Addus HomeCare Reports Fourth Quarter 2009 Results
PALATINE, Ill., March 18, 2010 /PRNewswire via COMTEX/ --
Fourth Quarter Highlights
- Total net service revenues increased 4.7% to $65.7 million
- Home & Community segment revenues increased 6.5% to $53.7 million
- Home Health segment revenues decreased 2.4% to $12.0 million
- Net loss was $3.7 million, or a loss of $0.48 per share, including $3.8 million ($2.4 million, net of tax) one-time expenses related to the IPO
Addus HomeCare Corporation (Nasdaq: ADUS), a comprehensive provider of home-based social and medical services, announced today its financial results for the fourth quarter and year ended December 31, 2009.
Total net service revenues for the fourth quarter 2009 were $65.7 million, a 4.7% increase compared to $62.7 million in the prior year quarter.
Financial results in the fourth quarter included $3.8 million ($2.4 million net of tax) in one-time charges associated with the Company's IPO completed in early November. These charges include $1.2 million related to the separation agreement for the Company's former Chairman, approximately $1.8 million in deemed interest expense for an additional contingent payout related to the 2006 acquisition of Addus, and a separate $0.8 million charge due to the write-off of unamortized debt issuance costs associated with the termination of the Company's previous credit facility, the latter two were recorded as interest expense.
Adjusted earnings before interest, taxes, depreciation, amortization, and stock based compensation ("Adjusted EBITDA") for the fourth quarter 2009 was $2.1 million, compared to $4.9 million in the prior year quarter. Adjusted EBITDA includes a $1.2 million IPO related charge for the separation agreement with Addus' former Chairman.
The Company reported a net loss of $3.7 million, or a loss of $0.48 per share based on 7.7 million diluted shares outstanding, in the fourth quarter of 2009, compared to a net loss of $0.1 million, or a loss of $0.06 per share based on 1.1 million diluted shares outstanding, in the prior year period. Excluding one-time items and preferred stock dividends, net income in the fourth quarter of 2009 was $0.6 million, or $0.07 per share based on 7.7 million diluted shares outstanding, compared to $1.1 million, or $1.07 per share based on 1.0 million diluted shares outstanding, in the prior year period.
Mark Heaney, President and Chief Executive Officer, stated, "Our Home & Community segment, which represents about 82% of our business, achieved revenue growth of 6.5% in the fourth quarter and improved gross profit margins compared to the year ago period. Nevertheless, our overall results for the quarter were negatively impacted by certain factors. We are in the process of centralizing and enhancing controls to our accounts receivable processes. As a result of this process and a deterioration in aging in some of our accounts receivable in the fourth quarter, we have increased our historical bad debt reserve levels by taking an additional $1.5 million reserve in the fourth quarter. We believe our centralized system and enhanced processes will increase the effectiveness of our collections."
He continued, "Our fourth quarter results were also impacted by Home Health revenues falling short of our internal forecasts, largely due to a slowdown in admissions from our Integrated Services program. The referrals shortfall resulted from the State of Illinois' effort to develop new procedures for integrating care. As we implement our new procedures, and as the State further embraces the integrated model, we are seeing our integrated care referrals return to historical levels of consistent and steady growth."
"During the quarter, we also increased our investment in sales and marketing for Home Health, in line with our growth strategy, while at the same time decreasing administrative expenses. We have identified $1.1 million in annualized administrative operating cost reductions. These cost savings will be used toward our investment in sales management and staff, which began in the fourth quarter and accelerated in the first quarter. We expect the added productivity from our investments in sales personnel to be realized in the second and third quarters of 2010," added Mr. Heaney.
"I would like to emphasize that the fundamentals of our business remain strong. As has been the record, year to year the business continues to grow. Home & Community remains solid. Medicare admissions from our Integrated model are increasing. The investment in Home Health sales is bearing fruit. Overhead is being monitored and reduced. Perhaps most importantly, our states are announcing their 2011 budgets and we are encouraged that they reflect a commitment to home and community services as an important part of their long term care solution. We continue be excited about Addus' long-term growth prospects, driven by favorable industry demographics and the increasing awareness of home care as a viable and cost effective health care solution for our elderly population. Further, acquisitions remain an important component of our strategy. And, with the expansion of our credit facility, we are more strongly positioned to capitalize on these opportunities," concluded Mr. Heaney.
Separately, the Company also announced it recently increased its credit commitment from $50 million to $55 million.
Fourth Quarter Segment Results
Net service revenues in the fourth quarter 2009 for the Home & Community segment were $53.7 million, a 6.5% increase compared to $50.5 million in the prior year quarter. The
increase in revenues was entirely the result of organic growth.
Home & Community operating income, including depreciation and amortization but excluding corporate expenses, was $4.6 million, compared to $4.8 million in the prior year quarter. This decrease included an additional $1.5 million for bad debt reserves as discussed above.
Home Health segment net service revenues in the fourth quarter 2009 were $12.0 million, a 2.4% decline compared to $12.2 million in the prior year quarter.
Home Health operating income, including depreciation and amortization but excluding corporate expenses, was $1.2 million, compared to $1.9 million in the prior year quarter. Operating income was adversely impacted by lower revenues in the quarter.
In the fourth quarter of 2009, Addus recorded an income tax benefit of $1.0 million, compared to income tax expense of $0.3 million in the fourth quarter of 2008. The fourth quarter tax benefit was reduced by $0.3 million for unfavorable adjustments to the full year tax expense. Approximately $0.2 million was an additional charge for the write-off of a deferred tax asset related to unexercised stock options for the Company's former Chairman.
Year Ended December 31, 2009 and 2008
Total net service revenues for the year ended December 31, 2009 were $259.3 million, a 9.7% increase compared to $236.3 million in 2008.
Financial results for the full year 2009 were impacted by $3.8 million ($2.4 million net of tax) in one-time IPO related items.
Adjusted EBITDA for the twelve months ended December 31, 2009 was $17.0 million, compared to $17.2 million for the same period in 2008. Adjusted EBITDA includes a $1.2 million IPO related charge related to the separation agreement with Addus' former Chairman.
Net income, prior to deducting preferred stock dividends, for the twelve months ended December 31, 2009 was $3.6 million, or $1.31 per share on 2.7 million diluted shares outstanding, compared net income of $4.0 million, or $3.94 per share on 1.0 million diluted shares outstanding, for the year ended December 31, 2008. Excluding one-time items, and prior to deducting preferred stock dividends, net income was $6.0 million, or $2.16 per share on 2.8 million diluted shares outstanding, for the full year 2009, compared to $4.0 million, or $3.94 per share on 1.0 million diluted shares outstanding, for the full year 2008. The full year 2009 share count includes dilutive stock options and the conversion of the preferred stock into common shares.
Full Year Segment Results
Net service revenues for the twelve months ended December 31, 2009 in the Home & Community segment were $210.1 million, an 11.2% increase compared to $189.0 in the prior year. This increase was comprised of $16.2 million from organic growth and $4.9 million from acquisitions completed in 2008.
Home & Community operating income for the twelve months ended December 31, 2009, including depreciation and amortization but excluding corporate expenses, was $20.4 million, a 15.7% increase compared to $17.6 million in the prior year.
Net service revenues for the twelve months ended December 31, 2009 in the Home Health segment were $49.2 million, a 4.0% increase compared to $47.3 million in 2008. This increase was comprised of $1.5 million from organic growth and $0.4 million from acquisitions completed in 2008.
Home Health operating income for the twelve months ended December 31, 2009, including depreciation and amortization but excluding corporate expenses, was $6.8 million, a 16.0% increase compared to $5.8 million for the same period in 2008.
Non-GAAP Financial Measure
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 fourth quarter results on Thursday, March 18, 2010, beginning at 5 p.m. Eastern time. The toll-free number is (888) 396-2356 (international callers should call 617-847-8709), with the passcode: 69051905. A telephonic replay of the conference call will be available through midnight on April 1, 2010, by dialing (888) 286-8010 (international callers should call 617-801-6888) and entering the passcode 53818737.
A live broadcast of Addus HomeCare's conference call will be available under the Investor Relations section of the Company's website, http://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 12,000 employees that provide services through more than 120 locations across 16 states to over 23,000 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 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, 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
(Amounts in thousands, except share and per share data)
(Unaudited)
For the Three Months For the Year
Ended December 31, Ended December 31,
-------------------- -------------------
2009 2008 2009 2008
-------- ------- -------- --------
Net service revenues $65,697 $62,729 $259,305 $236,306
Cost of service revenues 46,105 43,674 182,693 167,254
-------- ------- -------- --------
Gross profit 19,592 19,055 76,612 69,052
General and administrative
expenses 17,566 14,108 59,924 52,112
Depreciation and amortization 1,235 1,647 4,913 6,092
-------- ------- -------- --------
Total operating expenses 18,801 15,755 64,837 58,204
-------- ------- -------- --------
Operating income 791 3,300 11,775 10,848
Interest expense, net 3,584 1,915 6,773 5,755
-------- ------- -------- --------
Income (loss) from operations
before taxes (2,793) 1,385 5,002 5,093
Income tax expense (benefit) (1,009) 292 1,400 1,070
-------- ------- -------- --------
Net income (loss) (1,784) 1,093 3,602 4,023
Less: Preferred stock dividends (1,946) (1,156) (5,387) (4,270)
-------- ------- -------- --------
Net income (loss)
attributable to common
shareholders $(3,730) $(63) $(1,785) $(247)
========= ========= ========= =========
Basic and diluted loss per
common share $(0.48) $(0.06) $(0.66) $(0.24)
========= ========= ========= =========
Weighted average number of
common shares outstanding:
Basic and diluted 7,714,957 1,019,250 2,706,935 1,019,250
========= ========= ========= =========
ADDUS HOMECARE CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Amounts in thousands)
(Unaudited)
December 31, 2009 December 31, 2008
----------------- -----------------
Assets
------
Current assets
Cash $518 $6,113
Accounts receivable, net 70,491 49,237
Prepaid expenses and other
current assets 6,937 5,147
Deferred tax assets 5,700 3,826
Income taxes receivable 732 460
----------------- -----------------
Total current assets 84,378 64,783
----------------- -----------------
Property and equipment, net 3,133 3,421
----------------- -----------------
Other assets
Goodwill 59,482 47,926
Intangible assets, net 13,082 17,035
Deferred tax assets 509 1,223
Other assets 731 1,360
----------------- -----------------
Total other assets 73,804 67,544
----------------- -----------------
Total assets $161,315 $135,748
================= =================
Liabilities and stockholders' equity
------------------------------------
Current liabilities
Accounts payable $3,763 $3,879
Accrued expenses 25,557 22,721
Current maturities of long-term debt 7,388 7,101
Deferred revenue 2,189 2,175
----------------- -----------------
Total current liabilities 38,897 35,876
----------------- -----------------
Preferred stock dividends - 9,222
Long-term debt, less current maturities 41,851 56,075
Total stockholders' equity 80,567 34,575
----------------- -----------------
Total liabilities and
stockholders' equity $161,315 $135,748
================= =================
ADDUS HOMECARE CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)
For the Year Ended
------------------
December 31, 2009 December 31, 2008
----------------- -----------------
Net Income $3,602 $4,023
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities
Depreciation and amortization 4,913 6,092
Deferred income taxes (1,160) (815)
Change in fair value of
financial instrument (586) 778
Stock-based compensation 296 272
Deficiency tax benefit of stock-
based compensation 221 -
Contingent purchase price
deemed interest expense 1,802 -
Write-off of debt issuance costs 794 -
Amortization of debt issuance costs 591 483
Provision for doubtful accounts 4,514 2,451
Gain on sale of assets - (11)
Changes in operating assets and liabilities:
Accounts receivable (25,768) (8,313)
Prepaid expenses and other assets (1,790) (2,610)
Income taxes receivable (272) (460)
Checks issued against
future deposits - (3,956)
Accounts payable 463 502
Accrued expenses 3,422 5,974
Deferred revenue 14 488
Income taxes - (292)
----------------- -----------------
Net cash provided by(used in)
operating activities (8,944) 4,606
----------------- -----------------
Acquisitions of businesses, net
of acquired cash (13,937) (5,026)
Proceeds from sale of equipment - 17
Purchases of property and equipment (672) (406)
----------------- -----------------
Net cash used in investing activities (14,609) (5,415)
----------------- -----------------
Net proceeds from initial public offering 47,481 -
Borrowings on term-loan - 8,500
Payments on term-loan (53,368) (5,192)
Net borrowings (repayments) on
revolving credit loan (7,694) 3,908
Borrowings on new credit facility 38,500 -
Dividend payments on preferred stock (14,609) -
Borrowings on dividend notes 12,936 -
Payments on dividend notes (5,117) -
Debt issuance costs (756) (272)
Net borrowings (repayments) on
other notes 806 (43)
Deficiency tax benefit of stock-
based compensation (221) -
----------------- -----------------
Net cash provided by financing
activities 17,958 6,901
----------------- -----------------
Net change in cash (5,595) 6,092
Cash at the beginning of period 6,113 21
----------------- -----------------
Cash at the end of the period $518 $6,113
================= =================
Segment Information (Unaudited)
-------------------------------
(Amounts in thousands) For the Three Months Ended December 31, 2009
------------------------------------------------
Home & Community Home Health Corporate Total
---------------- ----------- --------- --------
Net service revenues $53,720 $11,977 $- $65,697
Cost of service
revenues 39,544 6,561 - 46,105
---------------- ----------- --------- --------
Gross profit 14,176 5,416 - 19,592
General and
administrative
expenses 8,710 4,069 4,787 17,566
Depreciation and
amortization 844 188 203 1,235
---------------- ----------- --------- --------
Total operating
expenses 9,554 4,257 4,990 18,801
---------------- ----------- --------- --------
Operating income $4,622 $1,159 $(4,990) $791
================ =========== ========= ========
For the Three Months Ended December 31, 2008
------------------------------------------------
Home & Community Home Health Corporate Total
---------------- ----------- --------- --------
Net service revenues $50,456 $12,273 $- $62,729
Cost of service
revenues 37,471 6,203 - 43,674
---------------- ----------- --------- --------
Gross profit 12,985 6,070 - 19,055
General and
administrative
expenses 7,029 3,940 3,139 14,108
Depreciation and
amortization 1,184 244 219 1,647
---------------- ----------- --------- --------
Total operating
expenses 8,213 4,184 3,358 15,755
---------------- ----------- --------- --------
Operating income $4,772 $1,886 $(3,358) $3,300
================ =========== ========= ========
For the Year Ended December 31, 2009
------------------------------------------------
Home & Community Home Health Corporate Total
---------------- ----------- --------- --------
Net service revenues $210,107 $49,198 $- $259,305
Cost of service
revenues 156,623 26,070 - 182,693
---------------- ----------- --------- --------
Gross profit 53,484 23,128 - 76,612
General and
administrative
expenses 29,732 15,607 14,585 59,924
Depreciation and
amortization 3,355 769 789 4,913
---------------- ----------- --------- --------
Total operating
expenses 33,087 16,376 15,374 64,837
---------------- ----------- --------- --------
Operating income $20,397 $6,752 $(15,374) $11,775
================ =========== ========= ========
For the Year Ended December 31, 2008
------------------------------------------------
Home & Community Home Health Corporate Total
---------------- ----------- --------- --------
Net service revenues $189,006 $47,300 $- $236,306
Cost of service
revenues 141,859 25,395 - 167,254
---------------- ----------- --------- --------
Gross profit 47,147 21,905 - 69,052
General and
administrative
expenses 25,167 15,153 11,792 52,112
Depreciation and
amortization 4,348 933 811 6,092
---------------- ----------- --------- --------
Total operating
expenses 29,515 16,086 12,603 58,204
---------------- ----------- --------- --------
Operating income $17,632 $5,819 $(12,603) $10,848
================ =========== ========= ========
Key Statistical and Financial Data (Unaudited)
----------------------------------------------
For the Three For the Year
Months Ended Ended
December 31, December 31,
-------------- -----------------
2009 2008 2009 2008
------ ------ ------- -------
General:
Adjusted EBITDA (in thousands) (1) $2,110 $4,942 $16,984 $17,212
States served at period end 16 16
Locations at period end 122 122
Employees at period end 12,559 12,137
Home & Community
Average weekly census 20,198 20,178 20,182 19,432
Billable hours (in thousands) 3,235 3,148 12,835 12,139
Billable hours per business day 50,547 49,188 50,333 47,418
Revenues per billable hour $16.61 $16.02 $16.37 $15.57
Home Health
Average weekly census:
Medicare 1,393 1,344 1,427 1,270
Non-Medicare 1,464 1,490 1,528 1,413
Medicare admissions (2) 1,937 2,173 7,734 7,232
Medicare revenues per episode
completed $2,593 $2,551 $2,569 $2,606
Percentage of Revenues by Payor:
State, local or other governmental 81% 81% 81% 82%
Medicare 12% 12% 12% 12%
Other 7% 7% 7% 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.
For the Three For the Year
Months Ended Ended December
Adjusted EBITDA (1) (Unaudited) December 31, 31,
------------------------------- ------------- --------------
(Amounts in thousands) 2009 2008 2009 2008
------ ------ ------ ------
Reconciliation of Adjusted
EBITDA to Net Income:
Net income (loss) $(1,784) $1,093 $3,602 $4,023
Net interest expense 3,584 1,915 6,773 5,755
Income tax expense (benefit) (1,009) 292 1,400 1,070
Depreciation and amortization 1,235 1,647 4,913 6,092
Stock-based compensation expense 84 (5) 296 272
------ ------ ------ ------
Adjusted EBITDA $2,110 $4,942 $16,984 $17,212
====== ====== ======= =======
(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.
Investor Contact:
Carol Ruth / Amy Glynn
The Ruth Group
Phone: (646) 536-7004 / 7023
Email: cruth@theruthgroup.com
Email: aglynn@theruthgroup.com
SOURCE Addus HomeCare Corporation
