Addus HomeCare dropped 30% on proposed CMS rule, says William Blair

William Blair analyst Matt Larew says Addus HomeCare sold off 30% on Friday after the Centers for Medicare and Medicaid Services announced the proposed ensuring access to Medicaid services rule as part of President Biden’s Executive Order on increasing access to high-quality care and supporting caregivers. The most relevant portion of the proposed rule would require that at least 80% of Medicaid payments for personal care, homemaker, and home health aide services be spent on compensation for the direct care workforce as opposed to administrative overhead or profit, the analyst tells investors in a research note. The rule is preliminary and subject to a 60-day comment period, and CMS is soliciting comments on what the appropriate percentage should be, adds the firm. William Blair thinks the rule is unlikely to be implemented and keeps an Outperform rating on shares of Addus HomeCare. It believes Addus’s services are part of the solution to providing care to polychronic, vulnerable patients.