Addus HomeCare Reports Second Quarter 2010 Results
PALATINE, Ill., Aug 05, 2010 /PRNewswire via COMTEX/ --
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
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.
"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.
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.
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, 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.
Investor Contact:
Amy Glynn / Nick Laudico
The Ruth Group
Phone: (646) 536-7023 / 7030
Email: aglynn@theruthgroup.com
Email: nlaudico@theruthgroup.com
(Unaudited tables and notes follow)
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 For the Six Months
30, 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
====== ===== ====== =====
Condensed Consolidated Balance Sheets
(Amounts in thousands)
(Unaudited)
June 30, December 31,
2010 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 CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)
For the Six Months
Ended
------------------
June 30, June 30,
2010 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
==== ====
Segment Information (Unaudited)
-------------------------------
(Amounts in
thousands) For the Three Months Ended June 30, 2010
----------------------------------------
Home & Home
Community 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 & Home
Community 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 & Home
Community 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 & Home
Community 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
======= ====== ======= ======
Key Statistical and Financial Data (Unaudited)
----------------------------------------------
For the Three Months For the Six Months
Ended Ended
June 30, 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.
For the Three For the Six
Months Ended June Months Ended
Adjusted EBITDA (1) (Unaudited) 30, 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.
SOURCE Addus HomeCare Corporation
