbusiness fromis Texasconcentrated going forward asin a resultsmall number of the Gentiva Acquisition. Accordingly,states, any change in the current demographic, economic, competitive or regulatory conditions in these states could have ana adversedisproportionately effectnegative impact on our business, financial condition or results of operations. Changes to the Medicaid programs in these states, eachincluding the OBBBA’s mandated restrictions on Medicaid funding mechanisms, or other significant reductions in state expenditures for the types of whichservices haswe implemented Medicaid expansion under the ACA,provide could also have a disproportionately adverse effect on our business, financial condition, results of operations or cash flows. ForIt example,is ifdifficult federalto fundingpredict whether these or other states material to our operating results will experience changes or other challenges that negatively impact our ability to be adequately reimbursed for theour expansion population is reduced, trigger laws in Illinois and New Mexico would end Medicaid expansion in those states or require other changes, and states without such trigger laws may be unable to offset federal regulations and/or be required to make cuts to their Medicaid programs.services.

Each of our agreements is generally in effect for a specific term, but they are also generally terminable with 60 days’ notice. Our ability to renew or retain our agreements depends on our quality of serviceservice, reputation and reputation,pricing, as well as other factors over which we have little or no control, such as state appropriations and changes in provider eligibility requirements. Additionally, failure to satisfy any of the numerous technical renewal requirements in connection with the proposals we submit for agreements could result in a proposal being rejected even if it contains favorable pricing terms. Failure to obtain, renew or retain agreements with major payors may negatively impact our results of operations and revenue. We can give no assurance these agreements will be renewed on commercially reasonable terms or at all.

Overall payments made by Medicare to each hospice provider number (generally corresponding to each of our hospice agencies) are subject to an inpatient cap and an aggregate cap, which CMS sets each federal fiscal year. The inpatient cap limits the number of days of inpatient care for which Medicare will pay to no more than 20% of total patient care days. The aggregate cap limits the amount of Medicare reimbursement a hospice may receive each year, based on the number of Medicare patients served. If a hospice’s Medicare payments exceed its inpatient or aggregate caps, it must repay to Medicare the excess amount. If payments received under any of our hospice provider numbers exceed these caps, we may beare required to reimburse Medicare such excess amounts, which could have a material adverse effect on our business and consolidated financial condition, results of operations and cash flows.

A significant portion of our caseload and revenues are derived from government healthcare programs, primarily Medicare and Medicaid. For the year ended December 31, 2024,2025, we derived approximately 61.8%39.3% of our net service revenues from state and local governmental agencies, primarily through Medicaid state programs and 22.2%20.5% from Medicare. However, changes in government healthcare programs may decrease the reimbursement we receive or limit access to, or utilization of, our services. As federal healthcare expenditures continue to increase and as many state governments navigate budgetary pressures, federal and state governments have made, and may continue to make, significant changes to the Medicare and Medicaid programs and reimbursement received for services rendered to beneficiaries of such programs. For example, theThe Budget Control Act of 2011 (“BCA”) requires automatic spending reductions to reduce the federal deficit, resulting in a uniform reduction across all Medicare programs of 2% per fiscal year that extends through the first eighteleven months of 2032. It is difficult to predict whether, when, or what other deficit reduction initiatives may be proposed by Congress, but we anticipate that the federal deficit will continue to place pressure on government healthcare programs and that future legislation may include additional Medicare spending reductions. Legislation and administrative actions at the federal level may impact the funding for, or structure of, the Medicaid program, and may shape the administration of the Medicaid program at the state level. For example, the OBBBA includes significant healthcare policy reforms that are expected to result in Medicaid spending reductions and changes in administration of state Medicaid programs. The law makes significant changes to Medicaid financing mechanisms, including restrictions intended to reduce the federal matching funds received by state Medicaid programs, such as limitations on provider tax arrangements and SDP arrangements.

Congress,In CMSaddition, andfrom state authorities may implement changestime to reimbursementtime, forCongress or coverage of items and services that affect our business and operations. For example, CMS periodically revises the reimbursement systems used to reimburse healthcare providers, including through changes to the home health and hospice reimbursement systems, which may result in reduced Medicare and/or Medicaid payments. In addition, delaysDelays or issues implementing reimbursement-related rules, including periodic payment updates for government programs, and interruptions in the distribution of governmental funds, could have an adverse impact on our business. The shift toward value-based care continues, including through the implementation of alternative payment models and various demonstration projects. Some states have obtained CMS approval to test new or existing approaches to payment and delivery of Medicaid benefits. Payment policies for different types of providers and for various items and services continue to evolve, and future health reform efforts could impact both federal and state programs.

If changes in Medicare, Medicaid or other state and local medical and social programs result in a reduction in available funds for the services we offer, increased costs of providing services, a reduction in the number of beneficiaries eligible for our services or able to access our services, or a reduction in the number of hours or amount of services that beneficiaries eligible for our services may receive, then our revenues and profitability could be negatively impacted. Our profitability depends principally on the levels of government-mandated payment rates and our ability to manage the cost of providing services. In some cases, commercial insurance companies and other private payors rely on government payment systems to determine payment rates and policies. As a result, changes to government healthcare programs that reduce Medicare, Medicaid or other payments may negatively impact payments from private payors, as well. Any reduction in reimbursements from governmental or private payors or policies that negatively affect utilization of our services, such as the imposition of copayments or prior authorization requirements, could also materially adversely affect our profitability.

Federal and state laws and regulations may adversely impact our ability to acquire or open new start-up agencies, and the change of ownership processes for Medicare, Medicaid and other payors can be complex. For example, a Medicare regulation known as the “36 Month Rule” restricts the assumption by a new majority owner of a Medicare-certified home health agency or hospice provider’s Medicare provider agreement and billing privileges. The 36 Month Rule applies if the acquired home health agency or hospice either enrolled in Medicare or underwent a change in majority ownership fewer than 36 months prior to the acquisition, subject to certain exceptions. Instead,In such circumstances, the buyer must enroll as a new provider with Medicare. The 36 Month Rule can increase competition for acquisition targets that are not subject to the rule and may cause significant Medicare billing delays for the purchases of home health agencies and hospices that are subject to the rule. Home health agencies and hospices undergoing changes of ownership are considered a “high-risk” provider type, subjecting provider enrollment applications to increased scrutiny, which may result in delays in processing. Further, in the past, CMS has limited enrollment of new home health agencies. If another moratorium is imposed on enrollment of new providers in a geographic area we desire to service, our ability to expand operations may be impacted.

The implementation of alternative payment models and theany transitionincreases ofin Medicaidenrollment andin Medicare beneficiariesAdvantage toor Medicaid managed care organizationsplans may limit our market share and could adversely affect our revenues.

Many government and commercial payors have transitioned or are transitioning providers to alternative payment models that are designed to promote cost-efficiency, quality and coordination of care. For example, ACOs incentivize hospitals, physician groups, and other providers to organize and coordinate patient care while reducing unnecessary costs. Some states have implemented, or plan to implement, accountable care models for their Medicaid populations. If we are not included in these programs, or if ACOs establish programs that overlap with our services, we are at risk for losing market share and for a loss of our current business.share. Further, if we fail to effectively provide or coordinate the efficient delivery of quality services, our reputation may be negatively impacted, we may receive reduced reimbursement amounts and we may owe repayments to payors, which could cause our revenues to decline.

We may be similarly impacted by increasedincreases in enrollment of Medicare and Medicaid beneficiaries in managed care plans, which isare part of the general shift away from traditional fee-for-service models. Under the managed Medicare program, known as Medicare Advantage, the federal government contracts with private health insurers to provide Medicare benefits. Insurers may choose to offer supplemental benefits, including in-home support services, and impose higher plan costs on beneficiaries. Approximately half of Medicare beneficiaries are enrolled in a Medicare Advantage plan, a figure that continues to grow. If more of our services are offered under Medicare Advantage or Medicaid managed care plans in the future, we could experience reduced reimbursement, limited utilization, and increased competition for managed care contracts. These adverse effects could also result from changes in federal and state laws, regulations and programs.

States predominantly deliver services to Medicaid enrollees through managed Medicaid plans as a strategy to control costs and manage resources. We may experience increased competition for managed care contracts due to state regulation and limitations. We cannot assure you that we will be successful in our efforts to be included in plan networks, that we will be able to secure favorable contracts with all or some of the managed care organizations, that our reimbursement under these programs will remain at current levels, that the authorizations for services will remain at current levels or that our profitability will remain at levels consistent with past performance. In addition, operational processeswe may notencounter bedifficulties wellwith definedoperational processes, such as adelays statein transitions beneficiaries to managed care. For example, membership, new referrals and the related authorizationauthorizations for services to be provided may be delayed,services, which may result in delays in service delivery to consumers or in payment for services rendered. Difficulties with operational processes may negatively affect our revenue growth rates, cash flow and profitability for services provided. Other alternative payment models may be presented by the government and commercial payors that subject our Company to financial risk. It is difficult to predict the nature and success of any such models. We cannot predict at this time what effect alternative payment models may have on our Company.

The healthcare andindustry, including the long-term care industriesindustry, areis highly competitive among service providers and care models.models for patients, personnel and acquisitions. We compete with personal care service providers, hospice providers, home health providers, private caregivers, publicly held companies, privately held companies, privately held single-site agencies, hospital-based agencies, not-for-profit organizations, community-based organizations and self-directed care programs. Some of these providers and competitive care models may have greater financial, technical, political and marketing resources, name recognition or a larger number of consumers and payors than we do. In addition, some of our competitors offer more services than we do in the markets in which we operate. If consumers obtain services we do not offer from other providers, they may shift their preferences to those providers for services we do provide. These competitive advantages may limit our ability to attract and retain referrals in local markets and to increase our overall market share.

In manysome states, there are limited barriers to entry in providing personal care services. However, somemany states require entities to obtain a license before providing home care services. Licensure is generally required of agencies providing home health and hospice services, though requirements vary by state. Some states also require a provider to obtain a CON or other type of approval before establishing, purchasing, or expanding certain health services, operations or facilities. CON restrictions may reduce the level of competition in a given industry or in a particular geographic region. Changes in licensure and CON requirements and recognition of new provider types or payment models could remove or reduce barriers to entry. In addition, economic changes such as increases in minimum wage and changes in Department of Labor rules can also impact the ease of entry into a market. For example, in July 2025, the Department of Labor published guidance suspending enforcement of a 2013 final rule that expanded minimum wage and overtime protections to home health aides. These and other factors affecting barriers to entry in a market may affect competition in the states in which we operate.

Often our contracts with payors are not exclusive. Local competitors may develop strategic relationships with referral sources and payors. Further, consolidation within the payor industry, vertical integration efforts involving payors and healthcare providers, and cost-reduction strategies by payors continue to increase.increase, and there are increasing efforts by payors to influence the consumer’s choice of provider through the use of narrow networks or other strategies. Legislative and regulatory initiatives, such as changes in state law eliminating restrictions on tiered networks and steering patients to particular providers, may accelerate or otherwise impact these trends. In addition, existing competitors may offer new or enhanced services that we do not provide or be viewed by consumers as a more desirable local alternative. These and other factors could impact our ability to contract with payors on favorable terms, result in pricing pressures, loss of or failure to gain market share or loss of consumers or payors, or otherwise affect our competitive position.position, Further, the introductionany of new and enhanced service offerings, in combination with the development of strategic relationships by our competitors,which could cause a decline in revenue, a loss of market acceptance of our servicesrevenue and a negativenegatively impact on our results of operations.

Trends toward clinical and price transparency and value-based purchasing may have an impact on our competitive position, ability to obtain and maintain favorable contract terms, and consumer volumes. For example, health insurers must provide online price comparison tools to help individuals get personalized cost estimates for covered items and services. HHS also requires health insurers to publish online the charges negotiated with providers for healthcare services. In addition, CMS websites make publicly available certain data on home health agency and hospice performance on quality measures and patient satisfaction. It is unclear how price transparency requirements, value-based purchasing and similar initiatives will affect consumer behavior, our relationships with payors, or our ability to set and negotiate prices.prices, but our competitive position could be negatively affected if our prices are higher or perceived to be higher than the prices of our competitors.

We expect these competitive trends to continue. We pursue various strategies intended to ensure our business is competitive, but the markets in which we operate are fragmented and factors affecting competition may be market-specific, which may impact our ability to compete effectively. If we are unable to compete effectively, consumers may seek services from other providers, which could have a negative impact on our business and results of operations.

Federal and state government agencies have heightened and coordinated civil and criminal enforcement efforts throughout the healthcare industry. We may face audits or investigations by government agencies or third parties, including under certain of our contractual relationships. An adverse outcome under any such audit or investigation, a determination that we have violated applicable laws and regulations, or a public announcement that we are being investigated for possible violations could result in liability, result in adverse publicity, and interruptions to payment, require us to change our operations and/or to implement plans of correction for alleged deficiencies, and result in other negative consequences that could adversely affect our business, financial condition, or results of operations.

We are required to comply with all applicable federal, state and local laws and regulations relating to employment, including OSHA requirements, wage and hour and other compensation requirements (including disclosure requirements), employee benefits, providing leave and sick pay, employment insurance, proper classification of workers as employees or independent contractors, immigration and equal employment opportunity laws. These laws and regulations can vary significantly among jurisdictions and can be highly technical. Costs and expenses related to these requirements are a significant operating expense and may increase as a result of, among other things, changes in federal, state or local laws or regulations, or the interpretation thereof, requiring employers to provide specified benefits or rights to employees, increases in the minimum wage and local living wage ordinances, increases in the level of existing benefits or the lengthening of periods for which unemployment benefits are available. Each of our subsidiaries that employ an average of at least 50 full-time employees in a calendar year are required to offer a minimum level of health coverage for 95% of our full-time employees in 2024 or be subject to an annual penalty, for example. Since our personal care operations are concentrated in IllinoisIllinois, New Mexico and New Mexico,Texas, we are also particularly sensitive to changes in laws and regulations in these states. We may not be able to offset any increased costs and expenses. Furthermore, any failure to comply with these laws, including even a seemingly minor infraction, can result in significant penalties which could harm our reputation and have a material adverse effect on our business. The COVID-19 pandemic increased some of these risks, with certain states modifying occupational health and safety guidelines in a manner that increases scrutiny and complexity of operations with respect to appropriate training and use in the workplace of PPE and the possibility of corresponding regulatory audit activity with respect to the adequacy of our practices and procedures. The COVID-19 pandemic also resulted in states modifying standards associated with payment amounts and required justifications to qualify for sick leave and unemployment benefits. These modifications may result in increased operational costs to us, which may adversely impact our financial performance.

On March 9, 2024, we completed our acquisition of the operationsUpstate of UpstateAcquisition for $0.4 million, with funding provided by available cash. With the purchaseUpstate of Upstate,Acquisition, the Company expanded its personal care services segment in South Carolina.

On December 2, 2024, we completed the Gentiva Acquisition for approximately $353.6 million, with funding primarily provided by drawing on the Company’s revolving credit facility and a portion of the net proceeds of the Company’s public offering of common stock. The purchase price is subject to the completion of working capital and related adjustments. With the Gentiva Acquisition, the Company expanded its services within its personal care services segment in Arizona, Arkansas, CaliforniaCalifornia, and North Carolina, and entered the market in Missouri and Texas. The home health segment also was expanded in Tennessee.

Effective May 20, 2024, we entered into a definitive asset purchase agreement to sell all of ourthe Company’s New York operations for a purchase price of up to $23.0 million in cash, subject to certain adjustments, including adjustments for future operating requirements (the “New York Asset Sale”). The purchase price included 50% cash consideration, paid out as an initial payment of $4.6 million and $6.9 million paid pro rata as a deferred payment as caregivers are transferred, and 50% in the form of contingent consideration for the Company’s New York Consumer Directed Personal Assistance Program (“CDPAP”) business. The Company entered into a consulting agreement with the purchaser,purchaser effective May 20, 2024, as the transfer of clients and caregivers and payment for assets pursuant to the New York Asset Sale is occurring over time as regulatory approvals are received, coordination of the transfer of clients and caregivers occurs, and the change of control takes place. InThe connectionCompany withdetermined thisthat transaction,the consulting agreement gave it the ability to control the business until October 2024, when the Company willdetermined ceasethat operationsit inno Newlonger York. In October 2024,controlled the Companybusiness as it transferred more than 50% of the clients and caregivers and therefore qualified for sale consideration of the New York Asset Sale. As a result, the Company has deconsolidated the results of its New York operations and recorded a gain on divestiture of $3.7 million.million during the year ended December 31, 2024. The Newgain Yorkwas Assetreflected Salewithin purchasegeneral priceand administrative expenses on the consolidated statement of up to $23.0 million includes an initial payment of $4.6 million, $6.9 million paid pro rata as a deferred payment as caregivers are transferred and 50% in the form of contingent consideration for the Company’s Consumer Directed Personal Assistance Program (“CDPAP”) business.operations.

Our payor clients are principally federal, state and local governmental agencies and managed care organizations. The federal, state and local programs under which the agencies operate are subject to legislative, administrative and budgetary changes and other risks that can influence reimbursement rates. We arehave experiencingexperienced a transition of business from government payors to managed care organizations, which we believe aligns with our emphasis on coordinated care and the reduction of the need for acute care. Medicare advantage revenue is included within Medicare.

With the Jacksonville Acquisition, the Great Lakes Acquisition, the Helping Hands Acquisition and the Gold Horses Acquisition in 2025, the Company expanded its personal care services to consumers in the state of Florida, Michigan, Pennsylvania and Texas. With the acquisition of Upstate and the Gentiva Acquisition in 2024, the Company expanded its personal care services to consumers in the state of Arizona, Arkansas, California, Missouri, North Carolina, South Carolina and Texas.

With the GentivaHelping Hands Acquisition, the Company expandedentered itsthe homehospice health services to patientsmarket in thePennsylvania, stateand of Tennessee. Withwith the acquisition of Tennessee Quality Care in 2023, the Company expanded its home healthhospice services to patients in the state of Tennessee.

TheAs noted above, we derive a significant amount of our net service revenues in Illinois. Changes to reimbursement rates and minimum wage requirements may materially impact our revenues. For example, the Illinois fiscal year 2025 budget includesincluded an increase in hourly rates for in-home care services to $29.63, effective January 1, 2025, and required a minimum wage of $18.00 per hour for direct service workers. CMS approved an amendment to Illinois’the Illinois HCBS Waiver for Persons whoWho are Elderly waiver program that included this rate increase, effective January 1, 2025. The Illinois fiscal year 2026 budget includes an increase in hourly rates for in-home care services to $30.80, effective January 1, 2026. This rate sustains a minimum wage of $18.75 per hour for direct service workers.

Changes in Medicare and MedicaidTexas Reimbursement

Overall payments made by Medicare to each hospice provider number are subject to an inpatient cap and an aggregate cap. The inpatient cap limits the number of days of inpatient care for which Medicare will pay to no more than 20% of total patient care days. Days in excess of the limitation are paid at the routine home care rate. The aggregate cap, which is set each federal fiscal year,cap limits the total Medicare reimbursement that a hospice may receive in a cap year (typically the federal fiscal year), based on an annual per-beneficiary cap amountamount, which is set each federal fiscal year, and the number of Medicare patients served. The aggregateper-beneficiary cap amount was updated to $34,465.34$35,361.44 for federal fiscal year 2025.2026. If a hospice’s Medicare payments exceed its inpatient or aggregate caps, it must repay Medicare the excess amount.

CMS updates the HHPPS payment rates each calendar year. For calendar year 2025,2026, CMS estimates that Medicare payments to home health agencies will increasedecrease by 0.5%.1.3%. This is based on a home health payment update percentage of 2.7%,2.4%, which reflects a 3.2% market basket update, reduced by a productivity adjustment of 0.50.8 percentage points and an estimated 1.8% decrease associated with the transition to the PDGM,points, among other changes. Home health providers that do not comply with quality data reporting requirements are subject to a 2-percentage point reduction to their market basket update. In addition, Medicare requires home health agencies to submit a one-time Notice of Admission (“NOA”) for each patient that establishes that the beneficiary is under a Medicare home health period of care. Failure to submit the NOA within five calendar days from the start of care will result in a reduction to the 30-day period payment amount for each day from the start of care date until the date the NOA is submitted.

In certain states, paymentPayment of claims may be impacted by the Review Choice Demonstration for Home Health Services, a program intended to identify and prevent fraud, reduce the number of Medicare appeals and improve provider compliance with Medicare program requirements. The program is currently limited to home health agencies in Illinois, Ohio, Oklahoma, North Carolina, Florida and Texas. Providers in states subject to the Review Choice Demonstration for Home Health Services may initially select either pre-claim review or post-payment review. Home health agencies that maintain high compliance levels are eligible for additional options that may be less burdensome. This program has not had a material impact on our results of operations or financial position.

In May 2024, CMS finalized a rule intended to improve access to services and quality of care for Medicaid beneficiaries across fee-for-service and managed care delivery systems. The final rule includes significant provisions related to HCBS, including the “80/20” or “payment adequacy” requirement, which will require states to ensure by mid-2030 that at least 80% of all Medicaid payments a provider receives for homemaker, home health aide, and personal care services, less certain excluded costs, under specified programs are spent on total compensation (including benefits) for direct care workers furnishing these services, rather than administrative overhead or profit, subject to limited exceptions. States are required to ensure compliance with the 80/20 requirement by mid-2030. The final rule includes several other measures intended to promote transparency and enhance quality and access to services, including a variety of reporting requirements for states. Given the very long implementation period and the likelihood of further changes as a result of litigation, administration and congressional changes, further rule-making and state changes in response to the final rule, it is premature to predict the ultimate impact of the final rule on our business. Some states have adopted or may consider adopting similar caregiver compensation restrictions.

Home care and other healthcare providers may be significantly impacted by changes to the Medicaid program, including changes resulting from the OBBBA and other legislation and administrative actions at the federal and state levels. Federal actions may impact funding for, or the structure of, the Medicaid programprogram, including through changes to Medicaid waiver programs, and may shape provider reimbursement rates, eligibility and coverage policiespolicies, waiver programs and other aspects of state Medicaid programs at the state level. For example, the OBBBA includes provisions that are expected to result in Medicaid spending reductions and changes in administration of state Medicaid programs. Currently,Among other changes, the law requires changes to Medicaid financing mechanisms, including restrictions intended to reduce the federal governmentmatching paysfunds areceived percentage match forby state Medicaid expendituresprograms, with greater restrictions in states that varieshave byexpanded stateMedicaid. andIn other factors, with no pre-set limit on federal spending. However,addition, some members of Congress and the presidentialexecutive administrationbranch have raised, and Congress may in the future adopt, other proposals intended to reduce Medicaid expenditures such as restructuring the Medicaid program to give states a “block grant” or fixed amount of overall funding for their respective Medicaid programs or to impose spending caps such as per Medicaid beneficiary limits on federal contributions. Reductions in federal funding or changes to the federal funding formula for Medicaid under the OBBBA or future initiatives could have a significant impact, particularly in states that expanded Medicaid under the ACA and especially if federal contributions for Medicaid expansion populations decrease and states are unable to offset the reductions. InDecreased addition,federal somefunding statesand useincreased orstate haveobligations appliedand toadministrative useburden could strain state budgets, which could result in state limitations on Medicaid waivers granted by CMS to implement the ACA’s Medicaid expansion provisions, impose different eligibility or enrollmentcoverage, restrictionspayment orrate otherwise implement programs that vary from federal standards. Some of these program variations may reduce the number of currentreductions, and/or futurechanges to Medicaid enrollees.waiver programs, among other effects.

The outcome of the 2024 federal elections, affecting both the executive and legislative branches, increasesincreased regulatory uncertainty and the potential for significant policy changes. PresidentThe Trumpexecutive branch has issuedsignificant influence over healthcare policy changes through government agency regulation and executive orders have been issued that impact or may impact the healthcare industry, including an order establishing a presidential advisory commission focused on restructuring and streamlining government agencies and reducing or eliminating regulations and federal government programs and other expenditures.industry. Further, some members of Congress and the presidentialexecutive administrationbranch have raised potential measures intended to accelerate the shift from traditional Medicare to Medicare Advantage or eliminating some or all of the consumer protections established by the ACA.

All of our income is from domestic sources. We incur state and local taxes in states in which we operate. Our effective income tax rate was 25.9%24.7% and 23.1%25.9% for the years ended December 31, 20242025 and 2023,2024, respectively. The difference between our federal statutory and effective income tax rates was principally due to the inclusion of state taxes, non-deductible compensation, and non-deductible permanent items, partially offset by the use of federal employment tax credits.credits and an excess tax benefit.

Net service revenues increased by 9.1%23.2% to $1,154.6$1,422.5 million for the year ended December 31, 20242025, compared to $1,058.7$1,154.6 million in 2023.2024. Net service revenuerevenues increased by $61.9$232.6 million, $21.0$34.4 million and $13.0$0.9 million in ourthe personal care, hospice and home health segments, respectively, for the year ended December 31, 2024,2025, compared to 2023.2024. Net service revenue in our personal care segment increasedincreased, primarily due to a 5.2%36.3% increase in billable hours, offset by a 6.4% decrease in revenues per billable hour due to lower reimbursement rates attributable to the Gentiva and aHelping 2.1%Hands increase in billable hoursAcquisitions for the year ended December 31, 20242025 compared to 2023.2024. The increase in our hospice segment revenue was primarily due to organic growth, driven by an increase in average daily census and higher revenue per patient day, mainly attributed to the acquisition of Tennessee Quality Care on August 1, 2023. The increase in our home health segment is primarily due to the full-year effect in 2024 of the acquisition of Tennessee Quality Care on August 1, 2023.day.

General and administrative expenses increased to $258.8$306.8 million for the year ended December 31, 20242025, compared to $234.8$258.8 million in 2023.2024. The increase in general and administrative expenses was primarily due to the full-year effect of the Tennessee Quality CareGentiva acquisition that resulted in an increase in administrative employee wages, taxes and benefit costs of $11.7$35.0 million. General and administrative expenses, expressed as a percentage of net service revenues, slightly increaseddecreased to 22.4%21.6% for 2024,2025, from 22.2%22.4% in 2023.2024.

Depreciation and amortization decreasedincreased to $13.5$16.4 million for the year ended December 31, 20242025, from $14.1$13.5 million in 2023,2024, primarily due to the decreaseincrease of intangible asset amortization related to accelerated amortization and the reduction in amortization expense of tradenames, which were fully amortized, partially offset by the full-year effect in 20242025 of our fiscal year 20232024 acquisitions and fiscal year 20242025 acquisitions.

TotalInterest interestexpense expense, net decreasedincreased to $7.7$13.6 million from $11.1$7.7 million for the year ended December 31, 20242025, compared to 2023. The decrease in interest expense was2024, primarily due to decreasedhigher amountsoutstanding borrowings held under our credit facilityfacility. Interest income decreased to $2.4 million from $4.4 million for the year ended December 31, 20242025, compared to 2023. Interest income increased $2.9 million2024, due to an increase in cash investment into interest bearing accounts from the Company’s public offering of common stock.stock in 2024.

All of our income is from domestic sources. We incur state and local taxes in states in which we operate. The effective income tax rate was 25.9%24.7% and 23.1%25.9% for the years ended December 31, 20242025 and 2023,2024, respectively. Our higherlower effective income tax rate in 20242025 was principally due to thea increasehigher of non-deductible compensation and non-deductible permanent items, as well as lower benefit from the use of federal employmentexcess tax credits.benefit. For the years ended December 31, 20242025 and 2023,2024, the non-deductibleexcess compensation,tax non-deductiblebenefit permanentwere items,2.3% and federal employment tax credits were 0.8% and (1.7)%,0.5%, respectively.

Net service revenues increased by 7.8%27.2% for the year ended December 31, 20242025 compared to the year ended December 31, 20232024 primarily as a result of ana 36.3% increase in billable hours, which more than offset a 6.4% decrease in revenues per billable hour of 5.2%, mainly attributed to the rate increases discussed above.

Gross profit, expressed as a percentage of net service revenues, increasedwas fromrelatively consistent at 27.9% for the year ended December 31, 20232025, compared to 28.3% for the year ended December 31, 2024 due to an increase in the reimbursement rate.2024.

HospiceThe hospice segment generates revenue by providing care to patients with a life expectancy of six months or less, as well as related services for their families. Hospice offers four levels of care, as defined by Medicare, to meet the varying needs of patients and their families. The four levels of hospice include routine care, continuous care, general inpatient care and respite care. Our hospice segment principally provides routine care.

Net service revenues from Medicare accounted for 91.2%93.1% and 89.9%91.2% and managed care organizations accounted for 3.3%3.1% and 3.4%3.3% for the years ended December 31, 20242025 and 2023,2024, respectively. Net service revenues increased by $21.0$34.4 million for the year ended December 31, 20242025, compared to the year ended December 31, 20232024 primarily duedriven toby increasesorganic growth, reflected in an increase in average daily census and higher revenue per patient day, mainly attributed to the organic growth and the acquisition of the operations of Tennessee Quality Care on August 1, 2023.day.

Gross profit, expressed as a percentage of net service revenues, wasincreased relatively consistent atfrom 47.0% and 46.8% for the yearsyear ended December 31, 2024 to 48.7% for the year ended December 31, 2025, primarily due to higher net service revenues and 2023,improved respectively.operating leverage within direct service costs.

The hospice segment’s general and administrative expenses primarily consist of administrative employee wages, taxes and benefit costs, rent, information technology and office expenses. General and administrative expenses, expressed as a percentage of net service revenues, was 24.3%23.0% and 25.1%24.3% for the years ended December 31, 20242025 and 2023,2024, respectively. The decrease in general and administrative expenses was primarily due to moreimproved efficientoperating operationsleverage forwithin administrative employees for the year ended December 31, 2024.functions.

You should read the following discussion together with our unaudited condensed consolidated financial statements and the related notes included elsewhere in this quarterly report on Form 10-Q. This discussion contains forward-looking statements about our business and operations. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include 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 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 standardsstandards, moratoria on new provider enrollments 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. In addition, these forward-looking statements are subject to the risk factors set forth in Part I, Item 1A of our Annual Report on Form 10-K for the period ended December 31, 2025, filed with the SEC. You should carefully review all of these factors. Moreover, our business may be materially adversely affected by factors that are not currently known to us, by factors that we currently consider immaterial or by factors that are not specific to us, such as general economic conditions. These forward-looking statements were based on information, plans, and estimates at the date of this report, and we assume no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes, except as may be required by law.

We are a home care services provider operating three segments: personal care, hospice, and home health. Our services are principally provided in-home under agreements with federal, state, and local government agencies, managed care organizations, commercial insurers, and private individuals. Our consumers are predominantly “dual eligible,” meaning they are eligible to receive both Medicare and Medicaid benefits. Managed care organizations accounted for 38.3%38.6% and 36.4%36.7% of our net service revenues during the three months ended MarchJune 31,30, 2026 and 2025, respectively, and 38.4% and 36.5% of our net service revenues during the six months ended June 30, 2026 and 2025, respectively.

As of MarchJune 31,30, 2026, we provided our services in 2324 states through 263264 offices. Our personal care segment also includes staffing services, with clients including assisted living facilities, nursing homes, and hospice facilities.

On January 1, 2025, the Company completed its acquisition of its Jacksonville affiliate (the “Jacksonville Acquisition”), for approximately $0.8 million, with funding provided by available cash. With the Jacksonville Acquisition, the Company expanded its personal care segment in Florida and recorded goodwill of $0.8 million.

On March 1, 2025, the Company completed its acquisition of the assets of Great Lakes Home Care Unlimited, LLC (the “Great Lakes Acquisition”), for $2.6 million, with funding provided by available cash. With the Great Lakes Acquisition, the Company expanded its personal care segment in Michigan and recognized goodwill in its personal care segment of $2.6 million.

On August 1, 2025, the Company completed its acquisition of Helping Hands Home Care Service, Inc. (the “Helping Hands Acquisition”), for approximately $21.4 million, with funding through the Company’s revolving credit facility and available cash. With the purchase of Helping Hands,Hands Acquisition, the Company expanded its services within its personal care segment and entered the hospice and home health markets in Pennsylvania and recognized goodwill in its personal care segment of $19.0 million.

Effective May 20, 2024, we entered into the New York Asset Sale. The Company entered into a consulting agreement with the purchaser, as the transfer of clients and caregivers and payment for assets pursuant to the New York Asset Sale iswas occurring over time as regulatory approvals are received, coordination of the transfer of clients and caregivers occurs, and the change of control takes place.time. In connection with this transaction, the Company ceased operations in New York. See Note 3 to the Notes to Unaudited Condensed Consolidated Financial Statements, Divestiture, for additional details regarding our divestiture.

The personal care segment derives a significant amount of its net service revenues in Illinois, which represented 32.1% and 33.0% of our net service revenues for the both the three and six months ended MarchJune 31,30, 2026 and 2025, respectively.

A significant amount of our net service revenues are derived from one payor, the Illinois Department on Aging, the largest payor program for our Illinois personal care operations, which accounted for 17.8%17.7% and 18.5%18.6% of our net service revenues for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and accounted for 17.8% and 18.6% of our net service revenues for the six months ended June 30, 2026 and 2025, respectively.

As noted above, we derive a significant amount of our net service revenues in Illinois. Changes to reimbursement rates and minimum wage requirements may materially impact our revenues. For example, theThe Illinois fiscal year 2026 budget included an increase in hourly rates for in-home care services to $30.80, effective January 1, 2026, and required a minimum wage of $18.75 per hour for direct service workers. These rates remain stable under the Illinois fiscal year 2027 budget. CMS approved an amendment to Illinois’ Persons Who are Elderly waiver program that included thisthe 2026 rate increase, effective January 1, 2026. Illinois’ current Persons Who are Elderly waiver expires September 30, 2026, unless CMS approves a renewal.

Our business will benefit from the rate increases noted above for 2026, but there is no assurance that there will be additional rate increases in Illinois for fiscal years beyond fiscal year 2026 to offset increases toin minimum wage, and our financial performance will be adversely impacted for any periods in which an additional offsetting reimbursement rate increase is not in effect.

TheIn outcome ofaddition, the 2024 federal elections, affecting both the executive and legislative branches, has increased regulatory uncertainty and the potential for significant policy changes. The President has issued executive orders that impact or may impact the healthcare industry. Further, some members of Congress and the presidential administration have raised potential measures intended to accelerate the shift from traditional Medicare to Medicare Advantage or eliminating some or all of the consumer protections established by the ACA.

All of our income is from domestic sources. We incur state and local taxes in states in which we operate. The effective income tax rates were 22.7%26.9% and 21.4%26.4% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The effective income tax rates were 25.0% and 24.0% for the six months ended June 30, 2026 and 2025, respectively, compared to our federal statutory rate of 21%. The difference between our federal statutory and effective income tax rates was principally due to the inclusion of state taxes, non-deductible compensation, excess tax expense or benefit and the use of federal employment tax credits.

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025

Net service revenues increased by 7.7%8.0% to $363.6$377.4 million for the three months ended MarchJune 31,30, 2026 compared to $337.7$349.4 million for the three months ended MarchJune 31,30, 2025. Revenue increased by $22.8$26.8 million in our personal care segment, increased by $4.3$2.0 million in our hospice segment and decreased by $1.3$0.9 million in our home health segment during the three months ended MarchJune 31,30, 2026, compared to the same period in 2025. The increase in our personal care segment was primarily dueattributable to organic growth in billable hours combined with the HomeCourt Acquisition, the Gold Horses Acquisition and the Helping Hands Acquisition. The increase in our hospice segment revenue was due to organic growth in average daily census.growth. The decrease in our home health segment was primarily attributed to lower patient volumes.

Gross profit, expressed as a percentage of net service revenues, was 31.9%32.2% for the three months ended MarchJune 31,30, 2026, compared to 31.9%32.6% for the same period in 2025.

General and administrative expenses increased to $77.8$78.5 million for the three months ended MarchJune 31,30, 2026, compared to $73.2$77.1 million for the three months ended MarchJune 31,30, 2025. The increase in general and administrative expenses was primarily due to acquisition activity, including the HomeCourt Acquisition, the Gold Horses Acquisition and the Helping Hands Acquisition, which contributed to an increase in administrative employee wage, bonus, tax, and benefit costs of $3.3$4.0 million.million, partially offset by a $1.7 million decrease in professional fees and other decreases in general and administrative expenses. General and administrative expenses, expressed as a percentage of net service revenues, were 21.4%20.8% for the three months ended MarchJune 31,30, 2026, compared to 21.7%22.1% for the three months ended MarchJune 31,30, 2025.

Interest expense decreased to $2.2$1.7 million for the three months ended MarchJune 31,30, 2026 from $4.0$3.5 million for the three months ended MarchJune 31,30, 2025. The decrease in interest expense was primarily due to lower average outstanding borrowings and a lower weighted average interest rate under our credit facility for the three months ended MarchJune 31,30, 2026,compared2026, compared to the three months ended MarchJune 31,30, 2025.

All of our income is from domestic sources. We incur state and local taxes in states in which we operate. The effective income tax rate was 22.7%26.9% and 21.4%26.4% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Our higher effective income tax rate for the three months ended MarchJune 31,30, 2026,2026 was principally due to a lower excess tax benefitexpense with a lower benefit from the use of federal employment tax credits. For the three months ended MarchJune 31,30, 2026 and 2025, the excess tax benefit and federal employment tax credits were 5.3%1.2% and 7.2%,2.6%, respectively.

The personal care segment derives a significant amount of its net service revenues from operations in Illinois, which represented 32.1% and 33.0% of our net service revenues for both the three and six months ended MarchJune 31,30, 2026 and 2025, respectively. One payor, the Illinois Department on Aging, accounted for 17.8%17.7% and 18.5%18.6% of net service revenues for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and accounted for 17.8% and 18.6% of net service revenues for the six months ended June 30, 2026 and 2025, respectively.

Net service revenues from state, local, and other governmental programs accounted for 49.7%50.3% and 51.5%51.4% of net service revenues for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Managed care organizations accounted for 47.6%47.1% and 45.3% of net service revenues for the three months ended MarchJune 31,30, 2026 and 2025, respectively, with commercial insurance, private pay, and other payors accounting for the remainder of net service revenues. Net service revenues from state, local, and other governmental programs accounted for 50.0% and 51.4% of net service revenues for the six months ended June 30, 2026 and 2025, respectively. Managed care organizations accounted for 47.3% and 45.3% of net service revenues for the six months ended June 30, 2026 and 2025, respectively, with commercial insurance, private pay, and other payors accounting for the remainder of net service revenues.

Net service revenues increased by 8.8%10.0% and 9.4% for the three and six months ended MarchJune 31,30, 2026 respectively, compared to the three and six months ended MarchJune 31,30, 2025. Net service revenues includedreflected a 5.2%5.6% and 5.4% increase in billable hours and a 3.3%4.2% and 3.7% increase in revenues per billable hour for the three monthsand ended March 31, 2026, compared to the threesix months ended MarchJune 31,30, 2025.2026, respectively.

Gross profit, expressed as a percentage of net service revenues, was 27.7%28.9% for the three months ended MarchJune 31,30, 2026,2026 comparedfrom to 27.6%28.2% for the three months ended March2025 31,and increased to 28.3% for the six months ended June 30, 2026 from 27.9% for the six months ended June 30, 2025. The increases primarily reflected higher revenues per billable hour.

The personal care segment’s general and administrative expenses primarily consist of administrative employee wages, taxes, and benefit costs, rent, information technology, and office expenses. General and administrative expenses, expressed as a percentage of net service revenues, waswere 8.9%8.5% and 9.2%9.0% for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and 8.7% and 9.1% for the six months ended June 30, 2026 and 2025, respectively.

Net service revenues from Medicare accounted for 94.4%93.4% and 92.4%93.0% for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and 93.9% and 92.7% for the six months ended June 30, 2026 and 2025, respectively. Net service revenues from managed care organizations accounted for 2.3%3.0% and 3.3%3.2% for the three months ended MarchJune 31,30, 2026 and 20252025, respectively, and for 2.6% and 3.3% for the six months ended June 30, 2026 and 2025, respectively.

Net service revenues increased by $4.33.3% millionand 5.2% for the three and six months ended MarchJune 31,30, 20262026, respectively, compared to the three and six months ended MarchJune 31,30, 2025,2025. primarilyNet attributedservices torevenues included organic growth in average daily census,census partiallyand offsethigher by a decrease in revenuerevenues per patient day.

Gross profit, expressed as a percentage of net service revenues, was 46.3%44.0% and 47.5%47.9% for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and 45.2% and 47.7% for the six months ended June 30, 2026 and 2025, respectively. ForThe thedecreases threewere monthsprimarily ended March 31, 2026, the decrease was mainly attributedattributable to an increase in direct wages, taxes and benefit costs as a percentage of net service revenues.

The hospice segment’s general and administrative expenses primarily consist of administrative employee wage, tax, and benefit costs, rent, information technology, and office expenses. General and administrative expenses, expressed as a percentage of net service revenues, was 24.1%25.2% and 23.7%24.1% for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and 24.6% and 23.9% for the six months ended June 30, 2026 and 2025, respectively.

The home health segment generates net service revenues by providing home health services on a short-term, intermittent or episodic basis to individuals, generally to treat an illness or injury. Net service revenues from Medicare accounted for 61.1%63.5% and 69.9%,69.4%, managed care organizations accounted for 23.7%25.7% and 21.2%,23.6%, and state, local, and other governmental programs accounted for 12.2%7.7% and 6.0%4.4% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Net service revenues from Medicare accounted for 62.3% and 69.7%, managed care organizations accounted for 24.7% and 22.4%, and state, local, and other governmental programs accounted for 9.9% and 5.2% for the six months ended June 30, 2026 and 2025, respectively. Home health services provided to Medicare beneficiaries are paid under the Medicare Home Health Prospective Payment System, which uses national, standardized 30-day period payment rates for periods of care. CMS uses the PDGM as the case-mix classification model to place periods of care into payment categories, classifying patients based on clinical characteristics. An outlier adjustment may be paid for periods of care in which costs exceed a specific threshold amount.

Net service revenues decreased by $1.34.8% millionand 5.9% for the three and six months ended MarchJune 31,30, 2026, respectively, compared to the three and six months ended MarchJune 31,30, 2025,2025. Net service revenues primarily due toreflected lower volumes, including lower recertifications andpatient visits, andpartially theoffset continuedby impacta of efforts to managefavorable payor mix within our home health operations and related incremental margin improvements.mix.

Gross profit, expressed as a percentage of net service revenues, was 45.3%44.5% and 40.0%45.9% for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and 44.9% and 42.9% for the six months ended June 30, 2026 and 2025, respectively. ForThe decrease for the three months ended MarchJune 31,30, 2026,2026 was primarily attributable to an increase in direct wages, taxes and benefit costs as a percentage of net service revenues. The increase for the increasesix months ended June 30, 2026 was mainlyprimarily attributedattributable to a decrease in direct wages, taxes and benefit costs as a percentage of net service revenues, as cost of services revenues decreased at a greater rate than net service revenues, compared to the three months ended March 31, 2025.revenues.

The home health segment’s general and administrative expenses primarily consist of administrative employee wage, tax and benefit costs, rent, information technology, and office expenses. General and administrative expenses, expressed as a percentage of net service revenues, were 26.4%25.4% and 23.2%21.6% for the three months ended MarchJune 31,30, 2026 and 2025.2025, respectively, and 25.9% and 22.4% for the six months ended June 30, 2026 and 2025, respectively.

Our primary sources of liquidity are cash on hand and cash from operations and borrowings under our credit facility. At MarchJune 31,30, 2026 and December 31, 2025, we had cash balances of $103.1$99.6 million and $81.6 million, respectively. At MarchJune 31,30, 2026, we had a $650.0 million revolving credit facility and a $150.0 million incremental loan facility, which may be for term loans or an increase to the revolving loan commitments. The maturity of this credit facility was extended to July 30, 2028.

During the threesix months ended MarchJune 31,30, 2026, we repaid $30.0$60.0 million under our revolving credit facility. As of MarchJune 31,30, 2026, we had a total of $94.3$64.3 million in revolving loans, with an interest rate of 5.43%5.40% outstanding on our credit facility and after giving effect to the amount drawn on our credit facility, approximately $7.9 million of outstanding letters of credit and borrowing limits based on an advance multiple of adjusted EBITDA (as defined in the Credit Agreement), we had $650.0 million of capacity and $547.8$577.8 million available for borrowing under our credit facility. At December 31, 2025, we had a total of $124.3 million revolving credit loans, with an interest rate of 5.48%, outstanding on our credit facility.

Our credit facility requires us to maintain a total net leverage ratio not exceeding 3.75:1.00. At MarchJune 31,30, 2026, we were in compliance with our financial covenants under the Credit Agreement. Although we believe our liquidity position remains strong, we can provide no assurance that we will remain in compliance with the covenants in our Credit Agreement, and in the future, it may prove necessary to seek an amendment with the bank lending group under our credit facility. Additionally, there can be no assurance that we will be able to raise additional funds on terms acceptable to us, if at all.

To mitigate the fiscal effects of the COVID-19 public health emergency, the ARPA provided for a 10 percentage point increase in federal matching funds for Medicaid HCBS from April 1, 2021, through March 31, 2022, provided the statestates satisfied certain conditions. States must submit periodic HCBS spending plans to CMS regarding the federal and state funds tied to the increase in federal matching funds. Although states were generally permitted to use the associated state funds by March 31, 2025, CMS granted extensions to several states and some state spending plans continue through September 30, 2026.

HCBS spending plans for the additional matching funds vary by state, but common initiatives in which the Company is participatingparticipates include those aimed at strengthening the provider workforce (e.g., efforts to recruit, retain, and train direct service providers). The Company is required to properly and fully document the use of such funds in reports to the state in which the funds originated. Funds may be subject to recoupment if not expended or if they are expended on non-approved uses.

During the three and six months ended MarchJune 31,30, 2026, the Company received additional state funding provided by the ARPA of $6.2$0.1 million.million and $6.3 million, respectively. Of the total state funding received by the Company pursuant to the ARPA through MarchJune 31,30, 2026, the Company utilized $3.2$2.4 million and $5.6 million during the three and six months ended MarchJune 31,30, 2026, respectively, primarily for caregivers and adding support to recruiting and retention efforts, included as a reduction of cost of service revenues in the Company’s Unaudited Condensed Consolidated Statements of Income. As of MarchJune 31,30, 2026, the deferred portion of ARPA funding of $14.6$12.4 million is included within Government stimulus advances on the Company’s Unaudited Condensed Consolidated Balance Sheets.

ThreeSix Months Ended MarchJune 31,30, 2026 Compared to ThreeSix Months Ended MarchJune 31,30, 2025

Cash flows from operating activities represent the inflow of cash from our payors and the outflow of cash for payroll and payroll taxes, operating expenses, interest, and taxes. Net cash provided by operating activities was $52.4$92.4 million for the threesix months ended MarchJune 31,30, 2026, compared to net cash provided by operating activities of $18.9$41.5 million for the same period in 2025. The increase in cash provided by operations was primarily due to the timing of receipts on accounts receivable and the timing of receiptpayments related to payroll and utilizationaccounts of government stimulus funds.payable. The changes in accounts receivable were primarily related to the growth in revenue and a decrease in days sales outstanding (“DSO”) during the threesix months ended MarchJune 31,30, 2026 as compared to the threesix months ended MarchJune 31,30, 2025. The related receivables due from the Illinois Department on Aging represented 23.1%13.2% and 18.5%18.6% of the Company’s net accounts receivable at MarchJune 31,30, 2026 and MarchJune 31,30, 2025, respectively.

Net cash used in investing activities for the threesix months ended MarchJune 31,30, 2026, primarily consisted of $1.7$12.2 million of net cash used for the HomeCourt Acquisition and $3.1 million of cash used for property and equipment purchases, primarily related to our ongoing investments in technology infrastructure fixed assets. Net cash used in investing activities for the threesix months ended MarchJune 31,30, 2025 primarily consisted of $3.4 million of net cash used for the Jacksonville Acquisition and the Great Lakes Acquisition, $1.9$3.1 million of cash used for property and equipment purchases, primarily related to our ongoing investments in technology infrastructure fixed assets, offset by $3.8 million in proceeds received relating to the New York Asset Sale.Sale and $2.9 million in proceeds received relating to the December 2024 acquisition of the personal care business of Curo Health Services, LLC, a Delaware limited liability company that does business as Gentiva.

Net cash used in financing activities for the threesix months ended MarchJune 31,30, 2026, primarily consisted of $30.0$60.0 million payment on our revolving credit facility, offset by cash received from the exercise of stock options of $0.8 million. Net cash providedused byin financing activities for the threesix months ended MarchJune 31,30, 2025 primarily consisted of $20.0$50.0 million payment on our revolving credit facility, offset by cash received from the exercise of stock options of $0.5 million.

Outstanding accounts receivable, net of the allowance for credit losses as of MarchJune 31,30, 2026 and December 31, 2025 were approximately $144.8$145.1 million and $151.7 million, respectively, decreased by $6.9$6.6 million as of MarchJune 31,30, 2026 as compared to December 31, 2025. Accounts receivable for the Illinois Department on Aging decreased approximately $4.2$18.6 million during the threesix months ended MarchJune 31,30, 2026. Our collection procedures include review of account aging and direct contact with our payors. We have historically not used collection agencies. An uncollectible amount is written off to the allowance account after reasonable collection efforts have been exhausted.

We calculate our DSO by taking the trade accounts receivable outstanding, net of allowance for credit losses for doubtful accounts, divided by the net service revenues for the last quarter, multiplied by the number of days in that quarter. Our DSOs were 36 days and 38 days at MarchJune 31,30, 2026 and December 31, 2025, respectively. The DSOs for our largest payor, the Illinois Department on Aging, were 4727 days and 55 days at MarchJune 31,30, 2026 and December 31, 2025, respectively.

As of MarchJune 31,30, 2026, we did not have any off-balance sheet guarantees or arrangements with unconsolidated entities.