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Addus HomeCare Announces Third Quarter 2014 Results
- Net service revenues increase 21.3% to $81.7 million
- Net income from continuing operations grew to $0.29 per diluted share, up 16.0%

DOWNERS GROVE, Ill., Oct. 30, 2014 /PRNewswire/ -- Addus HomeCare Corporation (NASDAQ: ADUS), a comprehensive provider of home and community-based services that primarily are social in nature, provided in the home and focused on the dual eligible population, today announced its financial results for the third quarter and nine months ended September 30, 2014.

For the third quarter, net service revenues increased 21.3% to $81.7 million from $67.3 million for the third quarter of 2013. Net income from continuing operations was $3.2 million for the third quarter of 2014, a 16.9% increase from $2.8 million for the third quarter last year, while net income from continuing operations per diluted share rose 16.0% to $0.29 from $0.25.

Net service revenues for the first nine months of 2014 were $230.3 million, a 17.5% increase from $196.1 million for the same prior-year period.  Net income from continuing operations for the first nine months of 2014 was $8.3 million, or $0.75 per diluted share, compared with $8.0 million or $0.73 per diluted share for the same prior year period. Net income from continuing operations for the first nine months of 2014 included a charge for acquisition transaction expense totaling $0.03 per diluted share. Excluding this item, adjusted net income from continuing operations per diluted share increased 6.9% to $0.78 for the first nine months of 2014 from $0.73 for the same period in 2013.

"Addus produced significant profitable growth for the third quarter of 2014, as organic growth and the impact of acquisitions since the third quarter last year drove a 21.3% increase in revenues, our highest quarterly revenue growth as a public company," commented Mark Heaney, President and Chief Executive Officer of Addus HomeCare. "Our 16.9% growth in net income from continuing operations reflected anticipated expense increases for our technology rollout, SOX 404 compliance efforts and the increased amortization related to our acquisitions.  Adjusted EBITDA rose 27.4% to $6.3 million for the third quarter and 18.9% to $16.6 million for the first nine months of 2014."

Third-quarter revenue growth reflected a 7.2% increase in same-store sales, with the remaining 14.1% increase attributable to acquisitions.  Average billable census increased 18.4% for the third quarter of 2014 from the third quarter last year.  Same-store census grew 7.6%, with acquisitions driving the remaining 10.8% increase in census.  Average revenue per billable hour remained relatively stable at $17.03 for the third quarter of 2014 compared with $17.08 for the third quarter last year.

At the end of the third quarter of 2014, Addus had $14.1 million in cash, no bank debt and $40 million of availability under its revolving credit facility.  Consistent with historical payment flows from the State of Illinois, net cash used in operations was $7.4 million for the quarter, while net cash provided by operations was $7.6 million for the first nine months of 2014. 

Heaney added, "In addition to our financial results, we are also pleased with our initiatives to build our sales capabilities and the resulting organic growth of our existing home and community-based services.  We are also gratified by the growth generated from acquisitions, and we continue to evaluate additional opportunities, especially in those states that are more actively engaged in transitioning dual eligible consumers to MCOs.  We also continue to make important progress regarding several strategic initiatives that support long-term growth as we enter new states and that give us competitive advantages as we grow existing markets. 

"As states transition management of their dual eligible populations to managed care plans, we remain focused on positioning the Company as an integral part of the continuum of care we believe MCOs will be expected to provide these consumers. The growing impact of this transition was evident in the third quarter, as our revenues from managed care increased to 9.5% of total net service revenues for the third quarter compared to 1.0% for the same prior-year quarter.  While the majority of the managed care revenues were generated from acquisitions, we noted a shift in same-store MCO census and revenues, with same-store revenues from MCOs growing to 2.4% of total revenue for the third quarter of 2014 compared with 1.0% for the third quarter last year and to 1.5% compared with 0.5% for the nine months ended September 30, 2014 and 2013, respectively."

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, M&A expense 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.

Conference Call

Addus will host a conference call to discuss its results for the third quarter today beginning at 5:00 p.m. Eastern time. The toll-free dial-in number for the conference call is (877) 474-9501 (international dial-in number is (857) 244-7554), passcode 10423889. A telephonic replay of the conference call will be available through midnight on November 6, 2014, by dialing (888) 286-8010 (international dial-in number is (617) 801-6888) and entering passcode 54894257.

A live broadcast of the 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. 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 anticipated transition to managed care providers, expected benefits and 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, 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 17, 2014, and in Addus HomeCare's Quarterly Reports on Form 10-Q, filed with the Securities and Exchange Commission on May 7, 2014, and August 11, 2014, 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).

About Addus

Addus is a comprehensive provider of home and community-based services that primarily are social in nature, 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, managed care organizations, commercial insurers and private individuals. For more information, please visit www.addus.com.

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Income and Cash Flow Information

(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,


2014


2013


2014


2013









Net service revenues

$                  81,658


$                  67,306


$                230,306


$                196,059

Cost of service revenues

59,818


50,080


169,218


146,422









Gross profit

21,840


17,226


61,088


49,637


26.7%


25.6%


26.5%


25.3%

General and administrative expenses

15,773


12,424


45,576


36,026

Depreciation and amortization

1,106


539


2,684


1,626

Total operating expenses

16,879


12,963


48,260


37,652









Operating income from continuing operations

4,961


4,263


12,828


11,985









Total interest expense (income), net

180


(24)


484


326









Income from continuing operations before taxes

4,781


4,287


12,344


11,659

Income tax expense 

1,544


1,517


4,024


3,620









Net income from continuing operations

3,237


2,770


8,320


8,039









Discontinued operations:
















    Loss from home health business, net of tax

-


(203)


-


(890)

    Gain on sale of  home health business, net of tax

-


-


-


11,111

















Net income

$                   3,237


$                   2,567


$                   8,320


$                  18,260









Net income (loss) per share:








    Basic








         Continuing operations

$                     0.30


$                     0.26


$                     0.76


$                     0.75

         Discontinued operations

-


(0.02)


-


0.95









    Basic income per share

$                     0.30


$                     0.24


$                     0.76


$                     1.70









    Diluted








         Continuing operations

$                     0.29


$                     0.25


$                     0.75


$                     0.73

         Discontinued operations

-


(0.02)


-


0.93









    Diluted income per share

$                     0.29


$                     0.23


$                     0.75


$                     1.66









Weighted average number of common shares outstanding:








     Basic

10,927


10,787


10,895


10,783

     Diluted

11,154


11,071


11,122


11,006









































Cash Flow Information:

For the Three Months Ended September 30,


For the Nine Months Ended September 30,


2014


2013


2014


2013









Net cash (used in) provided by operating activities

$                  (7,413)


$                  (9,130)


$                   7,590


$                  25,103

Net cash (used in) provided by investing activities

(1,958)


(183)


(13,149)


19,082

Net cash used in (provided by) financing activities

3,904


-


4,118


(16,458)









Net change in cash

(5,467)


(9,313)


(1,441)


27,727

Cash at the beginning of the period

19,591


38,777


15,565


1,737

Cash at the end of the period

$                  14,124


$                  29,464


$                  14,124


$                  29,464

 

 

 

Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)














September 30,


2014


2013



Assets








Current assets




Cash

$                   14,124


$                   29,464

Accounts receivable, net 

62,121


54,516

Prepaid expenses and other current assets

6,937


6,167

Deferred tax assets

8,326


7,258





Total current assets

91,508


97,405





Property and equipment, net

7,646


2,471





Other assets




Goodwill

64,237


50,416

Intangible assets, net 

11,043


5,352

Investment in joint venture

900


900

Other assets

13


173

Total other assets

76,193


56,841





Total assets

$                  175,347


$                  156,717





Liabilities and stockholders' equity








Current liabilities




Accounts payable

$                     3,613


$                     4,379

Current portion of capital lease obligations

978


-

Accrued expenses

41,434


36,401

Deferred revenue

3


19





Total current liabilities

46,028


40,799





Capital lease obligations, less current portion

2,926


-

Deferred tax liability

3,441


3,097





Total stockholders' equity

122,952


112,821





Total liabilities and stockholders' equity

$                  175,347


$                  156,717









 

Key Statistical and Financial Data (Unaudited)

















For the Three Months 
Ended September 30,


For the Nine Months
Ended September 30,



2014


2013


2014


2013


General:


















Adjusted EBITDA (in thousands) (1)

$         6,305


$ 4,950


$       16,617


$       13,976


States served at period end

-


-


22


21


Locations at period end

-


-


132


94


Employees at period end

-


-


17,504


13,660











Home & Community


















Average billable census - same store

29,118


27,058


30,665


26,411


Average billable census - acquisitions

2,914


-


2,088


-


Average billable census total

32,032


27,058


32,753


26,411


Billable hours (in thousands)

4,749


3,941


13,511


11,517


Average billable hours per census per month

49.9


48.5


45.8


48.5


Billable hours per business day

74,912


59,735


70,737


59,107


Revenues per billable hour

$         17.03


$ 17.08


$         17.05


$         17.02




















Percentage of Revenues by Payor:


















State, local and other governmental programs

85.9

%

94.0

%

88.6

%

94.0

%

Managed Care

9.5


1.0


6.8


0.5


Private duty

3.5


4.0


3.5


4.0


Commercial

1.1

%

1.0

%

1.1

%

1.5

%










(1) We define Adjusted EBITDA as earnings before discontinued operations, interest expense, taxes, depreciation, amortization, M&A expenses and stock-based compensation expense. 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. 





 









Adjusted EBITDA (1) (Unaudited)

For the Three Months
Ended September 30,


For the Nine Months
Ended September 30,


2014


2013


2014


2013

Reconciliation of Adjusted EBITDA to Net Income:
















Net income

$         3,237


$         2,567


$      8,320


$  18,260

Less: (Earnings) from discontinued operations, net of tax

-


203


-


(10,221)









Net income from continuing operations

3,237


2,770


8,320


8,039









Interest expense, net

180


(24)


484


326

Income tax expense from continuing operations

1,544


1,517


4,024


3,620

Depreciation and amortization

1,106


539


2,684


1,626

M&A expenses

7


-


543


-

Stock-based compensation expense

231


148


562


365









Adjusted EBITDA

$         6,305


$         4,950


$     16,617


$  13,976

































(1) We define Adjusted EBITDA as earnings before discontinued operations, interest expense, taxes, depreciation, amortization, M&A expenses and stock-based compensation expense. 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. 













 


SOURCE Addus HomeCare Corporation

Dennis Meulemans, Chief Financial Officer, Addus HomeCare, (630) 296-3400, dmeulemans@addus.com; Scott Brittain, Corporate Communications, Inc., (615) 324-7308, scott.brittain@cci-ir.com