Addus HomeCare (NASDAQ:ADUS) jumped ~9% on Monday after William Blair reiterated its Outperform rating on the home healthcare company following a ~28% decline in the previous session amid concerns over the impact of a proposed Medicaid rule.
ADUS shares slumped to the lowest level in nearly ten months after the proposed rule indicated that at least 80% of Medicaid payments for businesses such as home health aide services be spent on the direct care workforce as compensation.
William Blair analyst Matt Larew argues that the final rule is preliminary, and the Centers for Medicare & Medicaid Services (CMS) is seeking public comments to finalize the percentage.
The analyst also notes that states will get at least four years to implement certain changes to implement the proposal.
“That said, we would be surprised if the rule were enacted as written,” Larew wrote, adding, “We expect to hear additional commentary from management regarding the potential impact of the rule when the company reports this week.”
Addus (ADUS) is expected to report its Q1 2023 earnings after the market close on Monday.
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