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8-K
ADDUS HOMECARE CORP filed this Form 8-K on 08/07/2017
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Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES AND EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): August 7, 2017

 

 

ADDUS HOMECARE CORPORATION

(Exact Name of Registrant as Specified in its Charter)

 

 

 

Delaware   001-34504   20-5340172

(State or other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

6801 Gaylord Parkway, Suite 110,

Frisco, TX

  75034
(Address of Principal Executive Offices)   (Zip Code)

(469) 535-8200

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 2.02. Results of Operations and Financial Condition

On August 7, 2017, Addus HomeCare Corporation (the “Company”) issued a press release (the “Press Release”) announcing, among other matters, the Company’s results of operations for the fiscal quarter ended June 30, 2017. A copy of the Press Release is furnished herewith as Exhibit 99.1 to this report and is incorporated herein by reference.

 

Item 7.01. Regulation FD Disclosure

On August 7, 2017, the Company issued the Press Release, announcing, among other matters, its results of operations for the fiscal quarter ended June 30, 2017, the text of which is set forth as Exhibit 99.1.

 

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit

No.

  

Description

99.1    Press Release of Addus HomeCare Corporation dated August 7, 2017.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    ADDUS HOMECARE CORPORATION
Dated: August 7, 2017     By:  

/s/ Brian Poff

    Name:   Brian Poff
    Title:   Chief Financial Officer


Exhibit Index

 

Exhibit

No.

  

Description

99.1    Press Release of Addus HomeCare Corporation dated August 7, 2017.
EX-99.1

Exhibit 99.1

 

LOGO

 

Contacts:   
Brian W. Poff   

Scott Brittain

Executive Vice President,   

Corporate Communications, Inc.

  Chief Financial Officer   

(615) 324-7308

Addus HomeCare Corporation   

scott.brittain@cci-ir.com

(469) 535-8200   
investorrelations@addus.com   

ADDUS HOMECARE ANNOUNCES SECOND-QUARTER 2017 FINANCIAL RESULTS

GAAP Diluted EPS of $0.23 Compared to $0.23 in Prior Year

Adjusted Diluted EPS Increases 22.6% to $0.38 from $0.31

Same-Store Sales Increase 3.9%

COMPLETES PREVIOUSLY ANNOUNCED ACQUISITION OF OPTIONS HOME CARE

Frisco, Texas (August 7, 2017) – Addus HomeCare Corporation (NASDAQ: ADUS), a provider of comprehensive home care services, today announced its financial results for the second quarter and six months ended June 30, 2017.

Net service revenues were $103.6 million for the second quarter, up 2.6% from $100.9 million for the second quarter of 2016. Net income increased 3.8% to $2.7 million for the second quarter of 2017 from $2.6 million for the same quarter last year. Net income per diluted share was $0.23 for the second quarter of 2017 and 2016. For the second quarter of 2017, net income per diluted share included a write off of debt issuance costs associated with the Company’s prior credit facility of $0.09, M&A expenses of $0.02 and share-based compensation expense of $0.04. For the second quarter of 2016, net income per diluted share included severance and other charges of $0.04, restructure charges of $0.01 and share-based compensation expense of $0.03. After giving effect to these adjustments, adjusted net income per diluted share was $0.38 for the second quarter of 2017, a 22.6% increase from $0.31 for the second quarter of 2016. Adjusted EBITDA increased 14.0% for the second quarter of 2017 to $8.6 million from $7.5 million for the second quarter of 2016. (See page 7 for a reconciliation of all non-GAAP and GAAP financial measures in this news release.)

For the first six months of 2017, net service revenues increased 6.0% to $205.2 million from $193.5 million for the first half of 2016. Net income for the first six months of 2017 increased 152.4% to $7.0 million from $2.8 million for the same period in 2016, and net income per diluted share rose 140% to $0.60 from $0.25. Adjusted net income per diluted share was $0.72 for the first half of 2017, up 18.0% from $0.61 for the first six months of 2016.

Dirk Allison, President and Chief Executive Officer of Addus, remarked, “Addus performed well for the second quarter of 2017, with a solid 3.9% increase in same-store sales and expanded profit margins driving a 22.6% increase in adjusted earnings per diluted share. In addition to this substantial earnings growth, we announced a definitive agreement to acquire Options Home Care during the second quarter, a transaction we closed on schedule on August 1, 2017. We also entered into a new $250 million credit facility during the second quarter and finished our preparations to implement our new ADP payroll system, which we successfully completed in July.”

 

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ADUS Reports Second-Quarter 2017 Results

Page 2

August 7, 2017

 

The increase in net service revenues for the second quarter of 2017 was generated through organic growth and reflected the exit of the Company’s Adult Day Services business. The revenue growth for the second quarter of 2017 was comprised of a slight increase in billable hours per business day compared with the second quarter last year, as well as a 2.4% increase in revenue per billable hour.

Addus completed the second quarter with $15.9 million in cash and $45 million of bank debt. Net cash used by operating activities was $21.0 million for the second quarter, compared with $12.3 million for the second quarter of 2016, largely due to the timing of payments related to the Company’s accounts receivable with the state of Illinois. As a result of the passage of the new Illinois budget in early July, the Company has received payments of $70.2 million on the state’s past due non-Medicaid accounts receivable.

Mr. Allison added, “Our financial and operating performance for the second quarter has generated meaningful operating momentum as we move into the second half of 2017. The completion of our new ADP payroll system was a fundamental component of our plans to improve the productivity and efficiency of our existing operations. In addition, we’ve already demonstrated its ability to enhance our acquisition integration processes through the seamless integration of Options Home Care’s operations. This transaction brings annualized revenues of over $20 million to Addus, and the integration process was essentially completed the day of the transaction’s closing. With the new payroll system in place, as well as our new credit facility, we believe we are well positioned to pursue additional acquisition opportunities in our highly fragmented industry.

“While our focus on improving our processes, quality and efficiency continues, we have successfully completed all the major initiatives launched in the first half of 2016. As a result we are highly focused on executing our organic and acquisition growth strategies, which we believe will produce further 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 and severance and other costs. The Company defines 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. 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.

 

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ADUS Reports Second-Quarter 2017 Results

Page 3

August 7, 2017

 

Conference Call

Addus will host a conference call on Tuesday, August 8, 2017, 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 40182637. A telephonic replay of the conference call will be available through midnight on August 22, 2017, by dialing (855) 859-2056 (international dial-in number is (404) 537-3406) and entering pass code 40182637.

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, 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, 2017, 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 personal care services that are provided in the home and assist with activities of daily living. Addus’ consumers are primarily persons 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. At June 30, 2017, Addus provided personal care services to approximately 34,000 consumers through 110 locations across 24 states. For more information, please visit www.addus.com.

 

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ADUS Reports Second-Quarter 2017 Results

Page 4

August 7, 2017

 

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,
 
     2017     2016     2017     2016  

Net service revenues

   $ 103,559     $ 100,927     $ 205,165     $ 193,529  

Cost of service revenues

     75,048       75,232       149,337       143,515  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

     28,511       25,695       55,828       50,014  
     27.5     25.5     27.2     25.8

General and administrative expenses

     19,006       17,744       37,879       38,565  

Gain on sale of adult day service centers

     —         —         (2,065     —    

Depreciation and amortization

     1,514       1,744       3,030       3,222  

Provision for doubtful accounts

     2,070       1,813       4,102       3,181  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     22,590       21,301       42,946       44,968  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income from continuing operations

     5,921       4,394       12,882       5,046  

Total interest expense, net

     2,095       663       2,739       1,082  

Other non-operating income

     (44     —         (101     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     3,870       3,731       10,244       3,964  

Income tax expense

     1,170       1,131       3,285       1,207  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 2,700     $ 2,600     $ 6,959     $ 2,757  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income per diluted share:

   $ 0.23     $ 0.23     $ 0.60     $ 0.25  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of common shares outstanding - Diluted

     11,622       11,385       11,604       11,217  
Cash Flow Information:    For the Three Months
Ended June 30,
    For the Six Months
Ended June 30,
 
     2017     2016     2017     2016  

Net cash used in operating activities

   $ (20,990   $ (12,306   $ (11,375   $ (18,265

Net cash (used in) provided by investing activities

     (609     (369     629       (21,160

Net cash provided by financing activities

     18,316       11,835       18,606       43,561  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net change in cash

     (3,283     (840     7,860       4,136  

Cash at the beginning of the period

     19,156       9,080       8,013       4,104  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash at the end of the period

   $ 15,873     $ 8,240     $ 15,873     $ 8,240  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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ADUS Reports Second-Quarter 2017 Results

Page 5

August 7, 2017

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)

 

     June 30,  
     2017      2016  
Assets      

Current assets

     

Cash

   $ 15,873      $ 8,240  

Accounts receivable, net

     137,967        121,124  

Prepaid expenses and other current assets

     3,884        4,520  
  

 

 

    

 

 

 

Total current assets

     157,724        133,884  
  

 

 

    

 

 

 

Property and equipment, net

     7,191        7,634  
  

 

 

    

 

 

 

Other assets

     

Goodwill

     73,906        73,891  

Intangible assets, net

     13,320        17,953  

Deferred tax assets

     3,153        1,825  

Investment in joint venture

     900        900  
  

 

 

    

 

 

 

Total other assets

     91,279        94,569  
  

 

 

    

 

 

 

Total assets

   $ 256,194      $ 236,087  
  

 

 

    

 

 

 
Liabilities and Stockholders’ Equity      

Current liabilities

     

Accounts payable

   $ 3,430      $ 4,590  

Accrued expenses

     40,590        40,715  

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

     3,052        2,286  
  

 

 

    

 

 

 

Total current liabilities

     47,072        47,591  

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

     40,986        40,178  
  

 

 

    

 

 

 

Total liabilities

     88,058        87,769  
  

 

 

    

 

 

 

Total stockholders’ equity

     168,136        148,318  
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 256,194      $ 236,087  
  

 

 

    

 

 

 

 

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ADUS Reports Second-Quarter 2017 Results

Page 6

August 7, 2017

 

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,
 
     2017     2016     2017     2016  

General:

        

Adjusted EBITDA (in thousands) (1)

   $ 8,554     $ 7,501     $ 16,525     $ 14,154  

States served at period end

     —         —         24       24  

Locations at period end

     —         —         110       121  

Employees at period end

     —         —         23,680       22,385  

Home & Community:

        

Average billable census total (2)

     33,959       34,166       33,953       33,693  

Billable hours (in thousands)

     5,837       5,829       11,636       11,182  

Average billable hours per census per month

     57.3       56.9       57.1       55.3  

Billable hours per business day

     89,798       89,670       89,511       86,016  

Revenues per billable hour

   $ 17.74     $ 17.32     $ 17.63     $ 17.31  

Percentage of Revenues by Payor:

        

State, local and other governmental programs

     66.0     72.2     65.4     72.7

Managed care organizations

     31.3       24.3       31.8       23.7  

Private duty

     2.0       2.5       2.1       2.6  

Commercial

     0.7       1.0       0.7       1.0  

 

(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, 2016 by 260 and the six months ended June 30, 2016 by 477.

 

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ADUS Reports Second-Quarter 2017 Results

Page 7

August 7, 2017

 

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,
 
     2017     2016     2017     2016  

Reconciliation of Adjusted EBITDA to Net Income: (1)

        

Net income

   $ 2,700     $ 2,600     $ 6,959     $ 2,757  

Interest expense, net

     2,095       663       2,739       1,082  

Gain on sale of adult day service centers

     —         —         (2,065     —    

Other non-operating income

     (44     —         (101     —    

Income tax expense

     1,170       1,131       3,285       1,207  

Depreciation and amortization

     1,514       1,744       3,030       3,222  

M&A expenses

     405       45       649       741  

Stock-based compensation expense

     664       483       1,091       819  

Restructure charges

     44       242       44       1,554  

Severance and other costs

     6       593       894       2,772  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 8,554     $ 7,501     $ 16,525     $ 14,154  
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of Net Income per Diluted Share to Adjusted Net Income per Diluted Share: (2)

        

Net income per diluted share

   $ 0.23     $ 0.23     $ 0.60     $ 0.25  

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

     0.02       —         0.04       0.04  

Restructure charges per diluted share

     —         0.01       —         0.10  

Severance and other costs per diluted share

     —         0.04       0.05       0.17  

Stock-based compensation expense per diluted share

     0.04       0.03       0.06       0.05  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income per diluted share

   $ 0.38     $ 0.31     $ 0.72     $ 0.61  
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of Net Service Revenues to Adjusted Net Service
Revenues: (3)

        

Net service revenues

   $ 103,559     $ 100,927     $ 205,165     $ 193,529  

Revenues associated with the closure of certain sites

     23       (1,261     (601     (2,298
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net service revenues

   $ 103,582     $ 99,666     $ 204,564     $ 191,231  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(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)  We define Adjusted net income per diluted share as net income per diluted share, adjusted for M&A expenses, stock-based compensation expense, restructure charges and severance and other costs. Adjusted net income per diluted 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.
(3)  We define Adjusted net service revenues as net service revenues 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 service revenues or any other measure of financial performance calculated in accordance with GAAP.

 

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