Full Press Release Details
ADDUS HOMECARE ANNOUNCES THIRD QUARTER 2015 RESULTS
Downers Grove, Illinois (November 2, 2015) Addus HomeCare Corporation (NASDAQ: ADUS), a comprehensive provider of home and community-based
services that are primarily personal in nature, provided in the home and focused on the dual eligible population, today announced its financial results for the third quarter and nine months ended September 30, 2015.
For the third quarter, net service revenues were $84.3 million, an increase of 3.3% from $81.7 million for the third quarter of 2014. Net income was $2.9
million, or $0.26 per diluted share, for the third quarter of 2015 compared with $3.2 million, or $0.29 per diluted share, for the third quarter last year. Adjusted diluted earnings per share for the third quarter of 2015 was $0.25 compared with
$0.29 for the third quarter for 2014. Adjusted EBITDA was $6.0 million for the third quarter of 2015 compared with $6.3 million for the same prior-year quarter. Adjusted EBITDA excludes stock-based compensation expense of $412,000 and $231,000 for
the third quarter of 2015 and 2014, respectively. (See page 7 for a reconciliation of all non-GAAP and GAAP financial measures.)
months of 2015, net service revenues rose 9.4% to $252.1 million from $230.3 million for the first nine months of 2014. Net income was $8.3 million, or $0.74 per diluted share, for the first nine months of 2015 compared with $8.3 million, or $0.75
per diluted share, for the comparable period in 2014. Adjusted diluted earnings per share were $0.78 for the first nine months of 2015 compared with $0.78 for the first nine months of 2014. Adjusted EBITDA increased 9.7% to $18.2 million for the
first nine months of 2015 from $16.6 million for the first nine months of 2014.
Revenues and same-store revenues for the third quarter of 2015 reflected
the Company s previously announced exit from certain underperforming locations during the quarter, resulting in a $2.8 million reduction in revenues for the quarter and a 1,128 reduction in total and same store average billable census from
these locations compared with the third quarter last year. Adjusting revenues to remove the exited locations from both 2015 and 2014 results, total net service revenues and same store revenues rose 7.0% and 3.8%, respectively, for the third quarter
of 2015 and rose 11.4% and 8.2%, respectively, for the first nine months of 2015, compared with the same prior-year periods.
The Company s results
for the third quarter of 2015 were consistent with expectations for the third quarter results that Addus announced on October 22, 2015. As described in that press release, revenue growth was diminished, in part due to the slow pace of
transition by states of their dual eligible populations to managed care organizations. In addition, general and administrative expenses as a percent of revenue increased due to higher costs related to the Company s new human resources and
payroll information system (HRIS), Sarbanes-Oxley Act compliance effort and certain other operating expenses. Included in these third quarter G&A costs are $330,000 in items related to exited locations and a performance earn-out payment. These
increases were partially offset by a 120 basis-point comparable-quarter increase in the Company s gross profit margin to 27.9%, primarily due to improved workers compensation expense experience.
ADUS Reports Third Quarter 2015 Results
We are continuing to take steps to improve our G&A cost structure and believe our HRIS system costs
have peaked for the year, commented Mark Heaney, President and Chief Executive Officer of Addus HomeCare. We also remain focused on increasing organic growth, i.e. census development, and we continue to be encouraged by the performance
of our Illinois business for third quarter, which met our expectations for revenues with both comparable-quarter and sequential-quarter growth.
Looking forward, we remain fully committed to maintaining Addus position as one of the most qualified companies to partner with MCOs to provide
personal care services to their dual eligible populations. The transition by the states to MCOs is continuing, even if at an uneven pace. We believe this transition represents a substantial long-term growth opportunity for Addus given our scale,
expertise, technology, quality of care and financial strength in a highly fragmented industry. We expect the transition will, over time, concentrate the dual eligible census with MCOs. As evidenced by the growth in our pipeline of potential
acquisitions, we also believe the transition is accelerating industry consolidation consistent with other health care sectors.
third quarter with $14.9 million in cash, no bank debt and $40 million of availability under its revolving credit facility. There was a net cash use of $26.3 million for the third quarter of 2015, compared with $7.4 million for the third quarter
last year. For the first nine months of 2015, cash generation was $8.8 million. Since the end of the third quarter, the Company has collected an additional $17.0 million in accounts receivable from the State of Illinois.
Non-GAAP Financial Measures
The information provided in
this release includes adjusted diluted earnings per share, Adjusted EBITDA and adjusted net service revenue, which are non-GAAP financial measures. The Company defines adjusted diluted earnings per share as diluted earnings per share, adjusted for
M&A expenses, one-time costs associated with exited sites, tax benefit from worker opportunity tax credits and incremental costs for Sarbanes-Oxley Section 404 compliance. The Company defines Adjusted EBITDA as earnings before interest expense,
taxes, depreciation, amortization, M&A expenses and stock-based compensation expense. The Company defines adjusted net service revenue as revenue adjusted for the closure of certain sites. The Company has provided, in the financial statement
tables included in this press release, a reconciliation of adjusted diluted earnings per share to diluted earnings per share, a reconciliation of Adjusted EBITDA to net income and a reconciliation of adjusted net service revenue to net service
revenue, in each case, the most directly comparable GAAP measure. Management believes that adjusted diluted earnings per share, adjusted EBITDA and adjusted net service revenue are useful to investors, management and others in evaluating the
Company s operating performance, to provide investors with insight and consistency in the Company s financial reporting and to present a basis for comparison of the Company s business operations among periods, and to facilitate
comparison with the results of the Company s peers.
Addus will host a conference call on Tuesday, November 3, 2015, beginning at 9:00 a.m. Eastern time. The toll-free dial-in number is (877) 930-8289
(international dial-in number is (253) 336-8714), pass code 67427175. A telephonic replay of the conference call will be available through midnight on November 17, 2015, by dialing (855) 859-2056 (international dial-in number is
(404) 537-3406) and entering pass code 67427175.
A live broadcast of Addus HomeCare s conference call will be available under the Investor
Relations section of the Company s website: www.addus.com. An online replay of the conference call will also be available on the Company s website for one month, beginning approximately three hours following the conclusion of the
ADUS Reports Third Quarter 2015 Results
Forward-Looking Statements
Certain matters discussed in this press release 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. These forward-looking statements are based on our current expectations and beliefs concerning future
developments and their potential effect on us. 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
the consummation and integration of acquisitions, anticipated transition to managed care providers, our ability to successfully execute our growth strategy, unexpected increases in SG&A and other expenses, expected benefits and unexpected costs
of acquisitions and dispositions, management plans related to dispositions, the possibility that expected benefits may not materialize as expected, the failure of the business to perform as expected, changes in reimbursement, changes in government
regulations, changes in Addus HomeCare s relationships with referral sources, increased competition for Addus HomeCare s services, changes in the interpretation of government regulations, the uncertainty regarding the outcome of
discussions with managed care organizations, changes in tax rates, the impact of adverse weather, higher than anticipated costs, estimation inaccuracies in future revenues, margins, earnings and growth, and other risks set forth in the Risk Factors
section in Addus HomeCare s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2015, which is available at http://www.sec.gov. Addus HomeCare undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information, future events or otherwise. In addition, these forward-looking statements necessarily depend upon assumptions, estimates and dates that may be incorrect or imprecise and involve
known and unknown risks, uncertainties and other factors. Accordingly, any forward-looking statements included in this press release do not purport to be predictions of future events or circumstances and may not be realized. (Unaudited tables and
Addus is a comprehensive
provider of home and community-based services that are primarily provided in the home and focused on the dual eligible population. Addus services include personal care and assistance with activities of daily living, and adult day care.
Addus consumers are individuals who are at risk of hospitalization or institutionalization, such as the elderly, chronically ill and disabled. Addus payor clients include federal, state and local governmental agencies, managed care
organizations, commercial insurers and private individuals. For more information, please visit www.addus.com.
ADDUS HOMECARE CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income and Cash Flow Information
(amounts and shares in thousands, except per share data)
| Income Statement Information: | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net service revenues | $ | 84,331 | $ | 81,658 | $ | 252,055 | $ | 230,306 | ||||||||
| Cost of service revenues | 60,809 | 59,818 | 182,925 | 169,218 | ||||||||||||
| Gross profit | 23,522 | 21,840 | 69,130 | 61,088 | ||||||||||||
| 27.9 | % | 26.7 | % | 27.4 | % | 26.5 | % | |||||||||
| General and administrative expenses | 18,041 | 15,773 | 52,617 | 45,576 | ||||||||||||
| Depreciation and amortization | 1,197 | 1,106 | 3,504 | 2,684 | ||||||||||||
| Total operating expenses | 19,238 | 16,879 | 56,121 | 48,260 | ||||||||||||
| Operating income | 4,284 | 4,961 | 13,009 | 12,828 | ||||||||||||
| Total interest expense, net | 163 | 180 | 505 | 484 | ||||||||||||
| Income before taxes | 4,121 | 4,781 | 12,504 | 12,344 | ||||||||||||
| Income tax expense | 1,234 | 1,544 | 4,202 | 4,024 | ||||||||||||
| Net income | $ | 2,887 | $ | 3,237 | $ | 8,302 | $ | 8,320 | ||||||||
| Net income per share: | ||||||||||||||||
| Basic | $ | 0.26 | $ | 0.30 | $ | 0.76 | $ | 0.76 | ||||||||
| Diluted | $ | 0.26 | $ | 0.29 | $ | 0.74 | $ | 0.75 | ||||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||
| Basic | 11,007 | 10,927 | 10,978 | 10,895 | ||||||||||||
| Diluted | 11,247 | 11,154 | 11,183 | 11,122 | ||||||||||||
| Cash Flow Information: | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net cash (used in) provided by operating activities | $ | (26,258 | ) | $ | (7,413 | ) | $ | 8,786 | $ | 7,590 | ||||||
| Net cash (used in) investing activities | (555 | ) | (821 | ) | (5,712 | ) | (12,012 | ) | ||||||||
| Net cash (used in) provided by financing activities | (334 | ) | 2,767 | (1,560 | ) | 2,981 | ||||||||||
| Net change in cash | (27,147 | ) | (5,467 | ) | 1,514 | (1,441 | ) | |||||||||
| Cash at the beginning of the period | 42,024 | 19,591 | 13,363 | 15,565 | ||||||||||||
| Cash at the end of the period | $ | 14,877 | $ | 14,124 | $ | 14,877 | $ | 14,124 |
Condensed Consolidated Balance Sheets
(Amounts in thousands)
| September 30, | ||||||||
| 2015 | 2014 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash | $ | 14,877 | $ | 14,124 | ||||
| Accounts receivable, net | 78,395 | 62,121 | ||||||
| Prepaid expenses and other current assets | 7,609 | 6,937 | ||||||
| Deferred tax assets | 8,508 | 8,326 | ||||||
| Total current assets | 109,389 | 91,508 | ||||||
| Property and equipment, net | 8,187 | 7,646 | ||||||
| Other assets | ||||||||
| Goodwill | 65,962 | 64,237 | ||||||
| Intangible assets, net | 10,179 | 11,043 | ||||||
| Investment in joint venture | 900 | 900 | ||||||
| Other assets | 404 | 13 | ||||||
| Total other assets | 77,445 | 76,193 | ||||||
| Total assets | $ | 195,021 | $ | 175,347 | ||||
| Liabilities and stockholders equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 4,869 | $ | 3,613 | ||||
| Accrued expenses | 42,118 | 39,314 | ||||||
| Current portion of capital lease obligations | 1,100 | 978 | ||||||
| Current portion of contingent earn-out obligation | 1,250 | 1,000 | ||||||
| Deferred revenue | 3 | |||||||
| Total current liabilities | 49,337 | 44,908 | ||||||
| Capital lease obligations, less current portion | 2,162 | 2,926 | ||||||
| Contingent earn-out obligation, less current portion | 1,120 | |||||||
| Deferred tax liability | 5,832 | 3,441 | ||||||
| Total stockholders equity | 137,690 | 122,952 | ||||||
| Total liabilities and stockholders equity | $ | 195,021 | $ | 175,347 |
ADDUS HOMECARE CORPORATION AND SUBSIDIARIES
Key Statistical and Financial Data
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| General: | ||||||||||||||||
| Adjusted EBITDA (in thousands) (1) | $ | 5,950 | $ | 6,305 | $ | 18,233 | $ | 16,617 | ||||||||
| States served at period end | 21 | 22 | ||||||||||||||
| Locations at period end | 122 | 132 | ||||||||||||||
| Employees at period end | 19,642 | 17,504 | ||||||||||||||
| Home & Community | ||||||||||||||||
| Average billable census - same store (2) | 31,800 | 32,032 | 32,078 | 32,753 | ||||||||||||
| Average billable census - acquisitions (3) | 607 | 730 | ||||||||||||||
| Average billable census total | 32,407 | 32,032 | 32,808 | 32,753 | ||||||||||||
| Billable hours (in thousands) | 4,860 | 4,749 | 14,626 | 13,511 | ||||||||||||
| Average billable hours per census per month | 50.0 | 49.9 | 49.5 | 45.8 | ||||||||||||
| Billable hours per business day | 74,768 | 74,912 | 76,176 | 70,737 | ||||||||||||
| Revenues per billable hour | $ | 17.35 | $ | 17.03 | $ | 17.23 | $ | 17.05 | ||||||||
| Percentage of Revenues by Payor: | ||||||||||||||||
| State, local and other governmental programs | 78.1 | % | 85.9 | % | 77.8 | % | 88.6 | % | ||||||||
| Managed Care | 18.1 | 9.5 | 18.2 | 6.8 | ||||||||||||
| Private duty | 2.8 | 3.5 | 3.0 | 3.5 | ||||||||||||
| Commercial | 1.0 | % | 1.1 | % | 1.0 | % | 1.1 | % |
ADDUS HOMECARE CORPORATION AND SUBSIDIARIES
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Reconciliation of Adjusted EBITDA to Net Income: (1) | ||||||||||||||||
| Net income | $ | 2,887 | $ | 3,237 | $ | 8,302 | $ | 8,320 | ||||||||
| Interest expense, net | 163 | 180 | 505 | 484 | ||||||||||||
| Income tax expense | 1,234 | 1,544 | 4,202 | 4,024 | ||||||||||||
| Depreciation and amortization | 1,197 | 1,106 | 3,504 | 2,684 | ||||||||||||
| M&A expenses | 57 | 7 | 558 | 543 | ||||||||||||
| Stock-based compensation expense | 412 | 231 | 1,162 | 562 | ||||||||||||
| Adjusted EBITDA | $ | 5,950 | $ | 6,305 | $ | 18,233 | $ | 16,617 | ||||||||
| Reconciliation of Diluted Earnings per Share to Adjusted Diluted Earnings per Share: (2) | ||||||||||||||||
| Diluted earnings per share | $ | 0.26 | $ | 0.29 | $ | 0.74 | $ | 0.75 | ||||||||
| Acquisition-related transaction expense per share | 0.03 | 0.03 | ||||||||||||||
| Worker Opportunity Tax Credits per share | (0.02 | ) | (0.02 | ) | ||||||||||||
| One Time Costs associated with exited sites | 0.01 | 0.01 | ||||||||||||||
| Incremental Sarbanes-Oxley Section 404 compliance expense per share | 0.02 | |||||||||||||||
| Adjusted diluted earnings per share | $ | 0.25 | $ | 0.29 | $ | 0.78 | $ | 0.78 | ||||||||
| Reconciliation of Net Service Revenues to Adjusted Net Service Revenues: (3) | ||||||||||||||||
| Net service revenues | $ | 84,331 | $ | 81,658 | $ | 252,055 | $ | 230,306 | ||||||||
| Revenue associated with the closure of certain sites | (58 | ) | (2,888 | ) | (5,404 | ) | (8,892 | ) | ||||||||
| Adjusted net service revenues | $ | 84,273 | $ | 78,770 | $ | 246,651 | $ | 221,414 |