FRISCO, Texas - Addus HomeCare Corporation (NASDAQ:ADUS), a provider of home care services, has entered into a definitive agreement to sell its personal care operations in New York to HCS-Girling, a Brooklyn-based home health and care services provider.
The sale includes fiscal intermediary services under the New York Consumer Directed Personal Assistance Program (CDPAP).
The transaction, awaiting customary regulatory approvals, is valued at up to $23 million, contingent on HCS-Girling's future operational benchmarks in New York. Addus HomeCare plans to utilize the proceeds to decrease the outstanding balance on its revolving credit facility.
Dirk Allison, Chairman and CEO of Addus HomeCare, commented on the divestiture, stating that the New York market has presented challenges and no longer aligns with the company's growth strategy. Allison noted that the exit is expected to have a negligible impact on consolidated earnings and may modestly improve the company's margin profile. He expressed confidence in HCS-Girling's ability to continue delivering quality care to the New York clientele.
Agnes Shemia, Co-Founder and Co-CEO of HCS-Girling, expressed enthusiasm for the expansion opportunity in New York and committed to building on the solid foundation established by Addus. Shemia welcomed Addus's employees and caregivers to the HCS-Girling team, emphasizing a shared commitment to quality home care.
The sale marks Addus HomeCare's strategic shift away from a challenging market, focusing instead on growing other markets where the company can have a more significant impact for clients and shareholders. Addus HomeCare provides home care services to over 49,000 consumers across 22 states.
This news is based on a press release statement.
InvestingPro Insights
As Addus HomeCare Corporation (NASDAQ:ADUS) navigates its strategic shift, the company's financial health and market performance provide valuable context for investors. According to InvestingPro, Addus is currently trading at a low P/E ratio relative to near-term earnings growth, with an adjusted P/E ratio of 25.45 for the last twelve months as of Q1 2024. This suggests that the company's earnings are growing faster than the stock price, potentially indicating an undervalued stock.
Moreover, Addus has demonstrated strong returns, with a 21.02% price total return over the last three months and a notable 26.7% return over the last six months. The company's stock is also trading near its 52-week high, at 98.81% of the peak, which could signal investor confidence in its current trajectory and management decisions, such as the recent divestiture in New York.
InvestingPro Tips highlight that Addus operates with a moderate level of debt and its cash flows can sufficiently cover interest payments, which is reassuring for investors concerned about the company’s financial resilience. In addition, there are more InvestingPro Tips available for Addus HomeCare, and interested readers can discover additional insights and metrics on the InvestingPro website. For those looking to delve deeper into the company's financials and future prospects, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 12 more InvestingPro Tips listed, investors can gain a comprehensive understanding of the company's performance and position in the market.
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