EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

LOGO

Investor Contact:

Amy Glynn / Nick Laudico

The Ruth Group

Phone: (646) 536-7023 / 7030

Email: aglynn@theruthgroup.com

Email: nlaudico@theruthgroup.com

Addus HomeCare Reports Second Quarter 2010 Results

Second Quarter Financial Highlights

 

   

Total net service revenues grew 3.4% to $67.2 million

 

   

Home & Community segment net service revenues increased 3.6% to $54.1 million

 

   

Home Health segment net service revenues increased 2.5% to $13.0 million

 

   

Record quarterly Medicare revenues, with Home Health Medicare admissions up 10.5%

 

   

Net income of $1.7 million, or $0.16 per diluted share, which included $0.01 per share for acquisition related expenses

Recent Business Highlights

 

   

Expanded presence in Southeast market with acquisition of Advantage Health Systems in July 2010; expect accretion of $0.02 to $0.03 per share in 2010

 

   

Credit facility with Fifth Third Bank increased to $60.0 million with the addition of a new $5 million term loan component used to finance a portion of the Advantage Health Systems acquisition

Palatine, IL, August 5, 2010 - Addus HomeCare Corporation (Nasdaq: ADUS), a comprehensive provider of home-based social and medical services, announced today its financial results for the three and six months ended June 30, 2010.

Mark Heaney, President and Chief Executive Officer of Addus HomeCare, stated, “During the quarter, we continued to focus and execute on all of the key priorities we identified in previous quarters. These priorities are growing census, enhancing our Integrated Services model, controlling costs and improving collections. Our second quarter results reflect progress in improving our operations.

“In our Home & Community segment, which represents approximately 80% of revenues, we continued to drive census growth while controlling costs, which led to increased revenues and stable operating margins during the quarter. In our Home Health segment, second quarter Medicare admissions were up 10.5% year over year. This growth is a direct result of the investments we have made in sales and marketing over the past three quarters. While these investments negatively impacted margins in the first two quarters of 2010, we expect that improved sales productivity, coupled with continued cost containment, will result in modest operating margin improvement for Home Health in the second half of this year,” Heaney added.


Addus HomeCare Reports Second Quarter 2010 Results

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“During the quarter we maintained our focus on improvements to our Integrated Services program and continue to see integrated starts of care rebound to historical levels.

“In July, we completed the acquisition of Advantage Health Systems which also does business as CarePro, a highly regarded provider of home & community, home health and hospice services in South Carolina and Georgia. This acquisition expands our footprint in the Southeast market while also further diversifying our payor mix. We expect the acquisition to be accretive to earnings by $0.02 to $0.03 per share in 2010.

“We continue to make progress in our accounts receivables collections. The centralization of all of our payors by year-end is expected to improve the effectiveness of our collections. Receiving payments from the State of Illinois remains a major priority for us, and we continue to work very closely with state officials. As of the end of the second quarter, DSOs for the State of Illinois were 159, which represents a four day improvement from March 31, 2010.

“While we continue to focus on our plan, we are very aware that states across the country are challenged and that they will be for the foreseeable future. Many of the 18 states in which we operate have enacted measures to control or even reduce the rate at which their homecare programs expand. That said, the fact remains that in-home care is the lowest cost option available to states, all of whom are experiencing increases in their aging population,” concluded Mr. Heaney.

Second Quarter Review

Total net service revenues for the quarter ended June 30, 2010 were $67.2 million, a 3.4% increase compared to $65.0 million in the prior year quarter.

Net income for the second quarter of 2010 of $1.7 million, or $0.16 per diluted share, including $0.01 per share in acquisition related expenses, was based on 10.5 million diluted shares outstanding. This compares to net income after preferred stock dividends of $0.8 million, or $0.37 per diluted share based on 5.2 million diluted shares outstanding in the prior year period. Net income in the second quarter of 2009 prior to preferred stock dividends was $1.9 million.

Adjusted earnings before interest, taxes, depreciation, amortization, and stock-based compensation (“Adjusted EBITDA”) for the second quarter of 2010 was $4.3 million, compared to $5.1 million in the prior year quarter. Contributing to the decrease in adjusted EBITDA in the current quarter was higher Home & Community bad debt expense, costs associated with being a public company, investment in Home Health sales and marketing, and acquisition related expenses.


Addus HomeCare Reports Second Quarter 2010 Results

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Home & Community segment net service revenues for the second quarter of 2010 were $54.1 million, a 3.6% increase compared to $52.3 million in the prior year quarter. The increase in revenues was entirely the result of organic growth. Home & Community gross margins remained solid, at 25.3% in the second quarter of 2010, consistent with the prior year quarter.

Home & Community operating income, including depreciation and amortization but excluding corporate expenses, was $5.5 million, compared to $5.3 million in the prior year quarter.

Home Health segment net service revenues for the second quarter of 2010 were $13.0 million, a 2.5% increase compared to $12.7 million in the prior year quarter. The increase in revenues was entirely the result of organic growth and reflects a 10.5% increase in Medicare admissions. Home Health gross margins were 46.4% in the second quarter of 2010, compared to 47.4% in the prior year period.

Home Health operating income, including depreciation and amortization but excluding corporate expenses, was $1.7 million, compared to $2.0 million in the prior year quarter. The decline in Home Health operating income was primarily related to lower gross profit margins from higher direct service personnel travel related costs, medical supplies and employer related benefit costs, as well as investments related to the expansion of the sales force and related sales management.

Six Month Review

Total net service revenues for the six months ended June 30, 2010 were $131.8 million, a 3.9% increase compared to $126.8 million in the prior year period.

Net income for the six months ended June 30, 2010 of $3.0 million, or $0.29 per diluted share, including $0.01 per share in acquisition related expenses, was based on 10.5 million diluted shares outstanding, which included $0.01 per share in acquisition related expenses. This compares to net income after preferred stock dividends of $1.0 million, or $0.63 per diluted share based on 5.2 million diluted shares outstanding, for the six months ended June 30, 2009. Net income for the first six months of 2009 prior to preferred stock dividends was $3.3 million.

Adjusted EBITDA for the six months ended June 30, 2010 was $8.0 million, compared to $9.5 million in the prior year period.

Home & Community segment net service revenues for the first six months of 2010 were $106.8 million, a 4.2% increase compared to $102.5 million in the prior year period. Home & Community operating income, including depreciation and amortization but excluding corporate expenses, was $11.0 million, compared to $10.3 million in the prior year period.

Home Health segment net service revenues for the six months ended June 30, 2010 were $24.9 million, a 2.6% increase compared to $24.3 million in the prior year period. Home Health operating income, including depreciation and amortization but excluding corporate expenses, was $2.7 million, compared to $3.5 million in the prior year period.


Addus HomeCare Reports Second Quarter 2010 Results

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The information provided in this release includes Adjusted EBITDA, a non-GAAP financial measure, which the Company defines as net income plus depreciation and amortization, net interest expense, income tax 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 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 HomeCare will conduct a conference call to discuss its second quarter results on Thursday, August 5, 2010, beginning at 5 p.m. Eastern time. The toll-free number is (866) 770-7051 (international callers should call 617-213-8064), with the passcode: 23789687. A telephonic replay of the conference call will be available through midnight on August 19, 2010, by dialing (888) 286-8010 (international callers should call 617-801-6888) and entering the passcode 45402608.

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.

About Addus

Addus is a comprehensive provider of a broad range of social and medical services in the home. Addus’ services include personal care and assistance with activities of daily living, skilled nursing and rehabilitative therapies, and adult day care. Addus’ consumers are individuals with special needs 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, the Veterans Health Administration, commercial insurers and private individuals. Addus has over 13,000 employees that provide services through more than 125 locations across 18 states to over 24,000 consumers.

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 expected benefits and costs of acquisitions, management plans related to acquisitions, the possibility that expected benefits may not materialize as expected, the failure of a target company’s business to perform as expected, Addus HomeCare’s inability to successfully implement integration strategies,


Addus HomeCare Reports Second Quarter 2010 Results

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changes in reimbursement, changes in government regulations, changes in Addus HomeCare’s relationships with referral sources, increased competition for Addus HomeCare’s services, increased competition for joint venture and acquisition candidates, changes in the interpretation of government regulations, and other risks set forth in the Risk Factors section in Addus HomeCare’s Prospectus, filed with the Securities and Exchange Commission on October 29, 2009 and in Addus HomeCare’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 29, 2010, 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)


Addus HomeCare Reports Second Quarter 2010 Results

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ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(amounts and shares in thousands, except per share data)

(Unaudited)

 

     For the Three Months
Ended June 30,
    For the Six Months
Ended June 30,
 
     2010    2009     2010    2009  

Net service revenues

   $ 67,165    $ 64,966      $ 131,770    $ 126,805   

Cost of service revenues

     47,429      45,739        93,214      89,440   
                              

Gross profit

     19,736      19,227        38,556      37,365   

General and administrative expenses

     15,513      14,191        30,695      27,983   

Depreciation and amortization

     951      1,224        1,897      2,444   
                              

Total operating expenses

     16,464      15,415        32,592      30,427   
                              

Operating income

     3,272      3,812        5,964      6,938   

Interest expense, net

     750      1,050        1,468      2,168   
                              

Income from operations before taxes

     2,522      2,762        4,496      4,770   

Income tax expense

     868      831        1,484      1,474   
                              

Net income

     1,654      1,931        3,012      3,296   

Less: Preferred stock dividends

     —        (1,142     —        (2,284
                              

Net income (loss) attributable to common shareholders

   $ 1,654    $ 789      $ 3,012    $ 1,012   
                              

Income (loss) per common share:

          

Basic

   $ 0.16    $ 0.77      $ 0.29    $ 0.99   
                              

Diluted

   $ 0.16    $ 0.37      $ 0.29    $ 0.63   
                              

Weighted average number of common shares outstanding:

          

Basic

     10,500      1,019        10,500      1,019   
                              

Diluted

     10,500      5,190        10,500      5,203   
                              


Addus HomeCare Reports Second Quarter 2010 Results

Page 7

 

Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)

 

     June 30, 2010    December 31, 2009

Assets

     

Current assets

     

Cash

   $ 935    $ 518

Accounts receivable, net

     76,647      70,491

Prepaid expenses and other current assets

     8,872      6,937

Deferred tax assets

     6,364      5,700

Income taxes receivable

     48      732
             

Total current assets

     92,866      84,378
             

Property and equipment, net

     3,053      3,133
             

Other assets

     

Goodwill

     59,613      59,482

Intangible assets, net

     11,611      13,082

Deferred tax assets

     188      509

Other assets

     667      731
             

Total other assets

     72,079      73,804
             

Total assets

   $ 167,998    $ 161,315
             

Liabilities and stockholders’ equity

     

Current liabilities

     

Accounts payable

   $ 5,411    $ 3,763

Accrued expenses

     26,913      25,557

Current maturities of long-term debt

     4,737      7,388

Deferred revenue

     2,410      2,189
             

Total current liabilities

     39,471      38,897
             

Long-term debt, less current maturities

     44,819      41,851

Total stockholders’ equity

     83,708      80,567
             

Total liabilities and stockholders’ equity

   $ 167,998    $ 161,315
             


Addus HomeCare Reports Second Quarter 2010 Results

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ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands)

(Unaudited)

 

     For the Six Months Ended  
     June 30, 2010     June 30, 2009  

Net Income

   $ 3,012      $ 3,296   

Adjustments to reconcile net income to net cash provided by (used in) operating activities

    

Depreciation and amortization

     1,897        2,444   

Deferred income taxes

     0        (20

Change in fair value of financial instrument

     (191     (228

Stock-based compensation

     128        140   

Amortization of debt issuance costs

     74        354   

Provision for doubtful accounts

     1,950        1,319   

Changes in operating assets and liabilities:

    

Accounts receivable

     (8,106     (15,196

Prepaid expenses and other assets

     (1,946     (4,048

Accounts payable

     1,648        975   

Accrued expenses

     1,766        6,076   

Deferred revenue

     222        (142

Income taxes

     341        233   
                

Net cash provided by (used in) operating activities

     795        (4,797
                

Acquisitions of businesses, net of acquired cash

     (349     (1,473

Purchases of property and equipment

     (346     (231
                

Net cash used in investing activities

     (695     (1,704
                

Payments on term-loan

     —          (3,325

Net borrowings (repayments) on revolving credit loan

     —          2,400   

Net borrowings (repayments) on new credit facility

     750        —     

Payments on dividend notes

     (500     —     

Net borrowings (repayments) on other notes

     67        2,163   
                

Net cash provided by financing activities

     317        1,238   
                

Net change in cash

     417        (5,263

Cash at the beginning of period

     518        6,113   
                

Cash at the end of the period

   $ 935      $ 850   
                


Addus HomeCare Reports Second Quarter 2010 Results

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Segment Information (Unaudited)

 

(Amounts in thousands)    For the Three Months Ended June 30, 2010
     Home & Community    Home Health    Corporate     Total

Net service revenues

   $ 54,144    $ 13,021    $ —        $ 67,165

Cost of service revenues

     40,450      6,979      —          47,429
                            

Gross profit

     13,694      6,042      —          19,736

General and administrative expenses

     7,581      4,196      3,736        15,513

Depreciation and amortization

     621      158      172        951
                            

Total operating expenses

     8,202      4,354      3,908        16,464
                            

Operating income

   $ 5,492    $ 1,688    $ (3,908   $ 3,272
                            
     For the Three Months Ended June 30, 2009
     Home & Community    Home Health    Corporate     Total

Net service revenues

   $ 52,267    $ 12,699    $ —        $ 64,966

Cost of service revenues

     39,058      6,681      —          45,739
                            

Gross profit

     13,209      6,018      —          19,227

General and administrative expenses

     7,116      3,825      3,250        14,191

Depreciation and amortization

     835      196      193        1,224
                            

Total operating expenses

     7,951      4,021      3,443        15,415
                            

Operating income

   $ 5,258    $ 1,997    $ (3,443   $ 3,812
                            
     For the Six Months Ended June 30, 2010
     Home & Community    Home Health    Corporate     Total

Net service revenues

   $ 106,845    $ 24,925    $ —        $ 131,770

Cost of service revenues

     79,724      13,490      —          93,214
                            

Gross profit

     27,121      11,435      —          38,556

General and administrative expenses

     14,903      8,420      7,372        30,695

Depreciation and amortization

     1,235      321      341        1,897
                            

Total operating expenses

     16,138      8,741      7,713        32,592
                            

Operating income

   $ 10,983    $ 2,694    $ (7,713   $ 5,964
                            
     For the Six Months Ended June 30, 2009
     Home & Community    Home Health    Corporate     Total

Net service revenues

   $ 102,501    $ 24,304    $ —        $ 126,805

Cost of service revenues

     76,620      12,820      —          89,440
                            

Gross profit

     25,881      11,484      —          37,365

General and administrative expenses

     13,873      7,548      6,562        27,983

Depreciation and amortization

     1,667      393      384        2,444
                            

Total operating expenses

     15,540      7,941      6,946        30,427
                            

Operating income

   $ 10,341    $ 3,543    $ (6,946   $ 6,938
                            

 


Addus HomeCare Reports Second Quarter 2010 Results

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Key Statistical and Financial Data (Unaudited)

 

     For the Three Months Ended June 30,     For the Six Months Ended June 30,  
     2010     2009     2010     2009  

General:

        

Adjusted EBITDA (in thousands) (1)

   $ 4,289      $ 5,106      $ 7,989      $ 9,522   

States served at period end

         16        16   

Locations at period end

         122        121   

Employees at period end

         13,123        12,578   

Home & Community

        

Average weekly census

     20,648        20,211        20,421        20,147   

Billable hours (in thousands)

     3,252        3,245        6,424        6,355   

Billable hours per business day

     50,819        50,703        50,582        50,039   

Revenues per billable hour

   $ 16.65      $ 16.11      $ 16.63      $ 16.13   

Home Health

        

Average weekly census:

        

Medicare

     1,602        1,480        1,533        1,433   

Non-Medicare

     1,493        1,563        1,515        1,536   

Medicare admissions (2)

     2,130        1,927        4,211        3,802   

Medicare revenues per episode completed

   $ 2,633      $ 2,562      $ 2,598      $ 2,521   

Percentage of Revenues by Payor:

        

State, local or other governmental

     79     81     80     82

Medicare

     13     12     12     12

Other

     8     7     8     6

 

(1) We define Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, 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.
(2) Medicare admissions represents the aggregate number of new cases approved for Medicare services during a specified period.


Addus HomeCare Reports Second Quarter 2010 Results

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Adjusted EBITDA (1) (Unaudited)

   For the Three Months Ended June 30,    For the Six Months Ended June 30,
     2010    2009    2010    2009

Reconciliation of Adjusted EBITDA to Net Income:

           

Net income

   $ 1,654    $ 1,931    $ 3,012    $ 3,296

Net interest expense

     750      1,050      1,468      2,168

Income tax expense

     868      831      1,484      1,474

Depreciation and amortization

     951      1,224      1,897      2,444

Stock-based compensation expense

     66      70      128      140
                           

Adjusted EBITDA

   $ 4,289    $ 5,106    $ 7,989    $ 9,522
                           

 

(1) We define Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, 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.

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