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Addus HomeCare Announces Third-Quarter 2017 Financial Results
GAAP Diluted EPS Increases to $0.29 and Adjusted Diluted EPS to $0.42
Net Income Grows to $3.4 Million and Adjusted EBITDA Grows to $9.6 Million
Same-Store Sales Expand 4.9%

FRISCO, Texas, Nov. 6, 2017 /PRNewswire/ -- Addus HomeCare Corporation (NASDAQ: ADUS), a provider of comprehensive home care services, today announced its financial results for the third quarter and nine months ended September 30, 2017.

Net service revenues were $108.6 million for the third quarter, an increase of 4.9% from $103.5 million for the third quarter of 2016. Net income more than doubled to $3.4 million for the third quarter of 2017 from $1.7 million for the third quarter last year, and net income per diluted share rose 93.3% to $0.29 from $0.15. Adjusted earnings per diluted share increased 7.7% to $0.42 for the third quarter of 2017 from $0.39 for the third quarter of 2016. Adjusted earnings per diluted share for the third quarter of 2017 excluded M&A expenses of $0.04, restructure charges of $0.04, severance and other costs of $0.01 and stock-based compensation expense of $0.04. For the third quarter of 2016, adjusted earnings per diluted share excluded restructure charges of $0.23, severance and other costs of $0.02, stock-based compensation expense of $0.03 and the positive impact from normalization of effective tax rate of $0.04. Adjusted EBITDA increased 11.1% for the third quarter of 2017 to $9.6 million from $8.7 million for the third quarter of 2016. (See page 7 for a reconciliation of all non-GAAP and GAAP financial measures in this news release.)

For the first nine months of 2017, net service revenues increased 5.6% to $313.8 million from $297.0 million for the first nine months of 2016. Net income for the first nine months of 2017 increased 132.6% to $10.4 million from $4.5 million for the same period in 2016, and net income per diluted share rose 122.5% to $0.89 from $0.40. Adjusted net income per diluted share increased 14.1% to $1.13 for the first nine months of 2017 from $0.99 for the first nine months of 2016.

"We are proud of our solid financial results for the third quarter of 2017," commented Dirk Allison, President and Chief Executive Officer of Addus.  "The improvement in our revenue growth rate compared with the second quarter reflected strong same-store revenue growth of 4.9% and the initial contribution from the acquisition of Options Home Care on August 1st.  As a result of our team's execution and ongoing efforts, we generated increased operating leverage for the quarter, with a higher gross margin and a lower general and administrative expense as a percentage of revenue."

Revenue growth for the third quarter of 2017 was comprised of a 2.8% increase in billable hours per business day compared with the third quarter last year and a 3.6% increase in revenue per billable hour.

Addus had $45.7 million in cash at the end of the third quarter of 2017 and $45.0 million of bank debt, with $97.9 million of availability under its revolving credit facility. Net cash provided by operating activities was $54.0 million for the third quarter, compared with $49.3 million for the third quarter of 2016.

Mr. Allison concluded, "During the quarter, we demonstrated our ability to integrate our new management team's first acquisition.  As we approach 2018, we remain highly focused on executing our organic growth strategy, and we continue the disciplined evaluation of additional acquisition opportunities in an active pipeline of potential transactions. In a highly fragmented industry that is experiencing both rising demand and consolidation pressure, we are confident that we have the talent, infrastructure and financial resources to increase market share and shareholder value through the successful, long-term implementation of our growth strategies."

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 write off of debt issuance costs, gain on sale, normalization of effective tax rate, 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, write off of debt issuance costs, gain on sale, other non-operating income, 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.

Conference Call

Addus will host a conference call on Tuesday, November 7, 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 90328878. A telephonic replay of the conference call will be available through midnight on November 21, 2017, by dialing (855) 859-2056 (international dial-in number is (404) 537-3406) and entering pass code 90328878.

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 September 30, 2017, Addus provided personal care services to approximately 35,000 consumers through 114 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 September 30,


For the Nine Months
Ended September 30,


2017


2016


2017


2016









Net service revenues

$  108,592


$  103,502


$  313,758


$  297,032

Cost of service revenues

79,539


76,079


228,877


219,594

Gross profit

29,053


27,423


84,881


77,438


26.8%


26.5%


27.1%


26.1%

General and administrative expenses

19,359


21,299


57,239


59,864

Gain on sale of adult day service centers

-


-


(2,065)


-

Depreciation and amortization

1,781


1,721


4,811


4,943

Provision for doubtful accounts

2,106


1,908


6,208


5,089

Total operating expenses

23,246


24,928


66,193


69,896

Operating income from continuing operations

5,807


2,495


18,688


7,542

Total interest expense, net

840


632


3,579


1,714

Other non-operating income

(64)


(126)


(165)


(126)

Income before income taxes

5,031


1,989


15,274


5,954

Income tax expense

1,623


290


4,908


1,498

Net income

$      3,408


$      1,699


$    10,366


$      4,456









Net income per diluted share:

$        0.29


$        0.15


$        0.89


$        0.40









Weighted average number of common
      shares outstanding - diluted

11,631


11,417


11,616


11,227









Cash Flow Information:

For the Three Months
Ended September 30,


For the Nine Months
Ended September 30,


2017


2016


2017


2016









Net cash provided by operating activities

$    53,953


$    49,256


$    42,578


$    30,991

Net cash used in investing activities

(23,737)


(457)


(23,108)


(21,617)

Net cash (used in) provided by 
     
financing activities

(401)


(17,593)


18,205


25,968









Net change in cash

29,815


31,206


37,675


35,342

Cash at the beginning of the period

15,873


8,240


8,013


4,104

Cash at the end of the period

$    45,688


$    39,446


$    45,688


$    39,446


 

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)




September 30,


2017


2016

Assets






Current assets




     Cash

$    45,688


$    39,446

     Accounts receivable, net

96,335


80,454

     Prepaid expenses and other current assets

6,267


4,485

Total current assets

148,290


124,385





Property and equipment, net

7,494


5,993





Other assets




     Goodwill

91,821


73,851

     Intangible assets, net

16,243


16,671

     Deferred tax assets

3,153


1,825

     Investment in joint venture

900


900

Total other assets

112,117


93,247





Total assets

$  267,901


$  223,625





Liabilities and Stockholders' Equity






Current liabilities




     Accounts payable

$      4,910


$      4,268

     Accrued expenses

46,942


43,929

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

3,407


2,244

Total current liabilities

55,259


50,441





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

40,372


22,723





Total liabilities

95,631


73,164





Total stockholders' equity

172,270


150,461





Total liabilities and stockholders' equity

$  267,901


$  223,625


 

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Key Statistical and Financial Data

(Unaudited)






For the Three Months
Ended September 30,


For the Nine Months
Ended September 30,


2017


2016


2017


2016

General:








Adjusted EBITDA (in thousands) (1)

$      9,612


$      8,652


$    26,137


$    22,808

States served at period end

-


-


24


24

Locations at period end

-


-


114


118

Employees at period end

-


-


26,407


22,140









Home & Community








Average billable census - same store (2)

33,592


34,292


33,833


32,786

Average billable census - acquisitions

1,343


-


1,343


-

Average billable census total (2)

34,935


34,292


35,176


32,786

Billable hours (in thousands)

6,049


5,972


17,685


17,154

Average billable hours per census per month

57.7


58.1


55.9


56.2

Billable hours per business day

93,054


90,490


90,692


87,522

Revenues per billable hour

$      17.95


$      17.33


$      17.74


$      17.32









Percentage of Revenues by Payor:








State, local and other governmental programs

63.6%


70.8%


64.8%


72.0%

Managed care organizations

34.0


25.8


32.5


24.4

Private duty

1.8


2.3


2.0


2.5

Commercial

0.6%


1.1%


0.7%


1.1%









(1)     We define Adjusted EBITDA as net income before interest expense, taxes, depreciation, amortization, write off of debt
issuance costs, gain on sale, other non-operating income, 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 September 30, 2016 by 470 and the nine months
ended September 30, 2016 by 432.


 

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures

(amounts in thousands, except per share data)

(Unaudited)






For the Three Months
Ended September 30,


For the Nine Months 
Ended September 30,


2017


2016


2017


2016





Reconciliation of Adjusted EBITDA to Net Income: (1)




Net income

$      3,408


$      1,699


$    10,366


$      4,456

Interest expense, net

840


632


2,255


1,714

Write off debt issuance costs

-


-


1,323


-

Gain on sale of adult day service centers

-


-


(2,065)


-

Other non-operating income

(64)


(126)


(165)


(126)

Income tax expense

1,623


290


4,908


1,498

Depreciation and amortization

1,781


1,721


4,811


4,943

M&A expenses

692


43


1,343


785

Stock-based compensation expense

727


445


1,818


1,264

Restructure charges

507


3,690


551


5,243

Severance and other costs

98


258


992


3,031

Adjusted EBITDA

$      9,612


$      8,652


$    26,137


$    22,808









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




Net income per diluted share

$        0.29


$        0.15


$        0.89


$        0.40

Write off debt issuance costs per diluted share

-


-


0.09


-

Gain on sale of adult day service centers per 
     diluted share

-


-


(0.12)


-

Normalization of effective tax rate

-


(0.04)


-


(0.04)

M&A expenses per diluted share

0.04


-


0.08


0.05

Restructure charges per diluted share

0.04


0.23


0.03


0.32

Severance and other costs per diluted share

0.01


0.02


0.06


0.18

Stock-based compensation expense per 
     diluted share

0.04


0.03


0.10


0.08

Adjusted net income diluted share

$        0.42


$        0.39


$        1.13


$        0.99









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




Net service revenues

$  108,592


$  103,502


$  313,758


$  297,032

Revenues associated with the closure of 
     certain sites

(87)


(1,634)


(1,340)


(4,493)

Adjusted net service revenues

$  108,505


$  101,868


$  312,418


$  292,539









(1)      We define Adjusted EBITDA as net income before interest expense, taxes, depreciation, amortization, write off of debt issuance
costs, gain on sale, other non-operating income, 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 write off of debt issuance costs, gain
on sale, normalization of effective tax rate, 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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SOURCE Addus HomeCare Corporation

Brian W. Poff, Executive Vice President, Chief Financial Officer, Addus HomeCare Corporation, (469) 535-8200, investorrelations@addus.com; Scott Brittain, Corporate Communications, Inc., (615) 324-7308, scott.brittain@cci-ir.com