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Press Release

Addus HomeCare Announces Fourth-Quarter 2017 Financial Results
Reports Net Income of $3.2 Million or $0.28 per Diluted Share and Adjusted Diluted EPS of $0.46
Adjusted EBITDA Increases to $10.6 Million on Revenue of $112.0 Million
Same-Store Sales Expand 4.1%

FRISCO, Texas, March 5, 2018 /PRNewswire/ -- Addus HomeCare Corporation (NASDAQ: ADUS), a provider of comprehensive home care services, today announced its financial results for the fourth quarter and year ended December 31, 2017.

Net service revenues increased 8.0% for the quarter to $112.0 million from $103.7 million for the fourth quarter of 2016. Net income for the quarter was $3.2 million, a decrease of 57.2% from $7.6 million for the fourth quarter of 2016, and $0.28 per diluted share, a decrease of 57.6% from $0.66 per diluted share for the fourth quarter of 2016. Adjusted net income per diluted share increased 7.0% to $0.46 for the fourth quarter of 2017 from $0.43 for the fourth quarter of 2016. Adjusted net income per diluted share for the fourth quarter of 2017 excludes a non-cash increase in the provision for income taxes of $1.3 million, or $0.12 per diluted share, due to a write-down of net deferred tax assets pursuant to the Tax Cuts and Jobs Act; M&A expenses of $0.04; stock-based compensation expense of $0.04; and gain on sale and divestiture of $0.01. For the fourth quarter of 2016, adjusted net income per diluted share excludes prompt payment interest income from the state of Illinois of $0.17; M&A expenses of $0.02; reversal of prior estimated restructure charges of $0.03; severance and other costs of $0.01; reversal of stock-based compensation expense of $0.01; and the positive impact from normalization of effective tax rate of $0.04. Adjusted EBITDA increased 14.5% for the fourth quarter of 2017 to $10.6 million from $9.3 million for the fourth quarter of 2016. (See page 7 for a reconciliation of all non-GAAP and GAAP financial measures in this news release.)

For 2017, net service revenues were $425.7 million, up 6.2% from $400.7 million for 2016. Net income for 2017 increased 13.2% to $13.6 million from $12.0 million for 2016 and increased 10.4% to $1.17 per diluted share from $1.06 per diluted share. Adjusted net income per diluted share increased 9.6% to $1.60 for 2017 from $1.46 for 2016.  Adjusted EBITDA increased 14.6% to $36.8 million from $32.1 million in 2016.

"We are pleased with our operating and financial performance for the fourth quarter, which continued our positive trends for revenue growth, margin improvement and adjusted net income per diluted share that we have produced during 2017," remarked Dirk Allison, President and Chief Executive Officer of Addus.  "Our comparable-quarter revenue growth was driven by a solid increase in same-store revenue, which rose 4.1%, and the acquisition of Options Home Care, which provided its first full quarter of revenue.  We further benefited from the October acquisition of a small private-pay home-care provider based in Arizona. Our revenue growth combined with our ongoing focus on operating efficiency has led to steady improvement in our operating leverage.  As a result, combined with our solid gross margin of 27.4%, our adjusted EBITDA margin increased to 9.5% for the quarter, our third consecutive sequential-quarter increase."

Revenue growth for the fourth quarter of 2017 reflected a 3.6% increase in billable hours per business day and a 4.2% increase in revenue per billable hour, compared with the fourth quarter of 2016.

At the end of 2017, the Company had cash of $53.8 million and bank debt of $44.4 million, while availability under its revolving credit facility was $105.1 million. Net cash provided by operating activities was $10.2 million for the fourth quarter of 2017 and $52.8 million for the full year.

Mr. Allison concluded, "We are well positioned to achieve further profitable growth for 2018. Our objectives for organic growth for the year again reflect our ongoing expectation for same-store revenue growth in our targeted range of 3% to 5%. In addition, our recent announcement of a definitive agreement to purchase Ambercare Corporation, which produced revenue of approximately $57 million for 2017, substantially strengthens the anticipated revenue and earnings contribution from our acquisition strategy for 2018. With our strong infrastructure and financial position, we are prepared to act on acquisition opportunities that fit our strategic plan."

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, normalization of the effective tax rate, stock-based compensation expense, restructure charges, severance and other costs, write off of debt issuance costs, write down of deferred assets due to tax reform and gain on sale of ADS and JV divestiture. 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, after tax earnings from discontinued operations, write off of debt issuance costs, write down of deferred assets due to tax reform and gain on sale of ADS and JV divestiture. 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, March 6, 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 8399037. A telephonic replay of the conference call will be available through midnight on March 20, 2018, by dialing (855) 859-2056 (international dial-in number is (404) 537-3406) and entering pass code 8399037.

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 December 31, 2017, Addus provided personal care services to approximately 34,000 consumers through 116 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 December 31,


For the Year Ended
December 31,


2017


2016


2017


2016

Net service revenues

$  111,958


$  103,656


$  425,715


$  400,688

Cost of service revenues

81,243


75,000


310,119


294,593

Gross profit

30,715


28,656


115,596


106,095


27.4%


27.6%


27.2%


26.5%

General and administrative expenses

19,662


16,976


76,902


76,840

Gain on sale of assets

(402)


-


(2,467)


-

Depreciation and amortization

1,853


1,703


6,663


6,647

Provision for doubtful accounts

2,052


2,284


8,259


7,373

Total operating expenses

23,165


20,963


89,357


90,860

Operating income from continuing operations

7,550


7,693


26,239


15,235

Interest expense

841


572


4,472


2,332

Interest income

(14)


(2,766)


(66)


(2,812)

Other income

(52)


(80)


(217)


(206)

Income from continuing operations 
     
before income taxes

6,775


9,967


22,050


15,921

Income tax (benefit) expense from continuing 
     operations

3,681


2,496


8,589


3,994

Net income from continuing operations

3,094


7,471


13,461


11,927

Discontinued operations:








Income from Home Health Business, 
     
net of tax

147


97


147


97

Earnings from discontinued operations

147


97


147


97

Net income

$      3,241


$      7,568


$    13,608


$    12,024









Net income per share:








    Continuing Operations

$        0.27


$        0.65


$        1.16


$        1.05

    Discontinued Operations

$        0.01


$        0.01


$        0.01


$        0.01









  Weighted average number of common shares 
     outstanding - diluted

11,638


11,494


11,623


11,349









Cash Flow Information:

For the Three Months 
Ended December 31,


For the Year Ended 
December 31,


2017


2016


2017


2016

Net cash (used in) provided by 
     
operating activities

$    10,193


$   (31,734)


$    52,771


$        (743)

Net cash (used in) investing activities

(1,160)


(121)


(24,268)


(21,738)

Net cash (used in) provided by 
     
financing activities

(967)


422


17,238


26,390









Net change in cash

$      8,066


$   (31,433)


$    45,741


$      3,909

Cash at the beginning of the period

45,688


39,446


8,013


4,104

Cash at the end of the period

$    53,754


$      8,013


$    53,754


$      8,013


 

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)



December 31,


2017


2016

Assets







Current assets




     Cash

$    53,754


$      8,013

     Accounts receivable, net

88,952


116,999

     Prepaid expenses and other current assets

8,379


5,998

Total current assets

151,085


131,010





Property and equipment, net

7,489


6,648





Other assets




     Goodwill

90,339


72,688

     Intangible assets, net

16,596


15,263

     Investment in joint venture

-


900

     Deferred tax assets, net

1,601


3,355

Total other assets

108,536


92,206





Total assets

$  267,110


$  229,864





Liabilities and Stockholders' Equity







Current liabilities




     Accounts payable

$      4,271


$      4,486

     Accrued expenses

44,800


42,603

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

3,099


2,531

Total current liabilities

52,170


49,620





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

39,860


22,482

Total long-term liabilities

39,860


22,482





Total liabilities

92,030


72,102





Total stockholders' equity

175,080


157,762





Total liabilities and stockholders' equity

$  267,110


$  229,864

 

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Key Statistical and Financial Data

(Unaudited)



For the Three Months
Ended December 31,


For the Twelve Months
Ended December 31,


2017


2016


2017


2016

General:








Adjusted EBITDA (in thousands) (1)

$    10,631


$      9,284


$    36,768


$    32,094

States served at period end

-


-


24


24

Locations at period end

-


-


116


114

Employees at period end

-


-


26,097


23,070









Home & Community








Average billable census - same store (2)

33,323


34,097


33,919


33,944

Average billable census - acquisitions (3)

1,407


-


1,424


-

Average billable census total

34,730


34,097


35,343


33,944

Billable hours (in thousands)

6,148


5,934


23,833


23,088

Average billable hours per census per month

59.0


58.0


56.2


56.7

Billable hours per business day

94,582


91,288


91,664


88,460

Revenues per billable hour

$      18.21


$      17.47


$      17.86


$      17.35









Percentage of Revenues by Payor:








State, local and other governmental programs

62.4%


66.0%


64.2%


70.4%

Managed care organizations

34.8


30.7


33.1


26.1

Private pay

2.2


2.2


2.1


2.4

Commercial

0.6%


1.1%


0.6%


1.1%


(1)

We define 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, after tax earnings from discontinued operations, write off of debt issuance costs, write down of deferred assets due to tax reform and gain on sale of ADS and JV divestiture. 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 December 31, 2016 by 416 and the twelve months ended December 31, 2016 by 428.

(3)

The average billable census in acquisitions of 1,242 and 1,141 for the three months and twelve months ended December 31, 2016, respectively, was reclassified to average billable census - same stores for comparability purposes.

 

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures

(amounts in thousands, except per share data)

(Unaudited)



For the Three Months
Ended December 31,


For the Twelve Months
Ended December 31,


2017


2016


2017


2016

Reconciliation of Adjusted EBITDA to Net Income: (1)

Net income

$       3,241


$       7,568


$     13,608


$     12,024

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

(147)


(97)


(147)


(97)

Net income from continuing operations

3,094


7,471


13,461


11,927









Interest expense

841


572


3,149


2,332

Interest income

(14)


(2,766)


(66)


(2,812)

Write off debt issuance costs

-


-


1,323


-

Write down deferred tax asset/impact of 
     
Tax Reform Act

1,305


-


1,305


-

(Gain) on sale of ADS and JV divestiture

(402)


-


(2,467)


-

Other non-operating income

(52)


(80)


(217)


(206)

Income tax (benefit) expense from 
     
continuing operations

2,376


2,496


7,284


3,994

Depreciation and amortization

1,853


1,703


6,663


6,647

M&A expenses

774


337


2,116


1,122

Stock-based compensation expense

734


(192)


2,552


1,072

Restructure charges

76


(457)


627


4,787

Severance and other costs

46


200


1,038


3,231

Adjusted EBITDA

$     10,631


$       9,284


$     36,768


$     32,094









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

Net income per diluted share

$         0.27


$          0.65


$         1.16


$         1.05

Write down deferred tax asset from Tax Reform Act

0.12


-


0.12


-

Write off debt issuance costs per diluted share

-


-


0.09


-

Gain on sale of adult day service centers

   per diluted share

-


-


(0.12)


-

Gain on sale of joint venture divestiture

   per diluted share

(0.01)


-


(0.01)


-

Interest income from State of Illinois

-


(0.17)


-


(0.17)

Normalization of effective tax rate

-


(0.04)


-


(0.06)

M&A expenses per diluted share

0.04


0.02


0.12


0.07

Restructure charges per diluted share

-


(0.03)


0.03


0.30

Severance and other costs per diluted share

-


0.01


0.06


0.20

Stock-based compensation expense per diluted share

0.04


(0.01)


0.15


0.07

Adjusted net income per diluted share

$         0.46


$         0.43


$         1.60


$         1.46









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

Net service revenues

$    111,958


$    103,656


$    425,715


$    400,688

Revenues associated with the closure of certain sites

-


(1,335)


(1,340)


(5,828)

Adjusted net service revenues

$    111,958


$    102,321


$    424,375


$    394,860


(1)

We define 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, after tax earnings from discontinued operations, write off of debt issuance costs, write down of deferred assets due to tax reform and gain on sale of ADS and JV divestiture. 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 interest income from the State of Illinois, M&A expenses, normalization of the effective tax rate, stock-based compensation expense, restructure charges, severance and other costs, write off of debt issuance costs, write down of deferred assets due to tax reform and gain on sale of ADS and JV divestiture. 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.

 

 

Cision View original content:http://www.prnewswire.com/news-releases/addus-homecare-announces-fourth-quarter-2017-financial-results-300608313.html

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