EX-99.1 2 d769425dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

Investor Contact:

Dennis Meulemans

Chief Financial Officer

Phone: (630)-296-3400

Email: DMeulemans@addus.com

Addus HomeCare Reports Second Quarter 2014 Results

Second Quarter Financial Highlights

 

    17.1% increase in revenue over prior year quarter with total net service revenues of $77.0 million

 

    Net income of $2.7 million, or $0.25 per diluted share

 

    Acquisition of Aid & Assist in Tennessee positions Addus in key managed care state

Downers Grove, IL, July 31, 2014—Addus HomeCare Corporation (Nasdaq: ADUS), a comprehensive provider of home and community based services which are primarily social in nature and are provided in the home, focused on the dual eligible population, announced today its financial results for the second quarter ended June 30, 2014.

Second Quarter Review

Total net service revenues from continuing operations for the second quarter of 2014 were $77.0 million, a 17.1% increase compared to $65.8 million in the prior year quarter. Same store sales accounted for 6.7% increase with 10.4% generated by recently completed acquisitions. Net income from continuing operations was $2.7 million, or $0.25 per diluted share, compared to $0.24 per diluted share in 2013. Acquisitions contributed $245K of net income or $0.02 per diluted share.

Mark Heaney, President and Chief Executive Officer of Addus HomeCare, stated: “We are pleased with our performance for the quarter. Revenue growth, both for our same stores and for our new acquisitions remains strong, driven by an 8.7% increase in average census in the quarter in our same stores.”

Mr. Heaney also said, “We welcome the employees of Aid & Assist who give us a stronger presence in Tennessee, a key managed care state. Our first month of ownership has been very positive. The next step in the integration process is to merge our existing business into Aid for improved efficiency and effectiveness.”


Heaney continued “Focusing on the needs of our growing managed care payors continues to be a strategic focus of the organization. Our pilot programs with Aetna and Centene are progressing well and we are seeing increased census from these important projects. Based on projections from the State of Illinois, we anticipate between 20% to 30% of our Illinois caseload will transition to managed care in September.”

Same store average census grew 8.7%. Acquired census added an additional 7.9% for total census growth of 16.6% compared to the prior year quarter. Billable hours per business day increased 20.9%, offset by a slight decline in average revenues per billable hour.

Four consistently underperforming offices were closed in the quarter. These offices, located in New Jersey and Washington represented approximately $2.6 million in annualized revenues.

General and administrative expenses include $536K of one time M&A expense which reduced earnings by $0.03 per diluted share.

The estimated increase in Work Opportunity Tax Credits to be awarded in 2014 reduced our effective tax rate for the quarter to 30.9%, with an estimated overall rate for 2014 of 32.8%. This increased earnings by an estimated $0.02 per diluted share. Proforma earnings per share were $0.26 per diluted share after taking into effect M&A expenses and the change in our effective tax rate.

Net income from continuing operations increased 5.7% to $2.7 million. Adjusted EBITDA increased 27.8% in the quarter to $5.9 million.

Cash flow for the quarter was positive with $14.3 million provided by operating activities, driven by solid operational performance and substantial payments on accounts receivable from the State of Illinois. The Company ended the quarter with $19.5 million in cash and $40 million available under its revolving line of credit.

Six Month Review

Total net service revenues for the six months ended June 30, 2014 were $148.6 million, a 15.5% increase compared to $128.8 million in the same prior year period.

Net income from continuing operations for the six months ended June 30, 2014 was $5.1 million, or $0.46 per diluted share, compared to $5.3 million or $0.48 per diluted share, in the prior year period. This decline in earnings was due to the M&A expenses noted above and an increase in depreciation and amortization expenses related primarily to acquisitions, which reduced earnings by an additional $0.03 per diluted share.


2013 results were favorably affected by substantially lower effective tax rates in 2013 than experienced in 2014 (32.8% in 2014 vs. 28.5% in 2013). The net effect of the lower tax rates in 2013 was to increase earnings in that year by $0.03 per diluted share. Proforma earnings per diluted share would have been $0.49 per diluted share in 2014 after taking into effect M&A expenses noted above, compared to proforma adjusted earnings per diluted share of $0.45 in 2013 after normalizing for the lower tax rate experienced in that year, representing a 8.9% increase over 2013 results.

Adjusted EBITDA for the six months ended June 30, 2014 increased 14.9% to $10.4 million. Cash flow for the six month period ended June 30, 2014 was positive with $16.9 million provided by operating activities.

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 report its 2014 second quarter results on Thursday, July 31, 2014. Management will conduct a conference call to discuss its results at 5:00 p.m. Eastern time on July 31, 2014. The toll-free dial-in number is (866) 318-8618, international dial-in number is (617) 399-5137, with the passcode: 27134714. A telephonic replay of the conference call will be available through midnight on August 7, 2014, by dialing (888) 286-8010, international dial-in number is (617) 801-6888 and entering the passcode: 27510159.

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 home and community based services which are primarily social in nature and are provided in the home, 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, commercial insurers and private individuals. For more information, please visit www.addus.com.

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 Report on Form 10-Q, filed with the Securities and Exchange Commission on May 7, 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).

# # #


ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Income and Cash Flow Information

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

(Unaudited)

 

     For the Three Months Ended June 30  
     Same Store     Acquisitions     Total        
     2014     2013  

Income Statement Information:

    

Net service revenues

   $ 70,158      $ 6,807      $ 76,965      $ 65,755   

Cost of service revenues

     51,604        4,781        56,385        49,142   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     18,554        2,026        20,580        16,613   
     26.4     29.8     26.7     25.3

General and administrative expenses

     13,743        1,656        15,399        12,092   

Depreciation and amortization

     1,068        15        1,083        541   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     14,811        1,671        16,482        12,633   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income from continuing operations

     3,743        355        4,098        3,980   

Total interest expense, net

     151        —          151        142   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations before taxes

     3,592        355        3,947        3,838   

Income tax expense

     1,108        110        1,218        1,256   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income from continuing operations

     2,484        245        2,729        2,582   
  

 

 

   

 

 

   

 

 

   

 

 

 

Discontinued operations:

        

Loss from home health business, net of tax

     —          —          —          (150

Loss from discontinued operations

     —          —          —          (150
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 2,484      $ 245      $ 2,729      $ 2,432   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income per share:

        

Basic

        

Continuing operations

   $ 0.23      $ 0.02      $ 0.25      $ 0.24   

Discontinued operations

     —          —          —          (0.01
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic income per share

   $ 0.23      $ 0.02      $ 0.25      $ 0.23   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

        

Continuing operations

   $ 0.23      $ 0.02      $ 0.25      $ 0.23   

Discontinued operations

     —          —          —          (0.01
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted income per share

   $ 0.23      $ 0.02      $ 0.25      $ 0.22   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of common shares outstanding:

        

Basic

     10,903        10,903        10,903        10,785   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     11,138        11,138        11,138        11,016   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

     For the Three Months Ended June 30  
     2014     2013  

Cash Flow Information:

    

Net cash provided by operating activities

   $ 14,263      $ 21,221   

Net cash used in investing activities

     (11,687     (228

Net change in cash

     2,576        20,993   

Cash at the beginning of the period

     16,965        17,784   
  

 

 

   

 

 

 

Cash at the end of the period

   $ 19,541      $ 38,777   
  

 

 

   

 

 

 


ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Income and Cash Flow Information

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

(Unaudited)

 

     For the Six Months Ended June 30  
     Same Store     Acquisitions     Total        
     2014     2013  

Income Statement Information:

    

Net service revenues

   $ 136,674      $ 11,974      $ 148,648      $ 128,753   

Cost of service revenues

     101,116        8,284        109,400        96,342   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     35,558        3,690        39,248        32,411   
     26.0     30.8     26.4     25.2

General and administrative expenses

     27,061        2,741        29,802        23,602   

Depreciation and amortization

     1,553        25        1,578        1,087   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     28,614        2,766        31,380        24,689   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income from continuing operations

     6,944        924        7,868        7,722   

Total interest expense, net

     305        —          305        350   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations before taxes

     6,639        924        7,563        7,372   

Income tax expense

     2,172        308        2,480        2,103   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income from continuing operations

     4,467        616        5,083        5,269   
  

 

 

   

 

 

   

 

 

   

 

 

 

Discontinued operations:

        

Loss from home health business, net of tax

     —          —          —          (687

Gain on sale of home health business, net of tax

     —          —          —          11,111   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings from discontinued operations

     —          —          —          10,424   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 4,467      $ 616      $ 5,083      $ 15,693   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income per share:

        

Basic

        

Continuing operations

   $ 0.41      $ 0.06      $ 0.47      $ 0.49   

Discontinued operations

     —          —          —          0.97   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic income per share

   $ 0.41      $ 0.06      $ 0.47      $ 1.46   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

        

Continuing operations

   $ 0.40      $ 0.06      $ 0.46      $ 0.48   

Discontinued operations

     —          —          —          0.96   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted income per share

   $ 0.40      $ 0.06      $ 0.46      $ 1.44   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of common shares outstanding:

        

Basic

     10,878        10,878        10,878        10,779   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     11,121        11,121        11,121        10,920   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

     For the Six Months Ended June 30  
     2014     2013  

Cash Flow Information:

    

Net cash provided by operating activities

   $ 16,933      $ 34,246   

Net cash (used in) provided by investing activities

     (13,171     19,252   

Net cash provided by (used in) financing activities

     214        (16,458
  

 

 

   

 

 

 

Net change in cash

     3,976        37,040   

Cash at the beginning of the period

     15,565        1,737   
  

 

 

   

 

 

 

Cash at the end of the period

   $ 19,541      $ 38,777   
  

 

 

   

 

 

 


Condensed Consolidated Balance Sheets

(Amounts in thousands)

 

     June 30, 2014      June 30, 2013  
     (Unaudited)  

Assets

     

Current assets

     

Cash

   $ 19,541       $ 38,777   

Accounts receivable, net

     48,725         43,605   

Prepaid expenses and other current assets

     4,555         5,754   

Deferred tax assets

     8,326         7,258   
  

 

 

    

 

 

 

Total current assets

     81,147         95,394   
  

 

 

    

 

 

 

Property and equipment, net

     6,958         2,502   
  

 

 

    

 

 

 

Other assets

     

Goodwill

     64,324         50,456   

Intangible assets, net

     11,753         5,691   

Investment in joint venture

     900         900   

Other assets

     53         212   
  

 

 

    

 

 

 

Total other assets

     77,030         57,259   
  

 

 

    

 

 

 

Total assets

   $ 165,135       $ 155,155   
  

 

 

    

 

 

 

Liabilities and stockholders’ equity

     

Current liabilities

     

Accounts payable

   $ 4,769       $ 5,415   

Accrued expenses

     37,438         36,365   

Deferred revenue

     3         10   
  

 

 

    

 

 

 

Total current liabilities

     42,210         41,790   
  

 

 

    

 

 

 

Deferred tax liability

     3,441         3,097   

Total stockholders’ equity

     119,484         110,268   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 165,135       $ 155,155   
  

 

 

    

 

 

 


Key Statistical and Financial Data (Unaudited)

 

     For the Three Months
Ended June 30
    For the Six Months
Ended June 30
 
     2014     2013     2014     2013  

General:

        

Adjusted EBITDA (in thousands) (1)

   $ 5,922      $ 4,633      $ 10,373      $ 9,026   

States served at period end

         22        19   

Locations at period end

         133        93   

Employees at period end

         17,754        14,854   

Home & Community

        

Average billable census—same store

     28,453        26,173        28,163        26,501   

Average billable census—acquisitions

     2,070        —          1,847        —     

Average billable census total

     30,523        26,173        30,010        26,501   

Billable hours (in thousands)

     4,536        3,872        8,773        7,586   

Average billable hours per census per month

     49.5        49.0        48.7        48.0   

Billable hours per business day

     72,006        59,569        69,076        58,806   

Revenues per billable hour

   $ 16.97      $ 16.98      $ 16.94      $ 16.97   

Percentage of Revenues by Payor:

        

State, local and other governmental programs

     89     94     90     94

Managed Care

     6        1        5        1   

Private duty

     4        4        4        4   

Commercial

     1     1     1     1

 

(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 June 30
     For the Six Months
Ended June 30
 
     2014      2013      2014      2013  

Reconciliation of Adjusted EBITDA to Net Income:

           

Net income

   $ 2,729       $ 2,432       $ 5,083       $ 15,693   

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

     —           150         —           (10,424
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income from continuing operations

     2,729         2,582         5,083         5,269   

Interest expense, net

     151         142         305         350   

Income tax expense from continuing operations

     1,218         1,256         2,480         2,103   

Depreciation and amortization

     1,078         541         1,573         1,087   

M&A expenses

     536         —           601         —     

Stock-based compensation expense

     210         112         331         217   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

   $ 5,922       $ 4,633       $ 10,373       $ 9,026   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(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.