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Addus HomeCare Announces First-Quarter 2019 Financial Results

Revenues Increase 27.2 % to $139.3 million

Net Income of $4.9 Million or $0.36 per Diluted Share, and Adjusted Diluted Earnings per Share of $0.52

Adjusted EBITDA Increases 23.1% to $10.8 Million

Same-Store Sales Increase 5.6%

FRISCO, Texas, May 6, 2019 /PRNewswire/ -- Addus HomeCare Corporation (ADUS), a provider of comprehensive home care services, today announced its financial results for the first quarter ended March 31, 2019.

Net service revenues were $139.3 million for the first quarter of 2019, up 27.2% from $109.5 million for the first quarter of 2018. Net income was $4.9 million, compared with $4.9 million for the first quarter of 2018, while net income per diluted share was $0.36, compared with $0.42 per diluted share for the prior-year period. Adjusted net income per diluted share grew 23.8% to $0.52 for the first quarter of 2019 from $0.42 for the first quarter of 2018.

Adjusted net income per diluted share for the first quarter of 2019 excludes M&A expenses of $0.03, restructuring, severance and other costs of $0.05, and stock-based compensation expense of $0.08.  Adjusted net income per diluted share for the first quarter of 2018 excludes prompt payment interest income of $0.16 from the state of Illinois, M&A expenses of $0.07, restructuring, severance and other costs of $0.03, and stock-based compensation expense of $0.06

Adjusted EBITDA increased 23.1% to $10.8 million for the first quarter of 2019 from $8.8 million for the first quarter of 2018. (See page 8 for a reconciliation of all non-GAAP and GAAP financial measures in this news release.)

Dirk Allison, President and Chief Executive Officer, commented, "We are proud of our solid financial results for the first quarter, marking a great start to 2019.  First-quarter revenues reflected a strong increase in same-store revenue of 5.6%, exceeding our target range of 3% to 5%.  This increase was primarily driven by higher revenue in our New York market, as we saw significant consumer growth due to the ongoing narrowing of provider networks in the state.  In addition, we saw referral volumes in the first quarter return to more normal levels in both New Mexico and Illinois, as expected."

At March 31, 2019, the Company had cash of $66.2 million and bank debt of $20.0 million, while availability under its revolving credit facility was $141.2 million. Net cash used in operating activities was $3.2 million for the first quarter of 2019.

Mr. Allison added, "As our first-quarter results indicate, we have continued to execute our organic growth and acquisition strategies and extend our market reach as a leading provider of comprehensive home care services.  With our strong value proposition, including hospice and home health services, we believe we are well positioned to meet the increasing demand for our services.

"In April, we received approval from the Public Health and Health Planning Council of the New York Department of Health for our previously announced transaction to purchase the assets of VIP Health Care Services, a New York City-based provider of personal care services with annual revenues of approximately $50 million. We expect to complete the final requirements for licensure in order to close the transaction on or about June 1, 2019. This acquisition will further advance our strategy of enhancing strong operations in states where we operate. Importantly, we continue to have the flexibility and capital to pursue additional acquisitions that fit our strategic profile and enhance our ability to drive long-term growth in earnings and shareholder value. Our pipeline remains strong, and we are excited about the opportunities ahead for Addus in 2019."

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 interest income from the State of Illinois, M&A expenses, stock-based compensation expense, restructure charges, and severance and other costs. The Company defines adjusted EBITDA as net income before interest expense, interest income, other non-operating income, taxes, depreciation, amortization, interest income from the State of Illinois, M&A expenses, stock-based compensation expense, restructure charges, and severance and other costs. 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, 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, May 7, 2019, 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 1186139. A telephonic replay of the conference call will be available through midnight on May 21, 2019, by dialing (855) 859-2056 (international dial-in number is (404) 537-3406) and entering pass code 1186139.

A live broadcast of Addus HomeCare's conference call will be available under the Investor Relations section of the Company's website: www.addus.comAn online replay of the conference call will also be available on the Company's website for one month, beginning approximately two 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, 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 15, 2019, 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 comprehensive 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 24 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 March 31,


2019

2018

Net service revenues

$  139,254

$  109,476

Cost of service revenues

101,680

81,543

Gross profit

37,574

27,933


27.0%

25.5%

General and administrative expenses

29,257

21,537

Depreciation and amortization

2,074

1,807

Total operating expenses

31,331

23,344

Operating income from continuing operations

6,243

4,589

Total interest expense, net

403

(1,412)

Income before income taxes

5,840

6,001

Income tax expense

978

1,115

Net income

$      4,862

$      4,886




Net income per diluted share

$        0.36

$        0.42




Weighted average number of common shares outstanding - diluted

13,381

11,696




Cash Flow Information:

For the Three Months
Ended March 31,


2019

2018

Net cash (used in) provided by operating activities

$     (3,197)

$    14,276

Net cash (used in) investing activities

(1,006)

(3,699)

Net cash (used in) financing activities

(33)

(925)




Net change in cash

(4,236)

9,652

Cash at the beginning of the period

70,406

53,754

Cash at the end of the period

$    66,170

$    63,406

 

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)



March 31,


2019

2018

Assets




Current assets



Cash

$    66,170

$    63,406

Accounts receivable, net

120,143

88,380

Prepaid expenses and other current assets

7,146

7,250

Total current assets

193,459

159,036




Property and equipment, net

10,843

7,384




Other assets



Goodwill

135,399

93,090

Intangible assets, net

22,531

16,480

Operating lease asset

16,691

-

Deferred tax assets, net

-

1,472

Total other assets

174,621

111,042




Total assets

$  378,923

$  277,462




Liabilities and Stockholders' Equity




Current liabilities



Accounts payable

$    11,506

$      9,578

Accrued expenses

17,202

11,545

Accrued payroll

24,139

20,012

Accrued workers compensation

14,537

13,599

Total current liabilities

67,384

54,734




Deferred tax liabilities, net

615

-

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

17,375

39,396

Long-term operating lease liabilities, less current portion

11,679

-

Other long-term liabilities

242

-

Long-term lease liability, less current portion

-

407

Contingent earn-out obligation, less current portion

-

847

Total long-term  liabilities

29,911

40,650




Total liabilities

97,295

95,384




Total stockholders' equity

281,628

182,078




Total liabilities and stockholders' equity

$  378,923

$  277,462


 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Net Service Revenues by Segment

(Amounts in thousands)

(Unaudited)



For the Three Months
Ended March 31,


2019

2018

Personal Care

$  128,641

$  109,476

Hospice

7,917

-

Home Health

2,696

-

Total Revenue

$  139,254

$  109,476

 

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Key Statistical and Financial Data

(Unaudited)



For the Three Months
Ended March 31,


2019

2018

General:



Adjusted EBITDA (in thousands) (1)

$    10,790

$      8,762

States served at period end

24

23

Locations at period end

157

115

Employees at period end

30,990

26,358




Personal Care



Average billable census - same store (2)

34,013

34,194

Average billable census - acquisitions

3,556

-

Average billable census total

37,569

34,194

Billable hours (in thousands)

6,864

6,030

Average billable hours per census per month

60.4

58.8

Billable hours per business day

107,250

92,768

Revenues per billable hour

$       18.74

$      18.15




Hospice



Admissions

511

-

Average daily census

575

-

Average length of stay

115.1

-

Patient days

51,724

-

Revenue per patient day

$    153.07

$              -




Home Health



New Admissions

715

-

Recertifications

519

-

Total Volume

1,234

-

Visits

19,554

-




Percentage of Revenues by Payor:



Personal Care



State, local and other governmental programs

56.0%

61.5%

Managed care organizations

37.3

34.6

Private duty

3.9

3.4

Commercial

1.5

0.5

Other

1.3

-




Hospice



Medicare

93.3%

-

Managed care organizations

4.6

-

Other

2.1

-




Home Health



Medicare

81.6%

-

Managed care organizations

15.4

-

Other

3.0

-





(1)    We define Adjusted EBITDA as earnings adjusted for interest expense, taxes, depreciation, amortization, M&A expenses, stock-based compensation expense and restructure and severance 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 March 31, 2018 by 5.


 

 


ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures

(amounts in thousands, except per share data)

(Unaudited)



For the Three Months
Ended March 31,


2019

2018

Reconciliation of Adjusted EBITDA to Net Income: (1)



Net income

$      4,862

$      4,886




Interest expense, net

403

841

Interest income from Illinois

-

(2,253)

Income tax expense

978

1,115

Depreciation and amortization

2,074

1,807

M&A expenses

496

1,002

Stock-based compensation expense

1,233

859

Restructuring, severance and other costs

744

505

Adjusted EBITDA

$    10,790

$      8,762




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



Net income

$      4,862

$      4,886

Interest income from Illinois, net of tax

-

(1,831)

M&A expenses, net of tax

413

815

Restructuring, severance and other costs, net of tax

620

410

Stock-based compensation expense, net of tax

1,026

698

Adjusted Net Income

$      6,921

$      4,978




Reconciliation of Diluted Earnings per Share to Adjusted Diluted Earnings per Share: (3)

Diluted earnings per share

$        0.36

$        0.42

Interest income from Illinois

-

(0.16)

M&A expenses per diluted share

0.03

0.07

Restructuring, severance and other costs per diluted share

0.05

0.03

Stock-based compensation expense per diluted share

0.08

0.06

Adjusted net income per diluted share

$        0.52

$        0.42




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

Net service revenues

$  139,254

$  109,476

Revenue associated with the closure of certain sites

-

(5)

Adjusted net service revenues

$  139,254

$  109,471




(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. 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. 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.  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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