8-K
Addus HomeCare Corp false 0001468328 0001468328 2022-05-02 2022-05-02

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): May 3, 2022 (May 2, 2022)

 

 

ADDUS HOMECARE CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-34504   20-5340172

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

 

6303 Cowboys Way, Suite 600

Frisco, Texas

  75034
(Address of principal executive offices)   (Zip Code)

(469) 535-8200

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

 

 

Check the appropriate box if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d- 2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e- 4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Stock, $0.001 par value per share   ADUS   The Nasdaq Stock Market, LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company.  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 2.02

Results of Operations and Financial Condition.

On May 2, 2022, Addus HomeCare Corporation (the “Company”) issued a press release (the “Press Release”) announcing, among other matters, the Company’s results of operations for the fiscal quarter ended March 31, 2022. A copy of the Press Release is furnished herewith as Exhibit 99.1 to this report and is incorporated herein by reference.

 

Item 7.01.

Regulation FD Disclosure

On May 2, 2022, the Company issued the Press Release, announcing, among other matters, its results of operations for the fiscal quarter ended March 31, 2022, the text of which is set forth as Exhibit 99.1.

 

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits:

 

Exhibit
No.
   Description
99.1    Press Release of Addus HomeCare Corporation dated May 2, 2022.
104    Cover Page Interactive Data File (embedded within Inline XBRL document).


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    ADDUS HOMECARE CORPORATION
Date: May 2, 2022     By:  

/s/ Brian Poff

      Brian Poff
      Chief Financial Officer
EX-99.1

Exhibit 99.1

 

LOGO

 

Contacts:

Brian W. Poff

Executive Vice President, Chief Financial Officer

Addus HomeCare Corporation

(469) 535-8200

investorrelations@addus.com

  

Dru Anderson

CCI FINN Partners

(615) 324-7346

dru.anderson@finnpartners.com

ADDUS HOMECARE ANNOUNCES FIRST QUARTER 2022 FINANCIAL RESULTS

Frisco, Texas (May 2, 2022) – Addus HomeCare Corporation (NASDAQ: ADUS), a provider of home care services, today announced its financial results for the first quarter ended March 31, 2022.

First Quarter 2022 Highlights:

 

   

Revenues Grow 10.4% to $226.6 Million

 

   

Net Income of $8.5 Million, or $0.53 per Diluted Share

 

   

Adjusted Earnings per Diluted Share Increases to $0.77

 

   

Adjusted EBITDA Increases 16.1% to $22.4 Million

 

   

Hospice Same Store Revenue Increases 4.4%

Overview

Net service revenues were $226.6 million for the first quarter of 2022, a 10.4% increase compared with $205.3 million for the first quarter of 2021. Net income was $8.5 million for the first quarter of 2022, compared with $8.9 million for the first quarter of 2021, while net income per diluted share was $0.53 compared with $0.55 for the same period a year ago. Adjusted EBITDA increased 16.1% to $22.4 million for the first quarter of 2022 from $19.3 million for the first quarter of 2021. Adjusted net income per diluted share was $0.77 for the first quarter of 2022 compared with $0.74 for the first quarter of 2021. Adjusted net income per diluted share for the first quarter of 2022 excludes acquisition and de novo expenses of $0.13 and stock-based compensation expense of $0.11. (See the end of press release for a reconciliation of all non-GAAP and GAAP financial measures.)

Commenting on the results, Dirk Allison, Chairman and Chief Executive Officer, said, “Addus delivered a strong financial and operating performance for the first quarter of 2022, despite some early challenges related to the surge of the Omicron variant of COVID-19. We had a significant number of caregivers in quarantine in January, which primarily affected our personal care volumes and revenues, which are reimbursed on an hourly rate basis. We were pleased, however, to see a marked decline in caregiver quarantine rates starting in February and continuing through March, resulting in personal care volumes returning to pre-Omicron levels. We are fortunate to have a team of dedicated caregivers who continue to provide outstanding care and support to our patients and their families in a safe and preferred home environment. Like most health care providers, we are facing a tight labor market, and we continue to focus on implementing effective hiring and retention strategies to attract and retain caregivers.

“Despite these challenges, we had positive trends across each of our operating segments, reflecting favorable demand for home-based care. Addus is well positioned to meet this demand, having made the critical investments necessary to provide safe and cost-effective care in the home. For the first quarter, revenues for our personal care segment, which accounted for 74.8% of total revenue, were up 0.9% on a same-store basis. This trend primarily reflects recent rate increases in Illinois that were effective November 1, 2021, offset by the Omicron-related impact on volumes in January and February. Without the impact of Omicron on volumes, our personal care segment would have been within our target range of 3-5% organic revenue growth. Our home health segment revenue more than doubled over the first quarter last year, reflecting the addition of the acquired operations of Armada Home Health and Summit Home Health that were both completed in 2021. We continued to see improvement in our hospice segment, with same store revenues up 4.4% over the prior year and sequential growth in admissions. The results for our hospice business included two months’ of contribution from the acquired operations of JourneyCare, which closed on February 1, 2022.”

 

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ADUS Announces First-Quarter 2022 Financial Results

Page 2

May 2, 2022

 

Cash and Liquidity

As of March 31, 2022, the Company had cash of $124.8 million and bank debt of $259.9 million, with capacity and availability under its revolving credit facility of $377.6 million and $109.6 million, respectively. Net cash provided by operating activities was $6.0 million for the first quarter of 2022.

Looking Ahead

Allison added, “We are excited about the opportunities ahead for Addus in 2022. We have a proven operating model across the care continuum and are encouraged by the favorable demand trends for our services. Without question, the pandemic has demonstrated the value and safety of home-based care. As such, we believe we have significant prospects for continued organic growth in our current markets as well as by entering new markets through selective acquisitions. We will continue to look at opportunities in each of our operating segments with a focus on acquiring clinical services capabilities in markets where we already have strong personal care coverage, advancing our strategy to expand to more states with coverage of all three levels of home care. Under the leadership of Cliff Blessing, our new Executive Vice President and Chief Development Officer, we plan to use our financial strength to pursue our pipeline of potential acquisitions in support of our ongoing growth strategy.”

Non-GAAP Financial Measures

The information provided in this release includes adjusted net income, adjusted EBITDA and adjusted net income per diluted share, which are non-GAAP financial measures. The Company defines adjusted net income as net income before acquisition and de novo expenses, stock-based compensation expense, restructure expenses and other costs, gain or loss on the sale of assets, and retroactive rate increases from Illinois. The Company defines adjusted EBITDA as earnings before interest expense, taxes, depreciation, amortization, acquisition and de novo expenses, stock-based compensation expense, restructure expenses and other costs, loss on the sale of assets, and retroactive rate increases from Illinois. The Company defines adjusted diluted earnings per share as earnings per share, adjusted for acquisition and de novo expenses, stock compensation expense, restructure expenses and other costs, gain or loss on the sale of assets, and retroactive rate increases from Illinois. The Company defined adjusted net income, adjusted EBITDA, adjusted diluted earnings per share to exclude net COVID expenses arising from the pandemic from the second quarter of 2020 to the first quarter of 2021. The Company defines adjusted net service revenues as revenue adjusted for the closure of certain sites. The Company has provided, in the financial statement tables included in this press release, a reconciliation of adjusted net income to net income, a reconciliation of adjusted EBITDA to net income, a reconciliation of adjusted diluted earnings per share to earnings per share, and a reconciliation of adjusted net service revenues to net service revenues, in each case, the most directly comparable GAAP measure. Management believes that adjusted net income, adjusted EBITDA, adjusted diluted earnings per share, and adjusted net service revenues are 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.

 

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ADUS Announces First-Quarter 2022 Financial Results

Page 3

May 2, 2022

 

Conference Call

Addus will host a conference call on Tuesday, May 3, 2022, at 9:00 a.m. Eastern time. To access the live call, dial (877) 270-2148 (international dial-in number is (412) 902-6510) and ask to join the Addus HomeCare earnings call. A telephonic replay of the conference call will be available through midnight on May 10, 2022, by dialing 1-877-344-7529 (international dial-in number is (412) 317-0088) and entering pass code 4847379.

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 will also be available on the Company’s website for one month, beginning approximately two hours following the conclusion of the live broadcast.

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 “preliminary,” “continue,” “expect,” and similar expressions. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. 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 discretionary determinations by government officials, the consummation and integration of acquisitions, anticipated transition to managed care providers, our ability to successfully execute our growth strategy, unexpected increases in SG&A and other expenses, expected benefits and unexpected 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, higher than anticipated costs, lower than anticipated cost savings, estimation inaccuracies in future revenues, margins, earnings and growth, whether any anticipated receipt of payments will materialize, any future impact to our business operations, reimbursements and patient population due to the recent COVID-19 global pandemic, 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 February 25, 2022, which is available at www.sec.gov. The financial information described herein and the periods to which they relate are preliminary estimates that are subject to change and finalization. There is no assurance that the final amounts and adjustments will not differ materially from the amounts described above, or that additional adjustments will not be identified, the impact of which may be material. Addus HomeCare undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, these forward-looking statements necessarily depend upon assumptions, estimates and dates that may be incorrect or imprecise and involve known and unknown risks, uncertainties, and other factors. Accordingly, any forward-looking statements included in this press release do not purport to be predictions of future events or circumstances and may not be realized. (Unaudited tables and notes follow).

About Addus HomeCare

Addus HomeCare is a provider of home care services that primarily include personal care services that assist with activities of daily living, as well as hospice and home health services. Addus HomeCare’s consumers are primarily persons who, without these services, are at risk of hospitalization or institutionalization, such as the elderly, chronically ill and disabled. Addus HomeCare’s payor clients include federal, state and local governmental agencies, managed care organizations, commercial insurers and private individuals. Addus HomeCare currently provides home care services to approximately 44,500 consumers through 207 locations across 22 states. For more information, please visit www.addus.com.

 

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ADUS Announces First-Quarter 2022 Financial Results

Page 4

May 2, 2022

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Income

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

(Unaudited)

 

Income Statement Information:    For the Three Months Ended March 31,  
             2022                     2021          

Net service revenues

   $ 226,634     $ 205,302  

Cost of service revenues

     156,448       144,105  
  

 

 

   

 

 

 

Gross profit

     70,186       61,197  
     31.0     29.8

General and administrative expenses

     53,152       45,426  

Depreciation and amortization

     3,521       3,601  
  

 

 

   

 

 

 

Total operating expenses

     56,673       49,027  
  

 

 

   

 

 

 

Operating income

     13,513       12,170  

Total interest expense, net

     1,762       1,194  
  

 

 

   

 

 

 

Income before income taxes

     11,751       10,976  

Income tax expense

     3,281       2,082  
  

 

 

   

 

 

 

Net income

   $ 8,470     $ 8,894  
  

 

 

   

 

 

 

Net income per diluted share:

   $ 0.53     $ 0.55  
  

 

 

   

 

 

 

Weighted average number of common shares outstanding:

    

Diluted

     16,079       16,069  
Cash Flow Information:    For the Three Months Ended March 31,  
             2022                     2021          

Net cash provided by (used in) operating activities

   $ 5,983     $ (18,366

Net cash (used in) investing activities

     (85,594     (1,021

Net cash provided by (used in) financing activities

     35,479       (144
  

 

 

   

 

 

 

Net change in cash

     (44,132     (19,531

Cash at the beginning of the period

     168,895       145,078  
  

 

 

   

 

 

 

Cash at the end of the period

   $ 124,763     $ 125,547  
  

 

 

   

 

 

 

 

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ADUS Announces First-Quarter 2022 Financial Results

Page 5

May 2, 2022

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)

 

     March 31,  
             2022                      2021          

Assets

     

Current assets

     

Cash

   $ 124,763      $ 125,547  

Accounts receivable, net

     136,808        138,806  

Prepaid expenses and other current assets

     14,658        10,787  
  

 

 

    

 

 

 

Total current assets

     276,229        275,140  
  

 

 

    

 

 

 

Property and equipment, net

     19,073        19,322  

Other assets

     

Goodwill

     574,086        469,036  

Intangible assets, net

     76,300        69,395  

Deferred tax assets, net

     —          6,359  

Operating lease assets

     41,523        38,325  
  

 

 

    

 

 

 

Total other assets

     691,909        583,115  
  

 

 

    

 

 

 

Total assets

   $ 987,211      $ 877,577  
  

 

 

    

 

 

 

Liabilities and stockholders’ equity

     

Current liabilities

     

Accounts payable

   $ 21,004      $ 23,459  

Accrued payroll

     27,720        20,255  

Accrued expenses

     38,820        38,654  

Government stimulus advance

     4,173        20,368  

Accrued workers compensation

     12,640        14,380  

Current portion of long-term debt

     —          972  
  

 

 

    

 

 

 

Total current liabilities

     104,357        118,088  
  

 

 

    

 

 

 

Long-term debt, less current portion, net of debt issuance costs

     256,127        193,839  

Long-term operating lease liabilities, less current portion

     39,049        35,623  

Other long-term liabilities

     1,900        117  
  

 

 

    

 

 

 

Total long-term liabilities

     297,076        229,579  
  

 

 

    

 

 

 

Total liabilities

     401,433        347,667  
  

 

 

    

 

 

 

Total stockholders’ equity

     585,778        529,910  
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 987,211      $ 877,577  
  

 

 

    

 

 

 

 

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ADUS Announces First-Quarter 2022 Financial Results

Page 6

May 2, 2022

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Net Service Revenue by Segment

(Amounts in thousands)

(Unaudited)

 

     For the Three Months Ended March 31,  
             2022                      2021          

Net Service Revenues by Segment

     

Personal Care

   $ 169,632      $ 164,868  

Hospice

     47,727        36,094  

Home Health

     9,275        4,340  
  

 

 

    

 

 

 

Total Revenue

   $ 226,634      $ 205,302  
  

 

 

    

 

 

 

 

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ADUS Announces First-Quarter 2022 Financial Results

Page 7

May 2, 2022

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Key Statistical and Financial Data (Unaudited)

 

     For the Three Months Ended March 31,  
             2022                     2021          

Personal Care

    

States served at period end

     21       21  

Locations served at period end

     162       164  

Average billable census total (1)

     36,582       38,327  

Billable hours (in thousands)

     7,101       7,567  

Average billable hours per census per month

     64.4       65.2  

Billable hours per business day

     110,951       118,237  

Revenues per billable hour

   $ 23.64     $ 21.75  

Organic growth

    

- Revenue (2)

     0.9     2.4

Hospice

    

Locations served at period end

     33       34  

Admissions

     3,315       2,394  

Average daily census

     3,320       2,400  

Average discharge length of stay

     84.1       101.3  

Patient days

     275,488       216,007  

Revenue per patient day

   $ 173.24     $ 167.09  

Organic growth

    

- Revenue

     4.4     (8.4 ) % 

- Average daily census

     7.0     (20.2 ) % 

Home Health

    

Locations served at period end

     12       10  

New Admissions

     3,336       1,168  

Recertifications

     1,316       657  

Total Volume

     4,652       1,825  

Visits

     65,213       27,665  

Organic growth

    

- Revenue

     (0.5 ) %      0.0

- Total admissions

     2.4     14.3

Percentage of Revenues by Payor:

    

Personal Care

    

State, local and other governmental programs

     49.5     49.0

Managed care organizations

     45.6       45.8  

Private duty

     2.7       3.0  

Commercial

     1.2       1.4  

Other

     1.0     0.8

Hospice

    

Medicare

     91.1     94.2

Commercial

     4.7       1.5  

Managed care organizations

     3.6       4.1  

Other

     0.6     0.2

Home Health

    

Medicare

     73.4     80.7

Managed care organizations

     20.5       18.4  

Other

     6.1     0.9

 

(1)

The average billable census in acquisitions of 1,593 for the three ended March 31, 2021, was reclassified to average billable census - same stores for comparability purposes. Exited sites would have reduced same store census for the three months ended March 31, 2021 by 43.

(2)

Management has suspended materially all of its new patient admissions under the New York consumer self-directed program and therefore excludes associated revenues from the calculation. American Rescue Plan Act of 2021 (“ARPA”) funds received have also been excluded from the calculation.

 

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ADUS Announces First-Quarter 2022 Financial Results

Page 8

May 2, 2022

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures

(Amounts in thousands, except per share data)

(Unaudited) (1)

 

     For the Three Months Ended March 31,  
             2022                     2021          

Reconciliation of Adjusted EBITDA to Net Income: (2)

    

Net income

   $ 8,470     $ 8,894  

Interest expense, net

     1,762       1,194  

Income tax expense

     3,281       2,082  

Depreciation and amortization

     3,521       3,601  

COVID-19 expense, net

     —         (591

Acquisition and de novo expenses

     2,793       1,475  

Stock-based compensation expense

     2,485       2,239  

Restructuring and other non-recurring costs

     97       402  
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 22,409     $ 19,296  
  

 

 

   

 

 

 

Reconciliation of Adjusted Net Income to Net Income: (3)

    

Net income

   $ 8,470     $ 8,894  

COVID-19 expense, net of tax

     —         (479

Acquisition and de novo expenses, net of tax

     2,013       1,352  

Stock-based compensation expense, net of tax

     1,791       1,814  

Restructuring and other non-recurring costs, net of tax

     70       326  
  

 

 

   

 

 

 

Adjusted Net Income

     12,344       11,907  
  

 

 

   

 

 

 

Reconciliation of Diluted Earnings per Share to Adjusted Diluted Earnings per Share: (4)

    

Diluted earnings per share

   $ 0.53     $ 0.55  

COVID-19 expense, net per diluted share

     —         (0.03

Acquisition and de novo expenses, per diluted share

     0.13       0.08  

Stock-based compensation expense per diluted share

     0.11       0.12  

Restructuring and other non-recurring costs per diluted share

     —         0.02  
  

 

 

   

 

 

 

Adjusted net income per diluted share

   $ 0.77     $ 0.74  
  

 

 

   

 

 

 

Reconciliation of Net Service Revenues to Adjusted Net Service Revenues: (5)

    

Net service revenues

   $ 226,634     $ 205,302  

Revenue associated with the closure of certain sites

     (0     (668
  

 

 

   

 

 

 

Adjusted net service revenues

   $  226,634     $  204,634  
  

 

 

   

 

 

 

 

(1)

The Company defined adjusted net income, adjusted EBITDA, and adjusted diluted earnings per share to exclude net COVID expenses arising from the pandemic from the second quarter of 2020 to the first quarter of 2021.

(2)

We define Adjusted EBITDA as earnings before interest expense, other non-operating income, taxes, depreciation, amortization, acquisition and de novo expenses, stock-based compensation expense, restructure expenses and other costs, gain or loss on the sale of assets, and retroactive rate increases from Illinois. 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.

(3)

We define Adjusted Net Income as net income before acquisition and de novo expenses, stock-based compensation expense, restructure expenses and other costs, gain or loss on the sale of assets, and retroactive rate increases from Illinois. Adjusted Net Income 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.

(4)

We define Adjusted diluted earnings per share as earnings per share, adjusted for acquisition and de novo expenses, stock-based compensation expense, restructure expense and other costs, loss on the sale of assets, and retroactive rate increases from Illinois. Adjusted diluted earnings per share 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.

(5)

We define Adjusted net service revenues as revenue adjusted for the closure of certain sites. Adjusted net service revenues 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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