Addus HomeCare Corp Goodwill & Intangibles Disclosure

7. Goodwill and Intangible Assets

 

A summary of goodwill by segment and related adjustments is provided below:

 

		Goodwill
		Hospice				Personal Care				Home Health				Total
		(Amounts In Thousands)
Goodwill at December 31, 2023		$	432,799			$	153,276			$	76,920			$	662,995
Additions for acquisitions			—				292,204				18,094				310,298
Adjustments to previously recorded goodwill			41				(2,954	)			178				(2,735	)
Goodwill at December 31, 2024			432,840				442,526				95,192				970,558
Additions for acquisitions			—				30,187				—				30,187
Adjustments to previously recorded goodwill			26				(3,732	)			(343	)			(4,049	)
Goodwill at December 31, 2025		$	432,866			$	468,981			$	94,849			$	996,696

 

In 2025, the Company recognized goodwill in the personal care services segment of $30.2 million related to the Jacksonville Acquisition, the Great Lakes Acquisition, the Helping Hands Acquisition and the Gold Horses Acquisition. In 2024, the Company recognized goodwill in the personal care services segment of $292.2 million related to the acquisition of Upstate and the Gentiva Acquisition and recognized goodwill in the home health segment of $18.1 million related to the Gentiva Acquisition. In connection with the acquisition of Tennessee Quality Care in 2023, the Company recognized goodwill in its hospice and home health segments of $35.0 million and $44.3 million, respectively. The Company also recognized goodwill of $0.6 million related to the CareStaff acquisition in the personal care services segment in 2023.

 

Goodwill adjustments to previously recorded goodwill are generally related to accounts receivable and accrued expenses based on the final valuations. See Note 4 to the Notes to Consolidated Financial Statements for additional information regarding the acquisitions made by the Company in 2024 and 2023, and Note 5 for additional information regarding the divestiture for New York Asset Sale.

 

The Company’s identifiable intangible assets consist of customer and referral relationships, trade names and trademarks, non-competition agreements and state licenses. Amortization is computed using straight-line and accelerated methods based upon the estimated useful lives of the respective assets, which range from one to twenty years. Customer and referral relationships are amortized systematically over the periods of expected economic benefit, which range from three to fifteen years.

 

Goodwill and certain state licenses are not amortized pursuant to ASC Topic 350. We test intangible assets with indefinite useful lives for impairment at the reporting unit level on an annual basis, as of October 1, or whenever potential impairment triggers occur, such as a significant change in business climate or regulatory changes that would indicate that an impairment may have occurred. The Company did not record any impairment charges for the years ended December 31, 2025, 2024 or 2023.

 

For the years ended December 31, 2024 and 2023, the Company performed its annual goodwill impairment test using a quantitative analysis, which compares the estimated fair value of each reporting unit to its carrying value. The Company estimates the fair value of the reporting unit using both a discounted cash flow model as well as a market multiple model. The cash flow forecasts are adjusted by an appropriate discount rate based on the Company’s estimate of a market participant’s weighted-average cost of capital. These models are both based on the Company’s best estimate of future revenues and operating costs and are reconciled to the Company’s consolidated market capitalization, with consideration of the amount a potential acquirer would be required to pay, in the form of a control premium. The determination of fair value in the Company’s goodwill impairment analysis is based on an estimate of fair value for each reporting unit utilizing known and estimated inputs at the evaluation date. Some of those inputs include, but are not limited to, the most recent price of the Company’s common stock and fair value of long term debt, estimates of future revenue and expense growth, estimated market multiples, expected capital expenditures, income tax rates and cost of invested capital. For the years ended December 31, 2024 and 2023, under the quantitative assessment, the Company’s estimated fair values of each of its reporting units exceeded the respective carrying amounts.

 

For the year ended December 31, 2025, the Company elected to perform a qualitative assessment to evaluate whether it was more likely than not that the fair value of each reporting unit is less than its carrying amount. As part of the qualitative assessments, the Company considered (i) the magnitude of the reporting unit’s excess fair value over its carrying amount from the most recent quantitative impairment test, (ii) industry and market conditions, including the impacts of the interest rate environment, (iii) historical financial performance, including our revenue, earnings, and operating cash flow growth trends, (iv) the Company’s forecasts of revenue, earnings, and operating cash flows, (v) cost factors, including the effects of inflation and rising prices, (vi) the regulatory environment, (vii) other factors specific to each reporting unit, such as a change in strategy, a change in management, or acquisitions and divestitures affecting the composition of the reporting unit and its future operating results, and (viii) consideration of changes in the Company’s market capitalization. For the year ended December 31, 2025, under the qualitative assessment, the Company concluded that it was more likely than not that the fair value of each of its reporting units exceeded its respective carrying amounts as of the annual testing date.   

 

The carrying amount and accumulated amortization of each identifiable intangible asset category consisted of the following at December 31, 2025 and 2024:

 

						December 31, 2025												December 31, 2024
						(Amounts in Thousands)												(Amounts in Thousands)
		Estimated Useful Life				Gross carrying value				Accumulated amortization				Net carrying value				Gross carrying value				Accumulated amortization				Net carrying value
Customer and referral relationships (in years)			3 - 15			$	34,201			$	(33,656	)		$	545			$	34,201			$	(33,255	)		$	946
Trade names and trademarks (in years)			1 - 20				59,366				(26,535	)			32,831				59,366				(21,900	)			37,466
Non-competition agreement (in years)			3 - 5				6,728				(6,663	)			65				6,728				(6,263	)			465
State Licenses (in years)			6 - 10				26,529				(4,190	)			22,339				24,981				(1,243	)			23,738
State Licenses		Indefinite					46,630				—				46,630				47,028				—				47,028
Total intangible assets						$	173,454			$	(71,044	)		$	102,410			$	172,304			$	(62,661	)		$	109,643

 

During the year ended December 31, 2025, the Company acquired state licenses of $1.2 million in connection with the Helping Hands Acquisition.

 

During the year ended December 31, 2024, the Company acquired state licenses and a trade name of $23.0 million and $4.9 million, respectively, in its personal care services segment related to the Gentiva Acquisition. The Company also acquired indefinite-lived state licenses of $0.7 million in its home health segment in connection with the Gentiva Acquisition.

 

Amortization expense related to the identifiable intangible assets amounted to $8.4 million, $6.7 million and $7.1 million for the years ended December 31, 2025, 2024 and 2023, respectively.

 

The weighted average remaining useful life of identifiable intangible assets as of December 31, 2025, is 9.11 years.

 

The estimated future intangible amortization expense is as follows:

 

For the year ended December 31,		Total (Amount in Thousands)
2026		$	7,638
2027			7,312
2028			5,601
2029			5,497
2030			5,423
Thereafter			24,309
Total intangible assets subject to amortization		$	55,780