Addus HomeCare Reports Third Quarter 2011 Results
Third Quarter Financial Highlights , Nov 3, 2011 (GlobeNewswire via COMTEX) --
Total net service revenues were $69.4 million -- Home & Community net service revenues were $56.2 million -- Home Health net service revenues were $13.2 million -- Net income was $1.8 million, or $0.17 per diluted share, before a $16.0 million non-cash goodwill and intangible asset impairment charge, up from net income of $1.5 million, or $0.14 per diluted share
PALATINE, Ill., Nov. 3, 2011 (GLOBE NEWSWIRE) -- Addus HomeCare Corporation (Nasdaq:ADUS), a comprehensive provider of home-based social and medical services, announced today its financial results for the third quarter ended September 30, 2011.
Mark Heaney, President and Chief Executive Officer of Addus HomeCare, stated, "Our third quarter results, before the goodwill and intangible asset impairment charge, reflect our continued progress in improving our operations."
Third Quarter Review
Total net service revenues for the third quarter of 2011 were $69.4 million, a 0.7% decrease compared to the prior year quarter. The acquisition of Advantage Heath Systems, Inc., dba CarePro, contributed approximately $3.3 million in net service revenues in the third quarter of 2011.
Net income for the third quarter, before considering the goodwill and intangible asset impairment charge (Impairment Charge) was $1.8 million, or $0.17 per diluted share, compared to $1.5 million or $0.14 per diluted share, in the prior year quarter.
Home & Community segment net service revenues for the third quarter 2011 were $56.2 million, a 2.0% decrease from the prior year quarter. Home & Community segment revenues included approximately $2.4 million from CarePro operations. Excluding locations closed and program eliminations in select states totaling $1.5 million in revenue, same store sales of $53.8 million in revenues were consistent with the prior year quarter. Home & Community operating income, including depreciation and amortization but excluding corporate expenses, increased 14.9% to $6.8 million, or 12.1% of revenue, in the third quarter, compared to $5.9 million, or 10.3% of revenue, in the prior year quarter.
Home Health segment net service revenues for the third quarter of 2011 were $13.2 million, a 5.6% increase over the prior year quarter, despite a reduction in Medicare revenues estimated at $0.4 million as a result of the rate cut enacted in 2011. Home Health segment revenues included approximately $0.9 million from CarePro operations. Home Health operating income, before considering the effect of the Impairment Charge, and including depreciation and amortization but excluding corporate expenses, was $0.2 million, or 1.4% of revenues, compared to $1.1 million, or 8.5% of revenues, in the prior year quarter.
Nine Month Review
Total net service revenues for the nine months ended September 30, 2011 were $204.5 million, a 1.4% increase compared to the prior year period. The acquisition of CarePro contributed approximately $10.0 million in net service revenues in the first nine months of 2011.
Net income, before considering the effect of the Impairment Charge, for the first nine months of 2011 was $4.0 million, or $0.37 per diluted share. This compares to net income of $4.5 million, or $0.43 per diluted share, in the same period of 2010.
Home & Community segment net service revenues for the nine months ended September 30, 2011 were $165.3 million, a 0.7% increase compared to the prior year period. Home & Community segment revenues included approximately $7.2 million from CarePro operations. Excluding locations closed and program eliminations in select states totaling $5.9 million in revenue, same store sales increased by $1.9 million, or approximately 1.2%. Home & Community operating income, including depreciation and amortization but excluding corporate expenses, increased 7.4% to $18.1 million, or 11.0% of revenue, in the first nine months of 2011, compared to $16.9 million, or 10.3% of revenue, in the prior year period.
Home Health segment net service revenues for the nine months ended September 30, 2011 were $39.2 million, a 4.6% increase compared to the prior year period. Home Health segment revenues included approximately $2.8 million from CarePro operations. After adjusting for the Medicare rate reduction in 2011 of approximately $1.1 million, same store sales increased by $0.4 million, or 1.2%. Home Health operating income, before considering the effect of the Impairment Charge, and including depreciation and amortization but excluding corporate expenses, was $1.7 million, or 4.4% of revenues, for the first nine months of 2011, compared to $3.8 million, or 10.0% of revenues, in the prior year period.
Cash flow from operations was $11.8 million for the first nine months of 2011, compared to $5.1 million in the same period in 2010 due largely to the improved payments received from the State of Illinois, combined with an overall improvement in collections from all other payors.
Goodwill and Intangible Asset Impairment Charge
The Company performed an interim and preliminary assessment of the fair value of its two reporting units and determined the fair value of the Home & Community reporting unit was greater than its book value indicating no initial impairment. However, the preliminary assessment of its Home Health reporting unit indicated that the estimated fair value was less than the net book value of the business. This conclusion was based on the current Federal and state reimbursement environments and continued pressure on reimbursement in the Home Health reporting unit, combined with ongoing declines in the market capitalization of the Company and updates to the Company's business projections and forecasts. Accordingly, the Company recorded an estimated non-cash goodwill and intangible asset impairment charge of $16.0 million for the three months ended September 30, 2011. This determination represents an estimate, was based on a preliminary evaluation as of June 30, 2011 and is subject to the completion of the Company's annual impairment test as of October 1, 2011 which may result in an adjustment, which may be material, to the loss recorded in the third quarter of 2011.
Subsequent Event
In October 2011, the Company received $2.3 million from the State of Illinois as payment for prompt payment interest for delays in payment of invoices for the State's fiscal year ending June 30, 2011.
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 goodwill and intangible asset impairment charge, interest, taxes, depreciation, amortization, 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 will report its 2011 third quarter results after the market close on Thursday, November 3, 2011. Management will conduct a conference call to discuss its results at 5 p.m. Eastern time on November 3, 2011. The toll-free number is (866) 783-2145 (international callers should call 857-350-1604), with the passcode: 95464103. A telephonic replay of the conference call will be available through midnight on November 17, 2011 by dialing (888) 286-8010 (international callers should call 617-801-6888) and entering the passcode 89880081.
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, commercial insurers and private individuals.
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 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 28, 2010, and in Addus HomeCare's Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 4, 2011, 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 For the Nine Months
Income Statement Information: Ended September 30, Ended September 30,
--------------------- ----------------------
2011 2010 2011 2010
---------- --------- ---------- ----------
Net service revenues $ 69,384 $ 69,842 $ 204,478 $ 201,612
Cost of service revenues 48,373 49,710 144,303 142,924
---------- --------- ---------- ----------
Gross profit 21,011 20,132 60,175 58,688
General and administrative
expenses 16,955 16,277 49,567 46,972
Goodwill and intangible asset
impairment charge 15,989 -- 15,989 --
Depreciation and amortization 927 1,058 2,783 2,955
---------- --------- ---------- ----------
Total operating expenses 33,871 17,335 68,339 49,927
---------- --------- ---------- ----------
Operating income (loss) (12,860) 2,797 (8,164) 8,761
Interest expense, net 548 855 1,929 2,323
---------- --------- ---------- ----------
Income (loss) from operations
before taxes (13,408) 1,942 (10,093) 6,438
Income tax expense (benefit) (4,359) 463 (3,230) 1,947
---------- --------- ---------- ----------
Net income (loss) $ (9,049) $ 1,479 $ (6,863) $ 4,491
========== ========= ========== ==========
Income (loss) per common share:
Basic $ (0.84) $ 0.14 $ (0.64) $ 0.43
========== ========= ========== ==========
Diluted $ (0.84) $ 0.14 $ (0.64) $ 0.43
========== ========= ========== ==========
Weighted average number of common
shares outstanding:
Basic 10,746 10,681 10,746 10,561
========== ========= ========== ==========
Diluted 10,746 10,681 10,746 10,561
========== ========= ========== ==========
For the Nine Months
Cash Flow Information: Ended September 30,
-------------------
2011 2010
--------- --------
Net cash provided by operating activities $ 11,815 $ 5,074
Net cash used in investing activities (777) (6,111)
Net cash provided by (used in) financing
activities (10,557) 1,131
--------- --------
Net change in cash 481 94
Cash at the beginning of the period 816 518
--------- --------
Cash at the end of the period $ 1,297 $ 612
========= ========
Condensed Consolidated Balance Sheets
(Amounts in thousands)
(Unaudited)
September December
30, 2011 31, 2010
---------- ----------
Assets
-------------------------
Current assets
Cash $ 1,297 $ 816
Accounts receivable, net 69,918 70,954
Prepaid expenses and
other current assets 10,753 7,704
Deferred tax assets 6,338 6,324
---------- ----------
Total current assets 88,306 85,798
---------- ----------
Property and equipment,
net 2,482 2,923
---------- ----------
Other assets
Goodwill 50,735 63,930
Intangible assets, net 8,592 13,570
Deferred tax assets 5,666 --
Other assets 560 703
---------- ----------
Total other assets 65,553 78,203
---------- ----------
Total assets $ 156,341 $ 166,924
========== ==========
Liabilities and
stockholders' equity
-------------------------
Current liabilities
Accounts payable $ 4,661 $ 3,304
Accrued expenses 33,241 26,529
Current maturities of
long-term debt 6,250 5,158
Deferred revenue 2,318 2,141
---------- ----------
Total current liabilities 46,470 37,132
---------- ----------
Long-term debt, less
current maturities 28,402 40,027
Deferred tax liabilities -- 562
Other long-term
liabilities -- 1,112
Total stockholders'
equity 81,469 88,091
---------- ----------
Total liabilities and
stockholders' equity $ 156,341 $ 166,924
========== ==========
Segment Information
(Unaudited)
-----------------------------
For the Three Months Ended September 30, 2011
-------------------------------------------------
Home &
Community Home Health Corporate Total
---------- ----------- ----------- -----------
Net service revenues $ 56,157 $ 13,227 $ -- $ 69,384
Cost of service revenues 41,368 7,005 -- 48,373
---------- ----------- ----------- -----------
Gross profit 14,789 6,222 -- 21,011
Gross profit percentage 26.3% 47.0% 30.3%
General and administrative
expenses 7,382 5,914 3,659 16,955
Goodwill and intangible asset
impairment charge -- 15,989 -- 15,989
Depreciation and amortization 609 128 190 927
---------- ----------- ----------- -----------
Total operating expenses 7,991 22,031 3,849 33,871
---------- ----------- ----------- -----------
Operating income(loss) $ 6,798 $ (15,809) $ (3,849) $ (12,860)
========== =========== =========== ===========
Operating income, excluding
impairment charge $ 6,798 $ 180 $ (3,849) $ 3,129
========== =========== =========== ===========
Operating income percentage,
excluding impairment charge 12.1% 1.4% -5.5% 4.5%
For the Three Months Ended September 30, 2010
-------------------------------------------------
Home &
Community Home Health Corporate Total
---------- ----------- ----------- -----------
Net service revenues $ 57,311 $ 12,531 $ -- $ 69,842
Cost of service revenues 42,812 6,898 -- 49,710
---------- ----------- ----------- -----------
Gross profit 14,499 5,633 -- 20,132
Gross profit percentage 25.3% 45.0% 28.8%
General and administrative
expenses 7,871 4,415 3,991 16,277
Depreciation and amortization 712 158 188 1,058
---------- ----------- ----------- -----------
Total operating expenses 8,583 4,573 4,179 17,335
---------- ----------- ----------- -----------
Operating income $ 5,916 $ 1,060 $ (4,179) $ 2,797
========== =========== =========== ===========
Operating income percentage 10.3% 8.5% -6.0% 4.0%
For the Nine Months Ended September 30, 2011
-------------------------------------------------
Home &
Community Home Health Corporate Total
---------- ----------- ----------- -----------
Net service revenues $ 165,309 $ 39,169 $ -- $ 204,478
Cost of service revenues 123,221 21,082 -- 144,303
---------- ----------- ----------- -----------
Gross profit 42,088 18,087 -- 60,175
Gross profit percentage 25.5% 46.2% 29.4%
General and administrative
expenses 22,117 15,984 11,466 49,567
Goodwill and intangible asset
impairment charge -- 15,989 -- 15,989
Depreciation and amortization 1,828 385 570 2,783
---------- ----------- ----------- -----------
Total operating expenses 23,945 32,358 12,036 68,339
---------- ----------- ----------- -----------
Operating income(loss) $ 18,143 $ (14,271) $ (12,036) $ (8,164)
========== =========== =========== ===========
Operating income, excluding
impairment charge $ 18,143 $ 1,718 $ (12,036) $ 7,825
========== =========== =========== ===========
Operating income percentage,
excluding impairment charge 11.0% 4.4% -5.9% 3.8%
For the Nine Months Ended September 30, 2010
-------------------------------------------------
Home &
Community Home Health Corporate Total
---------- ----------- ----------- -----------
Net service revenues $ 164,156 $ 37,456 $ -- $ 201,612
Cost of service revenues 122,536 20,388 -- 142,924
---------- ----------- ----------- -----------
Gross profit 41,620 17,068 -- 58,688
Gross profit percentage 25.4% 45.6% 29.1%
General and administrative
expenses 22,774 12,835 11,363 46,972
Depreciation and amortization 1,947 479 529 2,955
---------- ----------- ----------- -----------
Total operating expenses 24,721 13,314 11,892 49,927
---------- ----------- ----------- -----------
Operating income $ 16,899 $ 3,754 $ (11,892) $ 8,761
========== =========== =========== ===========
Operating income percentage 10.3% 10.0% -5.9% 4.3%
Key Statistical and Financial
Data (Unaudited) (3)
-------------------------------
For the Three For the Nine Months
Months Ended Ended
September 30, September 30,
------------------- --------------------
2011 2010 2011 2010
--------- -------- --------- ---------
General:
Adjusted EBITDA (in thousands)
(1) $ 4,152 $ 3,924 $ 10,849 $ 11,913
States served at period end 19 19
Locations at period end 120 134
Employees at period end 13,601 13,861
Home & Community
Average census 23,026 23,333 22,761 22,471
Billable hours (in thousands) 3,323 3,371 9,736 9,795
Billable hours per business day 51,127 51,867 50,716 51,017
Revenues per billable hour $ 16.90 $ 17.00 $ 16.98 $ 16.76
Home Health
Average census:
Medicare 1,634 1,410 1,519 1,482
Non-Medicare 1,706 1,511 1,621 1,509
Medicare admissions (2) 2,210 2,027 6,773 6,342
Medicare revenues per episode
completed $ 2,426 $ 2,646 $ 2,494 $ 2,587
Percentage of Revenues by
Payor:
State, local or other
governmental 80% 81% 80% 80%
Medicare 12% 11% 13% 12%
Other 8% 8% 7% 8%
(1) We define Adjusted EBITDA as earnings before goodwill and intangible
asset impairment charge, 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.
(3) Key statistical and financial data for the three and nine months ended
September 30, 2011 includes the acquisition of Advantage Health Systems,
Inc.
For the Three Months For the Nine Months
Ended Ended
Adjusted EBITDA (1) (Unaudited) September 30, September 30,
------------------------------------ -------------------- ---------------------
2011 2010 2011 2010
---------- -------- ---------- ---------
Reconciliation of Adjusted EBITDA to
Net Income (loss):
Net income (loss) $ (9,049) $ 1,479 $ (6,863) $ 4,491
Goodwill and intangible asset
impairment charge 15,989 -- 15,989 --
Net interest expense 548 855 1,929 2,323
Income tax expense (benefit) (4,359) 463 (3,230) 1,947
Depreciation and amortization 927 1,058 2,783 2,955
Stock-based compensation expense 96 69 241 197
---------- -------- ---------- ---------
Adjusted EBITDA $ 4,152 $ 3,924 $ 10,849 $ 11,913
========== ======== ========== =========
(1) We define Adjusted EBITDA as earnings before goodwill and intangible asset
impairment charge, 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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SOURCE: Addus
CONTACT: Investor Contact: Amy Glynn / Nick Laudico The Ruth Group Phone: (646) 536-7023 / 7030 Email: aglynn@theruthgroup.com Email: nlaudico@theruthgroup.com
