Addus Homecare Corp (ADUS) 2009 Q3 法說會逐字稿

Good day, ladies and gentlemen. And welcome to the Q3 2009 Addus HomeCare Corporation earnings conference call. My name is Katrina, and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session.

(Operator Instructions)

I would now like to turn the conference over to your host for today, Carol Ruth of The Ruth Group. Please proceed.

Thank you, operator. With us today from Management are Mark Heaney, President and Chief Executive Office, and Frank Leonard, Chief Financial Officer of Addus HomeCare. As you know, Addus recently completed its initial public offering and made the transition to public company status. Shares of Addus started trading under the ticker symbol ADUS on October 28, and the IPO closed on November 2.

Before I turn the call over to Management, I would like to remind you that certain matters discussed in this conference call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may be identified by words such as continue, expect and similar expressions.

Forward-looking statements involve a number of risks and uncertainties that may cause actual results to differ materially from those expressed or implied by such forward-looking statements including changes in reimbursement and changes in government regulations, changes in Addus HomeCare's relationship with referral sources, increased competition for Addus HomeCare services, increased competition for joint manager and acquisition candidates, changes in the interpretation of government regulations and other risks set forth in the risk factor section in Addus HomeCare's prospectus filed with the Securities and Exchange Commission on October 29, 2009 and available in the investor relations section of Addus' website, and also on the SEC's website. With that, I will now turn the call over to Mark Heaney, President and CEO. Mark?

Carol, thank you very much, Carol, thank you also for your team. Your team has done a great job with us. We appreciate it. Thank you all, and we do welcome you to Addus' third quarter 2009 conference call, and we are excited about this being our first investor call as a public company.

This year we celebrate out 30th year in homecare, and over that time, over those 30 years, we have seen the industry grow consistently, but we have especially seen our business grow. And it has grown really for three reasons. The first is that aging at home where we, you, we all want to be, we've all earned the right to be is the right and best option.

The second is that because increasingly public policy has come to accept that funding programs that allow consumers to live at home where they want to be makes fiscal sense. And finally, and most importantly, we've grown consistently because the 12,000 of us, we talk about keeping our promises. And if we keep our promises, then you, over time, you ought to build a high quality service business and do that consistently.

We have just completed our initial public offering. I, with absolute certainty, I can say that the management staff at Addus HomeCare are excited and very appreciative of the opportunity that has been afforded to us by our investors and that we all, and all of us equally, are committed to earning and keeping your trust as investors.

Now while Frank and I have met many of you on the recently completed road show, I think it would be good if I began the third quarter report with just a brief introductory statement about the Company and what we do. We say this, and we'll say it, maybe, in every call. Addus HomeCare is a comprehensive provider of homecare services, where we are, and we practice to the lowest cost of care.

As this country ages, each and every segment of homecare is growing. All segments of homecare are growing. And we differentiate ourselves among other good homecare companies by offering and providing our consumers a wide range of homecare service offerings, rather than concentrating in a particular segment or service within the industry.

Now given our array of services and to the extent that it is appropriate and prescribed, we are able, often, to keep the consumer within the added system while diversifying our sources of revenue. And because we are able to provide this level of comprehensive care which we refer to as our integrated care model, our relationships with our consumers are very long-term. They last for years and even a lifetime, the consumer's lifetime, that is compared to a more episodic or shorter, few month relationship that other homecare providers might have with their consumers.

Today, we serve over 23,000 consumers from 120 different locations in 16 states, and we employ over 12,000 homecare professionals. As you know, we operated in two segments. Our largest, at about 80% of revenue, is our Home & Community segment.

These are social and personal care services that are provided to, primarily, the elderly. These services are the basic activities of daily living, bathing, shopping, laundry, grooming, helping with meal preparation, the kinds of things that older people need as they age at home. The payers for this segment are largely state, county and local government agencies.

Our Home Health segment represents about 20% of our revenues, traditional skilled, medical services in the home, more comparable to what we are accustomed to with the other publicly traded homecare companies, and as you know, the majority of these services are Federally funded, funded under Medicare.

Our strategy is to expand our business organically, as well as through good, strategic acquisitions. This includes a focus on broadening the current and new services in our existing market, and where it makes sense, acquiring into new geographies. Historically, our reputation, which is a very good one, along with our integrated model, has allowed us to generate referrals, and obviously, that results in organic growth.

Additionally, over the -- and I think importantly, over the past three years, we have really been investing in our sales, marketing and community education, our outreach programs that are obviously intended to grow the business building on a very good reputation in those communities that we have earned over 30 years of reliable service. I would like to turn to and touch on a few of the financial highlights before we turn the call over to Frank.

We are, with emphasis, we are very pleased with the results that we are reporting this morning. The driver of our high single digit revenue growth in both segments was organic growth. Importantly, the top line growth translated into an even greater increase in adjusted EBITDA and net income, reflecting on our ability to leverage the existing operating infrastructure.

Adjusted EBITDA increased by 15.7% year-over-year, and net income increased by 60%. And these are results that we are, and I think any company can, and should be, proud of.

I'd like to make a few comments about states. We work in states and the states are important to us. As you know, many states are still trying to balance their budgets in this current environment. Importantly though, the states' fiscal, 2010 budgets, they're done. That's done.

And we have seen, in some cases, rate increases. We have seen some of our rates stay flat, and in a few cases we have seen decreases. Frank will talk a little bit about this in his comments. We have always, we are, and we will continue to monitor state budget and regulatory processes. We consider that a strength of ours.

We are, and continue to be, in very close communications with all of our payers. We continue to be very active in discussions about how we can be part of the solution. We are absolutely dead certain of one thing and that is that states recognize the value of these services. And we believe that working together, we are going to continue to be funded and providing continued care for those who are in need.

We also, and I think this is important too, we have longstanding relationships with advocacy groups including the labor unions, and they and we are working together. They are behind us in this effort, and so we feel good about that coalition.

And finally, before I turn the call over to Frank, I think it's important, I've said this to Frank several times, and I promise not to say it again, but I do want to thank Frank, and I want to thank the accounting team for the bearing the brunt of the significant workload related from this IPO. Our employees, administrative and staff alike are going to say that we were able to perform.

We did not miss a beat during this process. And frankly, it has entirely to do with the work of the accounting department, and it's reflected in our strong financial performance, and so we are indebted. And with that, Frank, let me turn the comments over to you.

Thank you, Mark. I would also like to welcome everyone to our first conference call as a public company. We appreciate your interest and support. I'll start with a review of our consolidated results for the three and nine month periods, move on to an analysis of our segments for the current quarter and finish with our financial condition.

In the third quarter of 2009, our consolidated revenues increased by $4.1 million or 6.5% to $66.8 million compared to the third quarter of 2008. Over the same period, our census grew by 2.8%.

Operating income in the third quarter of 2009 increased by 38.8% to $4 million when compared to the third quarter of 2008. The strong increase in operating income was driven by improved revenue growth in both of our segments, lower intangible amortization and our ability to leverage our existing infrastructure against a growing revenue base.

For the third quarter of 2009, our adjusted EBITDA, defined as earnings before net interest expense, taxes, depreciation, amortization and stock-based compensation cost, total $5.4 million. This represents an increase of $0.7 million, or 15.7% from the prior quarter. Our adjusted EBITDA margin increased by 60 basis points to 8% of revenues in the third quarter of 2009, compared to 7.4% in the third quarter of 2008.

Third quarter 2009 net income, prior to deducting preferred stock dividends, increased by 59.4% to $2.1 million, compared to $1.3 million in the prior year quarter. Contributing to this growth was higher operating income and lower interest cost, which was partially offset by an increase in our effective tax rate.

Diluted earnings by share increased by 53.8% to $0.40 per share, compared to $0.26 per share in the third quarter of 2008. The diluted earnings per share for both periods include preferred stock dividends and reflected the dilutive effect of stock options and the assumed conversion of the preferred stock.

For the nine months ended September 2009, revenues increased by 11.5% to $193.6 million, while operating income grew by 45.5% to $11 million when compared to the same period last year. For the nine months ended September 2009, adjusted EBITDA increased by 21.2% to $14.9 million.

And the adjusted EBITDA margin widened by 60 basis points to 7.7% of revenues, compared to the 7.1% for the first nine months of 2008. Finally, for the nine months ended September 2009, diluted earnings per share for common stockholders was $1.04 a share, compared to a loss of $0.18 for the same period a year ago.

Turning to our Home & Community segment, third quarter 2009 segment revenues increased by $3.2 million or 6.4%, to $53.9 million compared to the prior year quarter. The increase in Home & Community revenues was 100% attributable to organic growth.

Increases in average billable rates contributed 3.7%, while increases in billable hours contributed 2.7% to the total organic growth. The segments pre-corporate adjusted EBITDA was $6.3 million in the third quarter of 2009, compared to $5.9 million in the prior year period.

Pre-corporate EBITDA margins for the corporate were flat at 11.7% of revenues as higher gross profit margins, due to lower fringe costs, were offset by increased operating expenses. These increased operating expenses included higher meeting costs, summing expenses and bad debt expense.

In the Home & Community segment, third quarter revenues increased by 7.2% to $12.9 million, compared to the $12 million in the prior year quarter. Of the 7.2% increase in revenues, 0.9% was attributable to acquisitions with the remainder, 6.3%, attributable to organic growth.

In late 2008, we made the decision to stop taking referrals on certain low margin payers. This decision negatively impacted our organic growth rate in the quarter by 4.9%. This strategic decision to focus our resources on higher margin sources of revenues has been substantially factored into current margin levels.

Now I will touch base on some specific Home Health operating metrics for the quarter. Total Medicare revenue for the third quarter of 2009 was $7.9 million, an increase of 10% over the third quarter of last year. Medicare revenues as a percent of total home health segment revenues increased by 1.5 percentage points to 60.9%.

Average Medicare weekly census increased by 12.3%. The average revenue for per completed Medicare episode for the current quarter of $2,514 was down 5.7% from the prior year quarter, while visits per episode were down 6.4%. Contributing to these decreases were a lower acuity case mix and a higher number [aloopa] episodes in the current quarter.

The segment's pre-corporate adjusted EBITDA for the third quarter 2009 was $2.2 million, compared to $1.7 million in the third quarter of 2008. The EBITDA margin increased significantly to 17.4% of revenues, compared to 14.1% of revenues in the third quarter of 2008. Third quarter Home Health results benefited from the increased mix of higher margin Medicare business, the nonrenewal of certain low margin accounts and our ability to leverage divisional operating expenses.

Turning now to our financial condition, cash provided by operating activities in the third quarter 2009 totaled $6.5 million. Due to our strong results in the third quarter, our cash provided from operating activities turned positive for the year-to-date period.

In the third quarter 2009, we also reduced our debt levels by $4.4 million. At September 30, 2009, we had total debt of $60 million. Contributing to the improved operating cash and reduced debt levels in the third quarter, was a reduction in our net accounts receivable of just over $600,000. For comparative purposes, our DFOs at September 30, 2008, June 30, 2009 and September 30, 2009 were 68 days, 86 days and 83 days, respectively.

The DSO for our largest payer, the Illinois Department on Aging, or IDOA, for the same three periods were 82 days, 112 days and 110 days, respectively. We believe that the DSO level for IDOA will be in the 110 to 120 day range for the next couple of quarters as the state continues to work through its revenue deficiencies.

Our cash flow and balance sheet will change significantly with the recent completed initial public offering and the closing of the new $50 million revolving credit facility with Fifth Third Bank. As a result of the IPO, we believe we are in a much stronger position to capitalize in the growth opportunities ahead.

Lastly, I would like to comment on the impact of the IPO. The capital structure reflected on our balance sheet at September 30, 2009 does not reflect the impact of our IPO that began trading on October 28. The IPO provided net proceeds to the Company of $50.2 million before transaction fees and expenses.

As of the IPO date, our common shares outstanding also increased from 5.1 million to 10.5 million shares. Our fourth quarter 2009 will also include certain onetime charges related to the payment of interest on the contingent note associated with the September 2006 acquisition, the write-off of unamortized debt financing cost and severance costs for the former Chairman. For further details, please refer to our prospectus.

With that, I would like turn the discussion back to Mark for closing comments.

Thank you, Frank, appreciate it. In summary, I think what we are trying to communicate and we have always communicated is that we are very proud of our Company and we think the work that we do is important. We are proud of the performance in the quarter. We know it is a team effort.

And as I communicated, collectively, we are excited about becoming a new public company. We think that our philosophy of providing high quality care at the lowest possible cost will lead to continued growth in both of our segments and in all of the different services that we provide.

With that, I am going to conclude and, Carol, we can open up for questions.

Thank you.

(Operator Instructions)

And your first question comes from the line of Whit Mayo from Robert Baird. Please proceed.

Hi, hey, good morning, guys, can you hear me?

Yes.

Okay, maybe just start with DSOs. They were down three days sequentially, and that is a break in the trend we've seen over the past five quarters. I guess my question is, given some of the comments you've made about your expectation for Illinois staying at these elevated levels, how should we think about DSOs for the rest of the year, and just any historical perspective that you could provide just on how states tend to pay around some of the holidays.

Frank, want to?

Sure. We are very happy to see the decrease in the current quarter, and I do want to thank the reimbursement team that has worked very hard to get that accomplished. We -- it is a high priority for the Company to keep working the DSO down. We do expect the State of Illinois to stay at higher levels. As I indicated, we expect, particularly, the IDOA, our largest payer, to be in the 110 to 120 day range. But we still can work on other payers to bring them down. And one of the things that we were able to accomplish in the third quarter was to bring down some of our -- we had building conversion issues related to the McKesson conversion that finished in the second quarter. We brought that balance down by $1 million, and we can continue to bring that down more in the fourth quarter. So, I would say we expect to continue to see the DSO come down a little bit going in the next couple of quarters.

Yes, I would like to comment on that also, Whit, if you don't mind. Obviously, this is a priority for the Company. It just is. We put more resources into, especially the Illinois matter. We hired a government relations person specific to this issue. We have coalition support. We have union support. They are working with us on this. And I'll also say that the State of Illinois prioritizes the Home & Community base program very highly. They are very sensitive to this, and they are trying to work with us. I think it is very important to tell the investors that these are approved bills, and I have been doing this for 30 years. And we have never, ever not been paid for an approved bill from any state or any government entity. As Frank mentioned, we are monitoring -- Frank has his projections as to when we see it is going to chance, and I'm with that, but this is a very high priority. We continue to work on it, and frankly, we also want to point out that we are in 15 other states and, Frank, I think you would agree, these other states are timely, and we have no indication that they are not going to continue to be so.

Okay.

Whit, I hope that answers your question.

That's really helpful, and then, Mark, maybe if you could just -- since we're talking about some strategic objectives, just maybe address some of the higher level, in-market development and sales initiatives that you were referring to in your opening comments. Are you talking -- is that more specifically people-related, or is that IT spending? Just any color would be helpful.

Sure. Over -- I think it starts with the culture of the Company, the history of the Company, and this is our 30th year, and I think it is -- for the first 25 years of this Company, it's important, I think, for our investors to know that we were -- and, by the way, a record of continuous growth. And the approach was, we were really an intake and high quality responsive service company. And that's how we built the business. We really did not have much in the way of external sales. And about four or five years ago, we realized that, obviously, the Company matured, and we said this was important to us. So we have had a steady emphasis over those years in building the external sales program. And I'll jump around a little bit, and I will tell you that I think that we are doing fairly well. I think we are competitive in the external sales, organic sales effort. Recently, we hired in a -- brought in a consulting firm well known in the industry who has made a review and made recommendations for redesigning the sales effort. We have -- we are hiring regional sales people. We are hiring additional sales staff, more feet on the streets in the communities. We have additional site training that they -- we are bringing in sales management software. So think that, frankly, and on the national level, the proposal was made to our Board this week to bring in national sales, major account sales people who will approach insurers or housing organizations and so forth, so -- and that, along with our branding, which is you know the Company, the branding has changed. It all reflects an effort to beef up, become stronger at and win in our organic sales program.

Okay, that's great, maybe one last question for Frank. You mentioned in your comments, you saw a 4.9% drag on your organic growth for your Home Health segment from some of the unprofitable business you walked away from last year. When will you fully anniversary that impact?

We've actually seen most of that through the third quarter. There's a little bit in the fourth quarter of 2008, but very little. So it's substantially completed as of third quarter 2009.

Okay, great, thanks a lot, guys.

Thank you, Whit.

And your next question comes from the line of Andreas Dirnagl from Stephens and Company. Please proceed.

Yes, good morning, guys. Frank, maybe to start with you, just a couple of questions on your sort of final comment in terms of sort of how the IPO affects the capital structure and various things going forward. Are there any expenses in the quarter, and I'm thinking things like the EOS management fee or perhaps the Chairman's salary that are not going to be recurring in future quarters because of the changes from the IPO?

Sure, Andreas. Yes, those two costs will not continue going forward from the close date of November 2, but we also have some increase in costs. And what we have anticipated is public company costs of about $1.3 million. That actually is an increase of about 10% to our national support center. So while we do have some cost savings, we do expect to have increased costs related to being a public company.

Great. And the EOS was -- how much was that, $1.4 million a year?

No, that was $350,000 per year.

$350,000 per year, okay, great. And then, maybe just, sorry, one final question on the IPO in terms of what's your expected debt level once everything has sort of pulled through? What are drawings going to be, initially, under the Fifth Third?

Right now, we are a little bit north of $30 million drawn.

Okay.

Again, remember the new credit facility is $50 million.

Right, right, and then maybe just a couple of comments, Frank. One of your sort of public competitors that is also in the home and community space made some sort of commentary on their call just regarding sort of states going forward. And they were seeing sort of a relatively unique thing, which is they weren't seeing cuts in bill rates. They weren't seeing cuts in sort of billable hours, but they were seeing, for lack of a better term, states sort of dragging their feet on making consumers, or new consumers, eligible for the benefits. And I was wondering is that sort of a phenomenon that you have been seeing in your states? Or does that sound likes it's isolated to their states?

Andreas, this is Mark. We are not seeing that. I actually don't think that -- I don't know why a state would do that. But we are not seeing that. Actually, and it's important to point out, and I don't think that the public policy people think that's a great idea. The Baucus bill talks about increasing eligibility for folks, in other words, making it possible for more folks to qualify for the program because, obviously, if these people are nursing home eligible, and that's three times the cost of home care, then why would we not make them, more people, eligible who are at risk or nursing home? We are not seeing that.

Okay, maybe just a couple of comments on sort of the operations on both sides, if I could get some color -- on the Home & Community side, if you look sort of at your current consumer population in terms of what they are eligible for, in terms of hour of service, would say that you are sort of maximizing the number of hours of service that you are providing? Or is there sort of room to sort of continue improvement there?

I would say that we are maximizing, broadly speaking, Andreas, we are maximizing the hours of service a consumer is entitled to. We techniques, and strategies and systems for doing that, software included, which is really -- well, let's leave it at that. The -- I would not expect that on the current base of business that one would look -- we should look for much of a discernible increase in revenue as a result of further increasing delivery of service, although it is a continuous -- the consumer has the right, and it's an entitlement. And so, we are continually trying to maximize their hours as appropriate.

Okay, and then finally, Mark, for -- especially for investors that are obviously newer to the name, can you maybe give a brief overview taking more of a 30,000 footer or a long-term viewpoint in terms of the decision to sort of move out of the lower margin business on the home health side, what that business was, and sort of what you're going to take that capacity and sort of focus on going forward?

Yes, sure. The -- by the way, we're not proud of having to not provide services to people. That's not something that we are in the business to do. And so, this was not a decision that we made lightly. But we had a book business, and frankly, it was concentrated in the Medicaid, Home Health side in a few states, and not every state. I want to be clear. There is good Medicaid home health to do, and we do some. But over a long period of time, the payers were just not paying at the appropriate rates. They were paying slowly. And that's not sustainable. And so, we made the decision to evaluate the prospect, the history and the prospects for these payers, and we made the decision to, following procedures, to stop service to those consumers. And I want to emphasize, that's not -- we're not proud of that. It's not like -- we didn't have a party that day. We will -- we always review our margins. And we expect to -- that we should make a reasonable profit on the work that we do. And that's all we ask.

Okay, and then sort of where you're focusing going forward in terms of building the Home Health business?

We -- I think -- you'll -- I have to think about how to answer this. My first public call I have to be careful not to do something that gets me in trouble.

As we all do.

The -- yes, exactly, and just, by the way, CEO on his first call went to jail. The -- okay, we are -- we expect that -- Andreas, we want -- we provide services in all segments. We provide private services, veterans services, home and community-based, Medicaid home health insurers, Medicare. If we can make a reasonable profit, we want to amass consumers and provide services to those folks, and have relationships with them over a long period of time. The largest of our business is home and community-based, but over time we have seen our Home Health business continue to grow. And, so we expect -- I expect that our Medicare Home Health, and our private duty, which has been growing, to continue to grow at a rate disproportionate to the other lines of our business. It happens that those are larger, higher margin business, and that's great. But the opportunity, the upside opportunity on both of those areas are tremendous as compared to the home and community-based, just on a percentage basis.

Okay, thank you. That was very helpful. (Operator Instructions)

And your next question comes from the line of Gregory Macosko from Lord Abbett. Choose the scene.

Yes, thank you. Just a simple issue relative to the preferred dilution, that, in other words, that included in both years and that's included in the $0.40 or not, that's after the -- before the $0.40, right?

That is actually included in the $0.40.

Okay.

Because it was dilutive in the, actually, third quarter 2009, as well as the year-to-date 2009 period.

Okay, and then, the -- talk about -- you mentioned in the, I think, it was the home health, home care area that there was some bad debt. Just explain that and where that comes from.

Sure. We review our bad, our allowance for doubtful accounts every quarter. And we basically, what we do is we look at it from the standpoint of aging buckets, and we apply historical rates to that. And we do it for each of our segments, Home & Community, as well as our Home Health segment. So, and what we'll do is we'll just record the appropriate bad debt expense in each quarter. The bad debt expense was up a couple of tenths in the first quarter of, I'm sorry, third quarter of 2009 compared to the third quarter of 2008 so, again, a very small increase. But again, we look at those fluctuations on a quarter-to-quarter basis.

And where did that come from? You mentioned earlier that you've never had a state not pay, and I just want to be clear about where they don't pay.

Let me be clear. This is Mark. What I said is that we have never had a state not pay an approved bill. We can over serve. Somebody can be authorized 100 hours. And we can bill for 100 by error. We won't get the 10. But never have we ever had an approved bill not paid by any government entity ever. But frankly, yes --

No, and that's true. It's usually over authorization that could be a documentation issue, could be the actual start -- we actually started the day before than we were authorized. So it's stuff like that.

And it's minimal.

And it's minimal, yes.

Okay. And I believe you have some new, improving, advancing systems relative to documentation and billing, et cetera. Have you -- has there been changes with regard to that over the last year or so?

That has definitely helped to allow us to look at our receivables on a consumer by consumer basis. And so, we definitely see that as being a benefit going forward. But you have got to look at our bad debt expense runs 1% to 1.5% of revenues. Obviously, we want to try and get that as low as we can. And McKesson's system will definitely help that.

Let me also just, for color, the very first thing Frank did coming here was focus on the reimbursement area, and frankly, a shift towards centralization, professionalization -- we've really beefed up the quality of leadership in reimbursement. Systems, coordination with sales and operations, along with the McKesson system, that goes back a year and a half on the list. It has been an emphasis for us.

And the 17.4% EBITDA margin in Home Health, is that something we can kind of look, given the changes in customers you're serving, et cetera, is that a reasonable expectation? Was there anything to make that above average in the current, the past quarter?

I think 17.4% was kind of on the high side, but we do see it around 17%, and obviously, we're all kind of awaiting any -- CMF came out with their rule, final rule for 2010 rates, which are right now higher, so obviously, that would help with margins in 2010 if that sticks. So, overall, I think that Home Health pre-corporate EBITDA margins around 17% is a good target number.

At these rate levels.

At these rates.

And you also suggested that growth in the Home Health area was held back, and yet it still grew 7.2% in the quarter. Is that -- again, relative to the home care business, that's a little bit faster. Is that, again, a not unreasonable number in the quarter?

Again, I think we don't want to provide any forecast here, but if we do back out the impact of that business that was not renewed, our non-Medicare business grew, actually, over 15%. So when we talk about our Medicare business growing over 10%, our non-Medicare business actually grew, in the current quarter, over 15%.

Yes, I think that, as I mentioned earlier, it's just the potential is tremendous. And then it becomes, in fact, a matter of execution. And that's why we get up early and go home late. But there's a tremendous opportunity to integrate care and, frankly, to catch acuities early and make a difference, so there is just tremendous opportunity for us on the Medicare side and the private duty side, on the Veteran's side.

And across the Company, what do you -- what is currently Illinois, and kind of what is your just general direction for that share of total revenue?

Frank, why don't you just talk about the number and I'll talk about the general.

Yes, for Home & Community, in particular, which obviously is 80% of our business, Illinois accounts for just over 50% of total segment revenues. And actually, over the last two years, we've actually seen increases in rates and census.

I -- I'll say this, our home and community-based business, our Home & Community business in Illinois is very large. We are -- if we aren't, we're one of the largest providers already. Investments would be made -- we like to go into new geography with -- leading with Home & Community. So I wouldn't expect that we would be focusing on any acquisitions or that kind of growth. We can put those resources into other states and complete -- continue to complete the model. However, when you asked about Illinois in general, just Illinois, that's more than just the Illinois Department on Aging or the rehabilitative services programs or home and community-based. It also includes the Medicare. And we have a very large home and community-based caseload in Illinois. We have a lot of offices in Illinois, and the opportunity to grow the Medicare and the private duty in Illinois, especially on a percentage basis, much disproportionate to the home and community-based. There are 7 million people in the service, in the marketing area of Chicago, and I think we are steadily improving, increasing our market share, but it's nowhere near what, frankly, what it should be. And so, it's a focus, and we're committed to it, a lot of opportunity in Illinois to build the Medicare and private side.

Okay, very good, thank you.

Thank you.

Thank concludes the Q&A portion of the call. I will now turn the call back to Mark Heaney for closing remarks.

Well, thank you, I actually don't know what to say. Thank you all very much. We do appreciate -- we look forward to another quarter of good, hard work and talking to you again a quarter from now, so thank you all so much.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. ??

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