The U.S. is in the midst of a demographic shift. The number of Americans aged 65 or older is projected to increase from 58 million in 2022 to around 82 million by 2050.

At present, approximately 19%—or roughly 64 million—of the U.S. population consists of baby boomers. With many of them about to transition into retirement, demand for personalized, home-based care is expected to grow.

As a result of this shift, Addus HomeCare (ADUS), a firm specializing in home-based care, is positioned to benefit from demographic tailwinds.

However, despite delivering returns well above 30% since 2020, the company continues to trade at a P/E of 18x, well below corporate average.

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America’s senior population is growing rapidly, with the number of individuals aged 65 or older projected to increase from 58 million in 2022 to roughly 82 million by 2050, representing a 42% increase.

Right now, approximately 19%—or roughly 64 million—of the U.S. population consists of baby boomers.

With many baby boomers about to exit the workforce and transition into retirement, demand for personalized, home-based care is expected to grow, especially as those aged 65 or older increasingly rely on home care based on estimates from the U.S. Department of Health and Human Services.

Amid this demographic shift is a myriad of issues facing the healthcare industry.

According to McKinsey, payers are facing declines in Medicaid and Affordable Care Act due to regulatory shifts. Providers could also see heightened uncompensated care and loss of reimbursement.

Labor shortages in the healthcare field are also a significant issue. Projections from the Health Resources & Services Administration indicate there will be shortages of professionals such as registered nurses (108,960), licensed practical nurses (249,950), physicians (141,160), and others by 2038.

Despite these issues, it’s clear that this demographic shift will serve as a tailwind for companies that specialize in home-based personal care and support such as Addus HomeCare (ADUS).

Founded in 1979, Addus HomeCare is a leading provider of home care and support services and operates across various states and serves over 62,000 patients weekly, serviced by roughly 50,000 employees.

The company’s primary offerings include services like home care, home health, and hospice. For home care, Addus provides bathing, grooming, medication reminders, meal preparation, dressing, and light housekeeping.

Meanwhile, home health has a much wider coverage, spanning from personal care to physical therapy, speech therapy, nutritional counseling, and nursing, among others.

End-of-life care, on the other hand, covers home-based palliative care and counseling services.

Combined, these offerings have enabled the company to grow its revenues from $951 million in 2022 to $1.3 billion in 2025.

Aside from having a wide range of services, the company was able to grow its revenues by having a diversified payor mix composed of managed care organizations (37%), Medicare (21%), and a mixture of federal, state, and local payors (21%), among others.

As of the third quarter of the company’s 2025 fiscal year, 76.5% of revenues have been generated by its personal care segment, followed by hospice at 18.4%, and the remaining generated by home health at 5.1%.

Addus’ Uniform return on assets (“ROA”) has grown from 37% in 2020 to 61% in 2024. The company also delivered an asset growth of 19%.

Despite the company’s ability to generate high returns, it currently trades at a Uniform P/E of 18x, well below corporate averages. This valuation signals market concerns about the mounting financial strain in the U.S. healthcare system and labor shortages.

That said, Addus’ wide range offerings and highly diversified payor mix, combined with demographic tailwinds, could propel further margin expansion and drive sustained growth.

Best regards,

Joel Litman & Rob Spivey
Chief Investment Officer &
Director of Research
at Valens Research