Full Press Release Details
Chief Financial Officer
Phone: (847) 303-5300
Email: DMeulemans@addus.com
Addus HomeCare Reports Third Quarter 2012 Results
Strategic Alternatives for the Home Health Division
Third Quarter Financial Highlights
Palatine, IL, November 1, 2012 Addus HomeCare Corporation (Nasdaq: ADUS), a provider of home-based social and
medical services focused on the elderly dual eligible population, announced today its financial results for the third quarter ended September 30, 2012.
Third Quarter Review
Total net service revenues for the third quarter of 2012 were $71.0
million, a 2.3% increase compared to $69.4 million in the prior year quarter. Net income, before considering the effect of $0.3 million, or $0.02 per diluted share, in severance related costs for the Home Health division was $2.0 million, or $0.19
per diluted share. Net income for the third quarter of 2011, before considering the $16.0 million goodwill and intangible asset impairment charge was $1.8 million, or $0.17 per diluted share.
Mark Heaney, President and Chief Executive Officer of Addus HomeCare, stated, Our Home & Community segment continued to demonstrate positive growth during the third quarter and we continued
to focus on performance improvements in our Home Health segment.
Home & Community segment net service revenues for the third quarter of 2012 were $59.6 million, a
6.1% increase from the prior year quarter. Home & Community operating income, including depreciation and amortization but excluding corporate expenses, increased 10.7% to $7.5 million, or 12.6% of revenue, in the third quarter, compared to
$6.8 million, or 12.1% of revenue, in the prior year quarter. This improvement was primarily due to an increase in average census and related billable hours, lower bad debt expense as well as a continued focus on cost control.
Home Health segment net service revenues for the third quarter of 2012 were $11.4 million, a 13.6% decrease over the prior year quarter. Home Health had
operating income of $0.2 million, or 1.8% of revenues, before considering $0.3 million in severance related costs recorded in the third quarter and including depreciation and amortization but excluding corporate expenses, compared to operating
income of $0.2 million, or 1.4% of revenues, in the prior year quarter.
Total net service revenues for the nine months ended September 30, 2012 were $209.2 million, a 2.3% increase compared to $204.5 million in the same
prior year period. Net income, before considering the effect of $0.3 million, or $0.02 per diluted share, in severance related costs for the Home Health division was $4.1 million, or $0.38 per diluted share. Net income for the nine months ended
September 30, 2011, before considering the $16.0 million goodwill and intangible asset impairment charge was $4.0 million, or $0.37 per diluted share.
Home & Community segment net service revenues for the nine months ended September 30, 2012 were $175.2 million, a 6.0% increase from the same prior year period. Home & Community
operating income, including depreciation and amortization but excluding corporate expenses, increased 15.9% to $21.0 million, or 12.0% of revenue for the nine months ended September 30, 2012, compared to $18.1 million, or 11.0% of revenue, in
the same prior year period. This improvement was primarily due to an increase in average census and related billable hours, lower bad debt expense as well as a continued focus on cost control.
Home Health segment net service revenues for the nine months ended September 30, 2012 were $34.1 million, a 13.1% decrease over the same prior year
period. Home Health had an operating loss, including depreciation and amortization but excluding corporate expenses, of $1.3 million, or (3.9)% of revenues, compared to operating income of $1.7 million, or 4.4% of revenues, in the same prior year
period. Home Health segment net service revenues for the nine months ended September 30, 2012 included an adjustment recorded in the first quarter of 2012 to estimates of accrued Medicare revenues totaling $0.9 million, which reduced
profitability by $0.8 million.
Exploration of Strategic Alternatives
The Company has decided to explore strategic alternatives relative to its home health services business and has retained The Braff Group to assist in the process. There can be no assurance that this
review process will result in a transaction or strategic alternative of any kind or of the potential timing or terms of any such transaction or strategic alternative. The Company does not intend to disclose developments or provide updates on the
progress or status of this process unless it deems further disclosure is appropriate or required.
Chief Operating Officer to Leave
The Company announced today that Daniel Schwartz, Chief Operating Officer has accepted a senior position at another business not in
competition with Addus and thus, has submitted his resignation effective November 16, 2012.
Mr. Heaney stated, We appreciate
Daniel s contributions to Addus, especially with respect to his driving key operational and financial metrics. Daniel s leadership has been valuable in positioning the Company for the future, and we wish Daniel the best in his future
Non-GAAP Financial Measures
The information provided in this release includes Adjusted EBITDA, a non-GAAP financial measure, which the Company defines as earnings before goodwill and intangible asset impairment charge, revaluation
of contingent consideration, net interest (income) expense, taxes, depreciation, amortization, and stock-based compensation expense. The Company has provided, in the financial statement tables included in this press release, a reconciliation of
Adjusted EBITDA to net income, the most directly comparable GAAP measure. Management believes that Adjusted EBITDA is 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 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 report its
2012 third quarter financial results after the market close on Thursday, November 1, 2012. Management will conduct a conference call to discuss its results at 5 p.m. Eastern time on November 1, 2012. The toll-free dial-in number is
(866) 383-7989 (international dial-in number is 617-597-5328), with the passcode: 63834295. A telephonic replay of the conference call will be available through midnight on November 9, 2012, by dialing (888) 286-8010 (international
dial-in number is 617-801-6888) and entering the passcode 92502227.
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 live broadcast.
provider of a broad range of social and medical services in the home. Addus services include personal care and assistance with activities of daily living, skilled nursing and rehabilitative therapies, and adult day care. Addus focuses on
serving the needs of the elderly dual eligible population. Addus consumers are individuals with special needs 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, commercial insurers and private individuals. For more information, please visit www.addus.com.
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.
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 expected benefits and costs of 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 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, 2012, and in Addus HomeCare s
Quarterly Reports on Form 10-Q, filed with the Securities and Exchange Commission on May 10, 2012 and August 9, 2012, each of 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. (Unaudited tables and notes follow)
ADDUS HOMECARE CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income and Cash Flow Information
(amounts and shares in thousands, except per share data)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Income Statement Information: | ||||||||||||||||
| Net service revenues | $ | 71,006 | $ | 69,384 | $ | 209,211 | $ | 204,478 | ||||||||
| Cost of service revenues | 50,687 | 48,373 | 149,832 | 144,303 | ||||||||||||
| Gross profit | 20,319 | 21,011 | 59,379 | 60,175 | ||||||||||||
| General and administrative expenses | 16,486 | 16,955 | 50,697 | 49,567 | ||||||||||||
| Goodwill and intangible asset impairment charge | 15,989 | 15,989 | ||||||||||||||
| Gain on sale of agency | (495 | ) | ||||||||||||||
| Depreciation and amortization | 639 | 927 | 1,908 | 2,783 | ||||||||||||
| Total operating expenses | 17,125 | 33,871 | 52,110 | 68,339 | ||||||||||||
| Operating income (loss) | 3,194 | (12,860 | ) | 7,269 | (8,164 | ) | ||||||||||
| Interest income | (128 | ) | ||||||||||||||
| Interest expense | 407 | 548 | 1,365 | 1,929 | ||||||||||||
| Total interest expense, net | 407 | 548 | 1,237 | 1,929 | ||||||||||||
| Income (loss) from operations before taxes | 2,787 | (13,408 | ) | 6,032 | (10,093 | ) | ||||||||||
| Income tax expense (benefit) | 990 | (6,745 | ) | 2,142 | (5,616 | ) | ||||||||||
| Net income (loss) | $ | 1,797 | $ | (6,663 | ) | $ | 3,890 | $ | (4,477 | ) | ||||||
| Income (loss) per common share: | ||||||||||||||||
| Basic and diluted | $ | 0.17 | $ | (0.62 | ) | $ | 0.36 | $ | (0.42 | ) | ||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||
| Basic | 10,761 | 10,746 | 10,761 | 10,746 | ||||||||||||
| Diluted | 10,773 | 10,746 | 10,764 | 10,746 |
| For the Nine Months Ended September 30, | ||||||||
| 2012 | 2011 | |||||||
| Cash Flow Information: | ||||||||
| Net cash provided by operating activities | $ | 9,336 | $ | 11,815 | ||||
| Net cash used in investing activities | (518 | ) | (777 | ) | ||||
| Net cash used in financing activities | (9,125 | ) | (10,557 | ) | ||||
| Net change in cash | (307 | ) | 481 | |||||
| Cash at the beginning of the period | 2,020 | 816 | ||||||
| Cash at the end of the period | $ | 1,713 | $ | 1,297 |
Condensed Consolidated Balance Sheets
(Amounts in thousands)
| September 30, 2012 | December 31, 2011 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash | $ | 1,713 | $ | 2,020 | ||||
| Accounts receivable, net | 71,400 | 72,368 | ||||||
| Prepaid expenses and other current assets | 8,602 | 8,137 | ||||||
| Deferred tax assets | 6,336 | 6,336 | ||||||
| Total current assets | 88,051 | 88,861 | ||||||
| Property and equipment, net | 2,852 | 2,490 | ||||||
| Other assets | ||||||||
| Goodwill | 50,576 | 50,695 | ||||||
| Intangible assets, net | 6,787 | 8,044 | ||||||
| Deferred tax assets | 4,089 | 4,089 | ||||||
| Other assets | 347 | 513 | ||||||
| Total other assets | 61,799 | 63,341 | ||||||
| Total assets | $ | 152,702 | $ | 154,692 | ||||
| Liabilities and stockholders equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 4,589 | $ | 5,266 | ||||
| Accrued expenses | 33,081 | 29,313 | ||||||
| Current maturities of long-term debt | 1,902 | 6,569 | ||||||
| Deferred revenue | 2,020 | 2,145 | ||||||
| Total current liabilities | 41,592 | 43,293 | ||||||
| Long-term debt, less current maturities | 20,500 | 24,958 | ||||||
| Total stockholders equity | 90,610 | 86,441 | ||||||
| Total liabilities and stockholders equity | $ | 152,702 | $ | 154,692 |
Segment Information (Unaudited)
| For the Three Months Ended September 30, 2012 | ||||||||||||||||
| Home & Community | Home Health | Corporate | Total | |||||||||||||
| Net service revenues | $ | 59,581 | $ | 11,425 | $ | $ | 71,006 | |||||||||
| Cost of service revenues | 44,520 | 6,167 | 50,687 | |||||||||||||
| Gross profit | 15,061 | 5,258 | 20,319 | |||||||||||||
| Gross profit percentage | 25.3 | % | 46.0 | % | 28.6 | % | ||||||||||
| General and administrative expenses | 7,079 | 5,364 | 4,043 | 16,486 | ||||||||||||
| Depreciation and amortization | 458 | 4 | 177 | 639 | ||||||||||||
| Total operating expenses | 7,537 | 5,368 | 4,220 | 17,125 | ||||||||||||
| Operating income (loss) | $ | 7,524 | $ | (110 | ) | $ | (4,220 | ) | $ | 3,194 | ||||||
| Operating income percentage | 12.6 | % | -1.0 | % | -5.9 | % | 4.5 | % | ||||||||
| For the Three Months Ended September 30, 2011 | ||||||||||||||||
| Home & Community | Home Health | Corporate | Total | |||||||||||||
| Net service revenues | $ | 56,157 | $ | 13,227 | $ | $ | 69,384 | |||||||||
| Cost of service revenues | 41,368 | 7,005 | 48,373 | |||||||||||||
| Gross profit | 14,789 | 6,222 | 21,011 | |||||||||||||
| Gross profit percentage | 26.3 | % | 47.0 | % | 30.3 | % | ||||||||||
| General and administrative expenses | 7,382 | 5,914 | 3,659 | 16,955 | ||||||||||||
| Goodwill and intangible asset impairment charge | 15,989 | 15,989 | ||||||||||||||
| Depreciation and amortization | 609 | 128 | 190 | 927 | ||||||||||||
| Total operating expenses | 7,991 | 22,031 | 3,849 | 33,871 | ||||||||||||
| Operating income (loss) | $ | 6,798 | $ | (15,809 | ) | $ | (3,849 | ) | $ | (12,860 | ) | |||||
| Operating income, excluding impairment charge | $ | 6,798 | $ | 180 | $ | (3,849 | ) | $ | 3,129 | |||||||
| Operating income percentage,excluding impairment charge | 12.1 | % | 1.4 | % | -5.5 | % | 4.5 | % | ||||||||
| For the Nine Months Ended September 30, 2012 | ||||||||||||||||
| Home & Community | Home Health | Corporate | Total | |||||||||||||
| Net service revenues | $ | 175,160 | $ | 34,051 | $ | $ | 209,211 | |||||||||
| Cost of service revenues | 130,681 | 19,151 | 149,832 | |||||||||||||
| Gross profit | 44,479 | 14,900 | 59,379 | |||||||||||||
| Gross profit percentage | 25.4 | % | 43.8 | % | 28.4 | % | ||||||||||
| General and administrative expenses | 22,072 | 16,209 | 12,416 | 50,697 | ||||||||||||
| Gain on sale of agency | (495 | ) | (495 | ) | ||||||||||||
| Depreciation and amortization | 1,385 | 11 | 512 | 1,908 | ||||||||||||
| Total operating expenses | 23,457 | 16,220 | 12,433 | 52,110 | ||||||||||||
| Operating income (loss) | $ | 21,022 | $ | (1,320 | ) | $ | (12,433 | ) | $ | 7,269 | ||||||
| Operating income percentage | 12.0 | % | -3.9 | % | -5.9 | % | 3.5 | % | ||||||||
| For the Nine Months Ended September 30, 2011 | ||||||||||||||||
| Home & Community | Home Health | Corporate | Total | |||||||||||||
| Net service revenues | $ | 165,309 | $ | 39,169 | $ | $ | 204,478 | |||||||||
| Cost of service revenues | 123,221 | 21,082 | 144,303 | |||||||||||||
| Gross profit | 42,088 | 18,087 | 60,175 | |||||||||||||
| Gross profit percentage | 25.5 | % | 46.2 | % | 29.4 | % | ||||||||||
| General and administrative expenses | 22,117 | 15,984 | 11,466 | 49,567 | ||||||||||||
| Goodwill and intangible asset impairment charge | 15,989 | 15,989 | ||||||||||||||
| Depreciation and amortization | 1,828 | 385 | 570 | 2,783 | ||||||||||||
| Total operating expenses | 23,945 | 32,358 | 12,036 | 68,339 | ||||||||||||
| Operating income (loss) | $ | 18,143 | $ | (14,271 | ) | $ | (12,036 | ) | $ | (8,164 | ) | |||||
| Operating income, excluding impairment charge | $ | 18,143 | $ | 1,718 | $ | (12,036 | ) | $ | 7,825 | |||||||
| Operating income percentage,excluding impairment charge | 11.0 | % | 4.4 | % | -5.9 | % | 3.8 | % |
Key Statistical and Financial Data (Unaudited)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| General: | ||||||||||||||||
| Adjusted EBITDA (in thousands) (1) | $ | 3,972 | $ | 4,152 | $ | 9,456 | $ | 10,849 | ||||||||
| States served at period end | 19 | 19 | ||||||||||||||
| Locations at period end | 117 | 120 | ||||||||||||||
| Employees at period end | 14,222 | 13,601 | ||||||||||||||
| Home & Community | ||||||||||||||||
| Average census | 24,138 | 23,026 | 23,677 | 22,761 | ||||||||||||
| Billable hours (in thousands) | 3,521 | 3,323 | 10,377 | 9,736 | ||||||||||||
| Billable hours per business day | 54,169 | 51,127 | 54,298 | 50,716 | ||||||||||||
| Revenues per billable hour | $ | 16.93 | $ | 16.90 | $ | 16.88 | $ | 16.98 | ||||||||
| Home Health | ||||||||||||||||
| Medicare admissions (2) | 2,008 | 2,233 | 6,168 | 6,826 | ||||||||||||
| Non-Medicare admissions | 1,213 | 1,558 | 3,777 | 4,909 | ||||||||||||
| Medicare revenues per episode completed | $ | 2,571 | $ | 2,426 | $ | 2,571 | $ | 2,494 | ||||||||
| Percentage of Revenues by Payor: | ||||||||||||||||
| State, local or other governmental | 82 | % | 80 | % | 83 | % | 80 | % | ||||||||
| Medicare | 11 | % | 12 | % | 11 | % | 13 | % | ||||||||
| Other | 7 | % | 8 | % | 6 | % | 7 | % |
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| Adjusted EBITDA (1) (Unaudited) | 2012 | 2011 | 2012 | 2011 | ||||||||||||
| Reconciliation of Adjusted EBITDA to Net Income: | ||||||||||||||||
| Net income (loss) | $ | 1,797 | $ | (6,663 | ) | $ | 3,890 | $ | (4,477 | ) | ||||||
| Goodwill and intangible asset impairment charge | 15,989 | 15,989 | ||||||||||||||
| Net interest expense | 407 | 548 | 1,237 | 1,929 | ||||||||||||
| Income tax expense (benefit) | 990 | (6,745 | ) | 2,142 | (5,616 | ) | ||||||||||
| Depreciation and amortization | 639 | 927 | 1,908 | 2,783 | ||||||||||||
| Stock-based compensation expense | 139 | 96 | 279 | 241 | ||||||||||||
| Adjusted EBITDA | $ | 3,972 | $ | 4,152 | $ | 9,456 | $ | 10,849 |