Full Press Release Details
Phone: (847) 303-5300
Email: DMeulemans@addus.com
Addus HomeCare Reports Third Quarter 2013 Results
Acquisition Agreements
Third Quarter Financial Highlights
November 7, 2013 Addus HomeCare Corporation (Nasdaq: ADUS), a comprehensive provider of home and community based services, primarily social in nature and provided in the home, and focused on the dual eligible population, announced today
its financial results for the third quarter ended September 30, 2013 and the signing of two definitive acquisition agreements.
President and Chief Executive Officer of Addus HomeCare, stated: We are pleased by the continued steady performance of our business including our growth in organic sales for which I especially want to acknowledge our Agency Directors who drive
top line growth. In addition, we are excited to announce that we have entered into two definitive acquisition agreements which further position Addus to capitalize on the opportunities presented by managed care and the dual eligible demonstration
The two acquisition agreements announced today will further expand our footprint in existing states and provide opportunities for
us to grow in two new states. Our purchase of the Medi Home Private Care Division from Medical Services of America further solidifies our presence in South Carolina and adds an initial presence in two very important managed care states, Tennessee
and Ohio. The purchase of the assets of Coordinated Home Health Care in New Mexico will increase Addus presence in that state, which is well along in its transition to managed care. We are looking forward to employees of Medical Services of
America and Coordinated Home Health Care joining the Addus team, continued Heaney.
Third Quarter Review
Total net service revenues for the third quarter of 2013 were $67.3 million, a 10.0% increase compared to $61.2 million in the prior year quarter attributable
to a 12.1% increase in average census in the quarter and a slight decline in average billable hours per client. Net income from continuing operations for the third quarter was $2.8 million, or $0.25 per diluted share, a 25.7% increase when compared
to $2.2 million, or $0.20 per diluted share, in the prior year quarter. Net income, including a loss from discontinued operations, was $2.6 million, or $0.23 per diluted share.
Gross profit increased to $17.2 million or 9.8% year over year. Gross profit margin was stable at 25.6% of revenues. Operating income from continuing
operations increased 10.2% to $4.3 million, or 6.3% of revenue, compared to $3.9 million, or 6.3% of revenue, in the prior year quarter. General and administrative expenses increased $1.2 million over 2012 levels, reflecting increased costs related
to the deployment of telephony throughout Illinois in response to the July 1st mandate from the State, Sarbanes-Oxley Act Section 404 compliance efforts and legal and consulting expenses related to our M & A activities. We anticipate
our general and administrative expenses will remain at these higher levels for the foreseeable future as we continue with the implementation of our new care system across our company, expand our Section 404 compliance activities and continue
considering attractive acquisition targets.
The Company received approximately $183,000 in prompt payment interest in the quarter from the State of
Illinois for late payments received in the State s fiscal year ended June 30, 2013. This income is recorded as a reduction to our interest expense. Income taxes were positively affected in the quarter by an increase in our ability to
capture Work Opportunity Tax Credits, reducing our effective tax rate by 1.0% when compared to the prior year quarter.
Cash flow for the quarter was a
negative $9.3 million, primarily the result of lower collections from the State of Illinois after having received a $21 million one-time payment from the State at the end of June.
Total net service revenues for the
nine months ended September 30, 2013 were $196.1 million, an 8.6% increase compared to $180.5 million for the same prior year period. Net income from continuing operations for the nine months ended September 30, 2013 increased 39.0% to
$8.0 million, or $0.73 per diluted share, compared to $5.8 million, or $0.54 per diluted share, in the prior year period. Net income, including the loss from discontinued operations and the gain from the sale of the home health business was $18.3
million, or $1.66 per diluted share.
Operating income, including depreciation and amortization, but excluding interest and income tax expenses,
increased 21.0% to $12.0 million, or 6.1% of revenue, for the nine months ended September 30, 2013. This compares to $9.9 million or 5.5% of revenue in 2012, after adjusting operating income for the benefit of a $0.5 million gain on a sale of
Two Definitive Acquisition Agreements
The Company entered into an asset purchase agreement to acquire all of the Private Duty operations of the Medi Home Private Care Division of Medical Services
of America, Inc. on October 17, 2013. The acquisition includes two agencies located in South Carolina; four agencies located in Tennessee; and two agencies located in Ohio. The South Carolina business will be incorporated into the
Company s existing operations in that state. The operations in Ohio and Tennessee represent the Company s initial entry into these two targeted states, as these states transition their long term care programs to managed care and their dual
eligible demonstration pilots.
The asset purchase agreement provides for separate closings with respect to the operations in each state. The closing
related to the agencies in South Carolina took place effective November 1, 2013.
The Company also entered into an asset purchase agreement to
acquire assets from Coordinated Home Health Care, LLC related to its personal care business in New Mexico on November 7, 2013. This acquisition includes sixteen offices located in Southern New Mexico and further expands the Company s
presence in that State. New Mexico has led other States in the transition of its long term care services to managed care.
The two acquisitions represent
approximately $20 to $22 million in aggregate projected annual revenues for the twelve month period ending December 31, 2013. These transactions are expected to close in the fourth quarter and are subject to customary closing conditions. There
can be no assurance that either or both of these transactions will be completed.
The Company filed a universal shelf registration statement on Form S-3 with the Securities and Exchange Commission on November 7, 2013. Upon being
declared effective, the shelf registration statement will provide the Company with the flexibility to offer and sell up to $150 million of common stock, preferred stock, warrants and units in one or more offerings and in any combination. In
addition, the shelf registration statement covers up to 4,951,773 shares of the Company s common stock held by certain existing stockholders in accordance with the requirements of contractual agreements previously entered into with these
stockholders. The Company will not receive any proceeds from potential sales of the common stock by these stockholders.
The Company currently has no specific plans to issue securities under the new shelf registration statement. Any
offer of securities covered by the shelf registration statement may be made solely by means of the prospectus included in the shelf registration statement and a related prospectus supplement containing specific information about the terms of any
This press release is neither an offer to sell nor a solicitation of any offer to buy, nor shall there be any sale of these securities in
any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
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 discontinued operations, interest 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 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 report its 2013 third quarter financial results after the market close on Thursday, November 7, 2013. Management will conduct a conference call
to discuss its results at 5 p.m. Eastern time on November 7, 2013. The toll-free dial-in number is (877) 474-9502 (international dial-in number is 857-244-7555), with the passcode: 84764667. A telephonic replay of the conference call will
be available through midnight on November 14, 2013, by dialing (888) 286-8010 (international dial-in number is 617- 801-6888) and entering the passcode 42698671.
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.
Addus is a comprehensive provider of home
and community based services, primarily social in nature and 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, 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 acquisitions, the anticipated financial impact of possible transactions, 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 28, 2013 and in Addus HomeCare s Quarterly Reports on Form 10-Q, filed with the Securities
and Exchange Commission on May 2, 2013 and August 1, 2013, 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, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Income Statement Information: | ||||||||||||||||
| Net service revenues | $ | 67,306 | $ | 61,211 | $ | 196,059 | $ | 180,540 | ||||||||
| Cost of service revenues | 50,080 | 45,528 | 146,422 | 134,026 | ||||||||||||
| Gross profit | 17,226 | 15,683 | 49,637 | 46,514 | ||||||||||||
| 25.6 | % | 25.6 | % | 25.3 | % | 25.8 | % | |||||||||
| General and administrative expenses | 12,424 | 11,181 | 36,026 | 34,710 | ||||||||||||
| Gain on sale of agency | (495 | ) | ||||||||||||||
| Depreciation and amortization | 539 | 635 | 1,626 | 1,897 | ||||||||||||
| Total operating expenses | 12,963 | 11,816 | 37,652 | 36,112 | ||||||||||||
| Operating income from continuing operations | 4,263 | 3,867 | 11,985 | 10,402 | ||||||||||||
| Total interest expense (income), net | (24 | ) | 407 | 326 | 1,237 | |||||||||||
| Income from continuing operations before taxes | 4,287 | 3,460 | 11,659 | 9,165 | ||||||||||||
| Income tax expense | 1,517 | 1,256 | 3,620 | 3,380 | ||||||||||||
| Net income from continuing operations | 2,770 | 2,204 | 8,039 | 5,785 | ||||||||||||
| Discontinued operations: | ||||||||||||||||
| Loss from home health business, net of tax | (203 | ) | (407 | ) | (890 | ) | (1,895 | ) | ||||||||
| Gain on sale of home health business, net of tax | 11,111 | |||||||||||||||
| Earnings (losses) from discontinued operations | (203 | ) | (407 | ) | 10,221 | (1,895 | ) | |||||||||
| Net income | $ | 2,567 | $ | 1,797 | $ | 18,260 | $ | 3,890 | ||||||||
| Net income (loss) per share: | ||||||||||||||||
| Basic | ||||||||||||||||
| Continuing operations | $ | 0.26 | $ | 0.20 | $ | 0.75 | $ | 0.54 | ||||||||
| Discontinued operations | (0.02 | ) | (0.04 | ) | 0.95 | (0.18 | ) | |||||||||
| Basic income per share | $ | 0.24 | $ | 0.16 | $ | 1.70 | $ | 0.36 | ||||||||
| Diluted | ||||||||||||||||
| Continuing operations | $ | 0.25 | $ | 0.20 | $ | 0.73 | $ | 0.54 | ||||||||
| Discontinued operations | (0.02 | ) | (0.04 | ) | 0.93 | (0.18 | ) | |||||||||
| Diluted income per share | $ | 0.23 | $ | 0.16 | $ | 1.66 | $ | 0.36 | ||||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||
| Basic | 10,787 | 10,761 | 10,783 | 10,761 | ||||||||||||
| Diluted | 11,071 | 10,773 | 11,006 | 10,764 | ||||||||||||
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Cash Flow Information: | ||||||||||||||||
| Net cash provided by (used in) operating activities | $ | (9,143 | ) | $ | 3,604 | $ | 25,103 | $ | 9,336 | |||||||
| Net cash provided by (used in) investing activities | (170 | ) | (259 | ) | 19,082 | (518 | ) | |||||||||
| Net cash used in financing activities | (3,125 | ) | (16,458 | ) | (9,125 | ) | ||||||||||
| Net change in cash | (9,313 | ) | 220 | 27,727 | (307 | ) | ||||||||||
| Cash at the beginning of the period | 38,777 | 1,493 | 1,737 | 2,020 | ||||||||||||
| Cash at the end of the period | $ | 29,464 | $ | 1,713 | $ | 29,464 | $ | 1,713 |
Condensed Consolidated Balance Sheets
(Amounts in thousands)
| September 30, 2013 | December 31, 2012 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash | $ | 29,464 | $ | 1,737 | ||||
| Accounts receivable, net | 54,516 | 71,303 | ||||||
| Prepaid expenses and other current assets | 6,167 | 7,293 | ||||||
| Assets held for sale | 245 | |||||||
| Deferred tax assets | 7,258 | 7,258 | ||||||
| Total current assets | 97,405 | 87,836 | ||||||
| Property and equipment, net | 2,471 | 2,489 | ||||||
| Other assets | ||||||||
| Goodwill | 50,416 | 50,536 | ||||||
| Intangible assets, net | 5,352 | 6,370 | ||||||
| Deferred tax assets | 2,328 | |||||||
| Investment in joint venture | 900 | |||||||
| Other assets | 173 | 298 | ||||||
| Total other assets | 56,841 | 59,532 | ||||||
| Total assets | $ | 156,717 | $ | 149,857 | ||||
| Liabilities and stockholders equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 4,379 | $ | 4,117 | ||||
| Accrued expenses | 36,401 | 32,717 | ||||||
| Current maturities of long-term debt | 208 | |||||||
| Deferred revenue | 19 | 2,148 | ||||||
| Total current liabilities | 40,799 | 39,190 | ||||||
| Long-term debt, less current maturities | 16,250 | |||||||
| Deferred tax liability | 3,097 | |||||||
| Total stockholders equity | 112,821 | 94,417 | ||||||
| Total liabilities and stockholders equity | $ | 156,717 | $ | 149,857 |
Key Statistical and Financial Data (Unaudited)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| General: | ||||||||||||||||
| Adjusted EBITDA (in thousands) (1) | $ | 4,951 | $ | 4,554 | $ | 13,977 | $ | 12,465 | ||||||||
| States served at period end | 21 | 19 | ||||||||||||||
| Locations at period end | 94 | 96 | ||||||||||||||
| Employees at period end | 13,660 | 14,528 | ||||||||||||||
| Home & Community | ||||||||||||||||
| Average billable census | 27,058 | 24,138 | 26,411 | 23,677 | ||||||||||||
| Billable hours (in thousands) | 3,941 | 3,521 | 11,517 | 10,377 | ||||||||||||
| Average billable hours per census per month | 49 | 49 | 48 | 49 | ||||||||||||
| Billable hours per business day | 59,735 | 54,169 | 59,107 | 54,298 | ||||||||||||
| Revenues per billable hour | $ | 17.08 | $ | 16.93 | $ | 17.02 | $ | 16.88 | ||||||||
| Percentage of Revenues by Payor: | ||||||||||||||||
| State, local and other govermental programs | 94 | % | 95 | % | 94 | % | 95 | % | ||||||||
| Commercial | 2 | 1 | 2 | 1 | ||||||||||||
| Private duty | 4 | % | 4 | % | 4 | % | 4 | % |
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| Adjusted EBITDA (1) (Unaudited) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
| Reconciliation of Adjusted EBITDA to Net Income: | ||||||||||||||||
| Net income | $ | 2,567 | $ | 1,797 | $ | 18,260 | $ | 3,890 | ||||||||
| Less: (Earnings) loss from discontinued operations, net of tax | 203 | 407 | (10,221 | ) | 1,895 | |||||||||||
| Net income from continuing operations | 2,770 | 2,204 | 8,039 | 5,785 | ||||||||||||
| Interest expense (income), net | (24 | ) | 407 | 326 | 1,237 | |||||||||||
| Income tax expense from continuing operations | 1,517 | 1,256 | 3,620 | 3,380 | ||||||||||||
| Depreciation and amortization | 540 | 635 | 1,627 | 1,897 | ||||||||||||
| Stock-based compensation expense | 148 | 52 | 365 | 166 | ||||||||||||
| Adjusted EBITDA | $ | 4,951 | $ | 4,554 | $ | 13,977 | $ | 12,465 |