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Addus HomeCare Announces Second-Quarter 2018 Financial Results

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Addus HomeCare Announces Second-Quarter 2018 Financial Results

Diluted EPS Increases 56.5% to $0.36; Adjusted Diluted EPS Grows 31.6% to $0.50

Net Income Increases 59.1% to $4.3 Million

Adjusted EBITDA Increases 32.3% to $11.3 Million

Revenues Grow 26.7% to $131.2 Million, with 3.7% Increase in Same-Store Sales

PR Newswire

FRISCO, Texas, Aug. 6, 2018 /PRNewswire/ -- Addus HomeCare Corporation (NASDAQ:ADUS), a provider of home care services, today announced its financial results for the second quarter and six months ended June 30, 2018.

Net service revenues increased 26.7% for the second quarter to $131.2 million from $103.6 million for the second quarter of 2017. Net income increased 59.1% to $4.3 million for the second quarter of 2018 from $2.7 million for the second quarter last year, while net income per diluted share increased 56.5% to $0.36 from $0.23. In addition, net income margin increased to 3.3% from 2.6%.  Adjusted net income per diluted share grew 31.6% to $0.50 for the second quarter of 2018 from $0.38 for the second quarter of 2017. Adjusted net income per diluted share for the second quarter of 2018 excludes M&A expenses of $0.03; restructuring charges of $0.01; severance and other costs of $0.03; and stock-based compensation expense of $0.07.  For the second quarter of 2017, adjusted net income per diluted share excludes a write off of debt issuance costs of $0.09; M&A expenses of $0.02; and stock-based compensation expense of $0.04. Adjusted EBITDA increased 32.3% to $11.3 million for the second quarter of 2018 from $8.6 million for the second quarter of 2017, and adjusted EBITDA margin expanded to 8.6% from 8.3%. (See page 8 for a reconciliation of all non-GAAP and GAAP financial measures in this news release.)

For the first six months of 2018, net service revenues increased 17.3% to $240.7 million from $205.2 million for the first six months of 2017. Net income increased 31.6% to $9.2 million for the first half of 2018 from $7.0 million for the first half last year, while net income per diluted share increased 30.0% to $0.78 from $0.60. Adjusted net income per diluted share grew 29.2% to $0.93 for the first six months of 2018 from $0.72 for the same period in 2017.  

"Addus continued to deliver profitable growth for the second quarter of 2018, both organically and through acquisitions," commented Dirk Allison, President and Chief Executive Officer of Addus. "Our growth in net service revenues for the quarter included the impact of five acquisitions in the 12 months ended June 30, 2018, with aggregate annualized revenues of more than $130 million.  The two largest of these acquisitions, Arcadia and Ambercare, were completed in the second quarter, on April 1st and May 1st, respectively.  Addus also continued to benefit from organic revenue growth in the second quarter, with same-store sales increasing 3.7%, consistent with our target range of 3% to 5%."

For the second quarter, personal care net service revenues increased 20.8%, on growth in billable hours per business day of 17.0% and revenue per billable hour of 3.3%, compared with the second quarter last year. As previously discussed, the Company's adoption of ASU 2014-09, Accounting for Contracts with Customers, effective as of January 1, 2018, reduced net service revenues by $2.3 million for the second quarter of 2018. This reduction affects the year over year comparability of net service revenues and expense items as a percentage of net service revenues, while not affecting net income, earnings per diluted share, adjusted EBITDA or adjusted earnings per diluted share.  As a result of the Ambercare transaction, Addus is reporting revenue in the hospice and home health segments for the second quarter, in addition to personal care services. 

The Company had cash of $69.2 million and bank debt of $103.7 million at the end of the second quarter of 2018, while availability under its revolving credit facility was $90.4 million. Net cash provided by operating activities was $5.9 million for the second quarter of 2018 compared with a net cash use of $21.0 million for the second quarter of 2017.

Mr. Allison concluded, "The integration of the two second-quarter acquisitions has gone smoothly, and they are performing to our expectations.  The full integration of these two acquisitions is expected to be completed by year end. These transactions are consistent with our acquisition strategy, which includes a focus on companies that advance our ability to be one of the leading home care service providers in a market, expand our scope of home care services and are accretive to our financial results.  Increasing industry consolidation pressures and recognition of our growing number of completed transactions have contributed to an expansion of our acquisition pipeline. We believe we are well positioned to complete additional acquisitions and are confident that, combined with continued organic growth, we will drive long-term growth in earnings and shareholder value."

Non-GAAP Financial Measures

The information provided in this release includes adjusted net income per diluted share, adjusted EBITDA and adjusted net service revenues, which are non-GAAP financial measures. The Company defines adjusted net income per diluted share as net income per diluted share, adjusted for M&A expenses, stock-based compensation expense, restructure charges, severance and other costs, write off of debt issuance costs, interest income from the State of Illinois and gain on sale of ADS. The Company defines adjusted EBITDA as net income before interest expense, interest income, other non-operating income, taxes, depreciation, amortization, M&A expenses, stock-based compensation expense, restructure charges, severance and other costs, interest income from the State of Illinois and gain on sale of ADS. The Company defines adjusted net service revenues as net service revenues 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 net income per diluted share to net income per diluted share, a reconciliation of adjusted EBITDA to net income and a reconciliation of adjusted net service revenues to net service revenues, in each case, the most directly comparable GAAP measure. Management believes that adjusted net income per diluted share, adjusted EBITDA and adjusted net service revenues 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.

Conference Call

Addus will host a conference call on Tuesday, August 7, 2018, 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 6886568. A telephonic replay of the conference call will be available through midnight on August 21, 2018, by dialing (855) 859-2056 (international dial-in number is (404) 537-3406) and entering pass code 6886568.

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.

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 discretionary determinations by government officials, 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, lower than anticipated cost savings, any failure of Illinois to enact a minimum wage offset and/or the timing of any such enactment, estimation inaccuracies in future revenues, margins, earnings and growth, whether any anticipated receipt of payments will materialize 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 14, 2018, which is available at 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 notes follow).

About Addus

Addus is a provider of home care services that include, primarily, personal care services that assist with activities of daily living, as well as hospice and home health services. Addus' consumers are primarily persons who, without these services, 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. Addus currently provides home care services to approximately 39,000 consumers through 157 locations across 25 states. For more information, please visit www.addus.com.

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(amounts and shares in thousands, except per share data)

(Unaudited)


Income Statement Information:

For the Three Months
Ended June 30,

For the Six Months
Ended June 30,


2018

2017

2018

2017

Net service revenues

$  131,237

$  103,559

$  240,684

$  205,165

Cost of service revenues

95,515

75,048

177,059

149,337

Gross profit

35,722

28,511

63,625

55,828


27.2%

27.5%

26.4%

27.2%

General and administrative expenses

26,408

19,006

47,866

37,879

Gain on sale of adult day service centers

-

-

-

(2,065)

Depreciation and amortization

2,335

1,514

4,141

3,030

Provision for doubtful accounts

87

2,070

165

4,102

Total operating expenses

28,830

22,590

52,172

42,946

Operating income from continuing operations

6,892

5,921

11,453

12,882

Total interest expense, net

1,350

2,095

(62)

2,739

Other non-operating income

-

(44)

-

(101)

Income before income taxes

5,542

3,870

11,515

10,244

Income tax expense

1,245

1,170

2,360

3,285

Net income

$      4,297

$      2,700

$      9,155

$      6,959






Net income per diluted share

$        0.36

$        0.23

$        0.78

$        0.60











Weighted average number of common shares
   outstanding - diluted

11,838

11,622

11,767

11,604






Cash Flow Information:

For the Three Months
Ended June 30,

For the Six Months
Ended June 30,


2018

2017

2018

2017

Net cash provided by (used in)

   operating activities

$      5,888

$   (20,990)

$    20,164

$   (11,375)

Net cash (used in) provided by

   investing activities

(59,772)

(609)

(63,471)

629

Net cash provided by financing activities

59,695

18,316

58,770

18,606






Net change in cash

5,811

(3,283)

15,463

7,860

Cash at the beginning of the period

63,406

19,156

53,754

8,013

Cash at the end of the period

$    69,217

$    15,873

$    69,217

$    15,873


 

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)



June 30,


2018

2017

Assets




Current assets



Cash

$    69,217

$    15,873

Accounts receivable, net

98,721

137,967

Prepaid expenses and other current assets

5,918

3,884

Total current assets

173,856

157,724




Property and equipment, net

8,398

7,191




Other assets



Goodwill

133,082

72,688

Intangible assets, net

28,090

13,170

Deferred tax assets

-

3,355

Investment in joint venture

-

900

Total other assets

161,172

90,113




Total assets

$  343,426

$  255,028




Liabilities and Stockholders' Equity




Current liabilities



Accounts payable

$      7,094

$      3,430

Accrued expenses

45,901

40,590

Current portion of long-term debt, net of debt issuance costs

2,494

3,052

Current portion of contingent earn-out obligation

847

-

Total current liabilities

56,336

47,072




Long-term debt, less current portion, net of debt issuance costs

99,358

40,986

Deferred tax liabilities, net

946

-

Other long-term liabilities

427

-

Total long-term liabilities

100,731

40,986




Total liabilities

157,067

88,058




Total stockholders' equity

186,359

166,970




Total liabilities and stockholders' equity

$  343,426

$  255,028


 

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Net Service Revenues by Segment

(Amounts in thousands)

(Unaudited)



For the Three Months
Ended June 30,

For the Six Months
Ended June 30,


2018

2017

2018

2017

Personal Care

$  125,065

$  103,559

$  234,512

$  205,165

Hospice

4,649

-

4,649

-

Home Health

1,523

-

1,523

-






Total Revenue

$  131,237

$  103,559

$  240,684

$  205,165


 

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Key Statistical and Financial Data

(Unaudited)



For the Three Months
Ended June 30,

For the Six Months
Ended June 30,


2018

2017

2018

2017

General:





Adjusted EBITDA (in thousands) (1)

$     11,320

$       8,554

$     20,054

$     16,525

States served at period end

-

-

25

24

Locations at period end

-

-

157

110

Employees at period end

-

-

31,835

23,680






Personal Care





Average billable census - same store (2)

32,759

33,959

32,715

33,953

Average billable census - acquisitions

4,990

-

5,026

-

Average billable census total (2)

37,749

33,959

37,741

33,953

Billable hours (in thousands)

6,828

5,837

12,858

11,636

Average billable hours per census per month

59.8

57.3

56.5

57.1

Billable hours per business day

105,053

89,798

98,910

89,511

Revenues per billable hour

$       18.32

$       17.74

$       18.24

$       17.63






Hospice





Admissions

250

-

250

-

Average daily census

541

-

541

-

Average length of stay

157.8

-

157.8

-

Patient days

32,600

-

32,600

-

Revenue per patient day

$     142.60

$              -

$     142.60

$              -






Home Health





New Admissions

388

-

388

-

Recertifications

369

-

369

-

Total Volume

757

-

757

-

Visits

12,857

-

12,857

-





















Percentage of Revenues by Payor:





Personal Care





State, local and other governmental programs

57.9

66.0

59.4

65.4

Managed care organizations

34.6

31.3

34.8

31.8

Private duty

4.5

2.0

4.0

2.1

Commercial

1.5

0.7

1.0

0.7

Other

1.5

-

0.8

-






Hospice





Medicare

93.7

-

93.7

-

Managed care organizations

6.3

-

6.3

-






Home Health





Medicare

92.2

-

92.2

-

Managed care organizations

7.1

-

7.1

-

Other

0.7

-

0.7

-





















(1)       We define Adjusted EBITDA as net income before interest expense, taxes, depreciation, amortization, M&A expenses, stock-based compensation expense, restructure charges and severance and other costs. Adjusted EBITDA is a performance measure used by management that is not calculated in accordance with generally accepted accounting principles in the United States (GAAP). It should not be considered in isolation or as a substitute for net income, operating income or any other measure of financial performance calculated in accordance with GAAP.

(2)       Exited sites would have reduced same store census for the three months ended June 30, 2017 by 190 and the six months ended June 30, 2017 by 261.

 

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures

(Amounts in thousands, except per share data)

(Unaudited)



For the Three Months
Ended June 30,

For the Six Months
Ended June 30,


2018

2017

2018

2017

Reconciliation of Adjusted EBITDA to Net Income: (1)

Net income

$       4,297

$       2,700

$       9,155

$       6,959

Interest expense, net

1,350

2,095

2,192

1,416

Interest income from Illinois

-

-

(2,253)

-

Write off debt issuance costs

-

-

-

1,323

Gain on sale of adult day service centers

-

-

-

(2,065)

Other non-operating income

-

(44)

-

(101)

Income tax expense

1,245

1,170

2,360

3,285

Depreciation and amortization

2,335

1,514

4,141

3,030

M&A expenses

530

405

1,532

649

Stock-based compensation expense

997

664

1,856

1,091

Restructure charges

169

44

492

44

Severance and other costs

397

6

579

894

Adjusted EBITDA

$     11,320

$       8,554

$     20,054

$     16,525






Reconciliation of Adjusted Net Income to Net Income: (2)

Net income

$       4,297

$       2,700

$       9,155

$       6,959

Interest income from Illinois, net of tax

-

-

(1,790)

-

Gain on sale of adult day service centers, net of tax

-

-

-

(1,320)

Write off debt issuance costs, net of tax

-

917

-

893

M&A expenses, net of tax

420

275

1,218

438

Stock-based compensation expense, net of tax

792

452

1,476

736

Restructuring charges, net of tax

134

30

391

30

Severance and other costs, net of tax

316

4

460

603

Adjusted Net Income

$       5,959

$       4,378

$     10,910

$       8,338






Reconciliation of Net Income per Diluted Share to Adjusted Net Income per Diluted Share: (3)

Net income per diluted share

$         0.36

$         0.23

$         0.78

$         0.60

Interest income from Illinois per diluted share

-

-

(0.15)

-

Write off debt issuance costs per diluted share

-

0.09

-

0.09

Gain on sale of adult day service centers

   per diluted share

-

-

-

(0.12)

M&A expenses per diluted share

0.03

0.02

0.10

0.04

Restructure charges per diluted share

0.01

-

0.03

-

Severance and other costs per diluted share

0.03

-

0.04

0.05

Stock-based compensation expense per diluted share

0.07

0.04

0.13

0.06

Adjusted net income per diluted share

$         0.50

$         0.38

$         0.93

$         0.72






Reconciliation of Net Service Revenues to Adjusted Net Service Revenues: (4)

Net service revenues

$    131,237

$    103,559

$    240,684

$    205,165

Revenues associated with the closure of certain sites

(1)

(262)

2

(1,253)

Adjusted net service revenues

$    131,236

$    103,297

$    240,686

$    203,912


(1)        We define Adjusted EBITDA as earnings before interest expense, interest income, other non-operating income, taxes, depreciation, amortization,
M&A expenses, stock-based compensation expense, restructure expenses, severance and other costs and gain on the sale of ADS. Adjusted
EBITDA is a performance measure used by management that is not calculated in accordance with generally accepted accounting principles in the
United States (GAAP). It should not be considered in isolation or as a substitute for net income, operating income or any other measure of financial
performance calculated in accordance with GAAP.

(2)     We define Adjusted Net Income as net income before interest income from the state of Illinois, M&A expenses, stock-based compensation expense,
restructure expenses, severance and other costs and gain on the sale of ADS. Adjusted Net Income is a performance measure used by management
that is not calculated in accordance with generally accepted accounting principles in the United States (GAAP). It should not be considered in
isolation or as a substitute for net income, operating income or any other measure of financial performance calculated in accordance with GAAP.

(3)        We define Adjusted diluted earnings per share as earnings per share, adjusted for interest income from the State of Illinois, M&A expenses, stock
compensation expense and restructure expense, severance and other costs and gain on the sale of ADS.  Adjusted diluted earnings per share is a
performance measure used by management that is not calculated in accordance with generally accepted accounting principles in the United States
(GAAP). It should not be considered in isolation or as a substitute for net income, operating income or any other measure of financial performance
calculated in accordance with GAAP.

(4)     We define Adjusted net service revenues as revenue adjusted for the closure of certain sites.  Adjusted net service revenues is a performance measure
used by management that is not calculated in accordance with generally accepted accounting principles in the United States (GAAP).  It should not
be considered in isolation or as a substitute for net income, operating income or any other measure of financial performance calculated in accordance
with GAAP.


 

 

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SOURCE Addus HomeCare Corporation

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