Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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): August 4, 2011

 

 

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)

 

(IRS Employer

Identification Number)

 

2401 South Plum Grove Road, Palatine, Illinois   60067
(Address of principal executive offices)   (Zip Code)

(847) 303-5300

(Registrant’s telephone number, including area code)

N/A

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

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ 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))

 

 

 


Item 2.02. Results of Operations and Financial Condition

On August 4, 2011, Addus HomeCare Corporation issued a press release announcing its earnings for the three and six month periods ended June 30, 2011. A copy of the press release is furnished as Exhibit 99.1 to this report.

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including the exhibit, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “ Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

Item 7.01. Regulation FD Disclosure

The information contained in Item 2.02 of this Current Report on Form 8-K is incorporated by reference herein.

 

Item 9.01. Financial Statements and Exhibits

(d) Exhibits:

 

Exhibit

No.

  

Description

99.1    Press release of Addus HomeCare Corporation dated August 4, 2011.


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
Dated: August 4, 2011   By:  

/s/ Dennis B. Meulemans

  Name:   Dennis B. Meulemans
  Title:   Chief Financial Officer


Exhibit Index

 

Exhibit

No.

  

Description

99.1    Press release of Addus HomeCare Corporation dated August 4, 2011.
Press Release

Exhibit 99.1

LOGO

Investor Contact:

Amy Glynn / Nick Laudico

The Ruth Group

Phone: (646) 536-7023 / 7030

Email: aglynn@theruthgroup.com

Email: nlaudico@theruthgroup.com

Addus HomeCare Reports Second Quarter 2011 Results

Second Quarter Financial Highlights

 

   

Total net service revenues grew 1.6% to $68.3 million, with comparable growth rates in both the Home & Community and Home Health Divisions

 

   

Net income of $1.3 million, or $0.12 per diluted share

 

   

Accounts Receivable DSO has improved by 19 days to 65 days

Palatine, IL, August 4, 2011 - Addus HomeCare Corporation (Nasdaq: ADUS), a comprehensive provider of home-based social and medical services, announced today its financial results for the second quarter ended June 30, 2011.

Mark Heaney, President and Chief Executive Officer of Addus HomeCare, stated: “In the second quarter, we continued to integrate our new senior management team, including our new Vice President for Home Health, who joined us in July. In addition, we are initiating a search for a Chief Sales and Marketing Officer to lead our sales team. We are of course pleased that the State of Illinois made a significant payment in the quarter.”

Second Quarter Review

Total net service revenues for the second quarter of 2011 were $68.3 million, a 1.6% increase compared to the prior year quarter. The acquisition of CarePro contributed approximately $3.3 million in net service revenues in the second quarter of 2011.

Second quarter 2011 net income was $1.3 million, or $0.12 per diluted share. Net income was $1.7 million or $0.16 per diluted share in the prior year quarter.

Home & Community segment net service revenues for the second quarter of 2011 were $55.0 million, a 1.6% increase from the prior year quarter. Home & Community segment


revenues included approximately $2.4 million from CarePro operations. Excluding locations closed in late 2010 and program eliminations in select states totaling $1.8 million in revenue, same store sales increased by $0.2 million, or approximately 0.4%. Home & Community operating income, including depreciation and amortization but excluding corporate expenses, was $6.0 million, or 10.9% of revenue in the second quarter, compared to $5.5 million, or 10.1% of revenue, in the prior year quarter.

Home Health segment net service revenues for the second quarter of 2011 were $13.2 million, a 1.7% 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 include approximately $0.9 million from CarePro operations. Home Health operating income, including depreciation and amortization but excluding corporate expenses, was $0.8 million, or 6.3% of revenues, compared to $1.7 million, or 13.0% of revenues in the prior year quarter.

Cash flow from operations was $17.6 million for the second quarter of 2011 compared to cash used in operations of $0.8 million in the second quarter of 2010. This improvement reflects a significant payment received late in the second quarter from the State of Illinois. Subsequent to June 30, 2011, the cash generated from operations was used to reduce the outstanding balance on the Company’s line of credit and other debt.

Six Month Review

Total net service revenues for the six months ended June 30, 2011 were $135.1 million, a 2.5% increase compared to the prior year period. The acquisition of CarePro contributed approximately $6.8 million in net service revenues in the first half of 2011.

Net income for the first half of 2011 was $2.2 million, or $0.20 per diluted share. This compares to net income of $3.0 million, or $0.29 per diluted share in the same period of 2010.

Home & Community segment net service revenues for the six months ended June 30, 2011 were $109.2 million, a 2.2% increase compared to the prior year period. Home & Community segment revenues included approximately $4.9 million from CarePro operations. Excluding locations closed in late 2010 and program eliminations in select states totaling $3.8 million in revenue, same store sales increased by $1.2 million, or approximately 1.1%. Home & Community operating income, including depreciation and amortization but excluding corporate expenses, was $11.3 million, or 10.4% of revenue in the first half of 2011, compared to $11.0 million, or 10.3% of revenue, in the prior year period.

Home Health segment net service revenues for the six months ended June 30, 2011 were $25.9 million, a 4.1% increase compared to the prior year period. Home Health segment revenues include approximately $1.9 million from CarePro operations. After adjusting for the Medicare rate reduction in 2011 of approximately $0.8 million, same store sales decreased by $0.1 million, or 0.3%. Home Health operating income, including depreciation and


amortization but excluding corporate expenses, was $1.5 million, or 5.9% of revenues for the first half of 2011, compared to $2.7 million, or 10.8% of revenues in the prior year period.

Cash flow from operations was $29.1 million for the first half of 2011 compared to $0.8 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. Subsequent to June 30, 2011, the cash from operations was used to reduce the outstanding balance on the Company’s line of credit and other debt.

Non-GAAP Financial Measures

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 will report its 2011 second quarter results after the market close on Thursday, August 4, 2011. Management will conduct a conference call to discuss its results at 5 p.m. Eastern time on August 4, 2011. The toll-free number is (866) 730-5770 (international callers should call 857-350-1594), with the passcode: 30071147. A telephonic replay of the conference call will be available through midnight on August 18, 2011 by dialing (888) 286-8010 (international callers should call 617-801-6888) and entering the passcode 89988113.

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 Ended June 30,      For the Six Months Ended June 30,  
     2011      2010      2011      2010  

Income Statement Information:

           

Net service revenues

   $ 68,252       $ 67,165       $ 135,094       $ 131,770   

Cost of service revenues

     48,142         47,429         95,930         93,214   
  

 

 

    

 

 

    

 

 

    

 

 

 

Gross profit

     20,110         19,736         39,164         38,556   

General and administrative expenses

     16,493         15,513         32,612         30,695   

Depreciation and amortization

     927         951         1,856         1,897   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total operating expenses

     17,420         16,464         34,468         32,592   
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating income

     2,690         3,272         4,696         5,964   

Interest expense, net

     668         750         1,381         1,468   
  

 

 

    

 

 

    

 

 

    

 

 

 

Income from operations before taxes

     2,022         2,522         3,315         4,496   

Income tax expense

     689         868         1,129         1,484   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 1,333       $ 1,654       $ 2,186       $ 3,012   
  

 

 

    

 

 

    

 

 

    

 

 

 

Income per common share:

           

Basic

   $ 0.12       $ 0.16       $ 0.20       $ 0.29   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

   $ 0.12       $ 0.16       $ 0.20       $ 0.29   
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average number of common shares outstanding:

           

Basic

     10,746         10,500         10,746         10,500   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

     10,770         10,500         10,762         10,500   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     For the Six Months Ended June 30,  
     2011     2010  

Cash Flow Information:

    

Net cash provided by operating activities

   $ 29,098      $ 795   

Net cash used in investing activities

     (632     (695

Net cash provided by (used in) financing activities

     (5,177     317   
  

 

 

   

 

 

 

Net change in cash

     23,289        417   

Cash at the beginning of the period

     816        518   
  

 

 

   

 

 

 

Cash at the end of the period

   $ 24,105      $ 935   
  

 

 

   

 

 

 


Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)

 

     June 30, 2011      December 31, 2010  

Assets

     

Current assets

     

Cash

   $ 24,105       $ 816   

Accounts receivable, net

     51,285         70,954   

Prepaid expenses and other current assets

     9,090         7,704   

Deferred tax assets

     6,338         6,324   
  

 

 

    

 

 

 

Total current assets

     90,818         85,798   
  

 

 

    

 

 

 

Property and equipment, net

     2,576         2,923   
  

 

 

    

 

 

 

Other assets

     

Goodwill

     63,851         63,930   

Intangible assets, net

     12,193         13,570   

Other assets

     612         703   
  

 

 

    

 

 

 

Total other assets

     76,656         78,203   
  

 

 

    

 

 

 

Total assets

   $ 170,050       $ 166,924   
  

 

 

    

 

 

 
Liabilities and stockholders’ equity      

Current liabilities

     

Accounts payable

   $ 5,246       $ 3,304   

Accrued expenses

     31,465         26,529   

Current maturities of long-term debt

     6,000         5,158   

Deferred revenue

     2,328         2,141   
  

 

 

    

 

 

 

Total current liabilities

     45,039         37,132   
  

 

 

    

 

 

 

Long-term debt, less current maturities

     34,027         40,027   

Deferred tax liabilities

     562         562   

Other long-term liabilities

     —           1,112   

Total stockholders’ equity

     90,422         88,091   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 170,050       $ 166,924   
  

 

 

    

 

 

 


Segment Information (Unaudited)

 

     For the Three Months Ended June 30, 2011  
     Home &
Community
    Home
Health
    Corporate     Total  

Net service revenues

   $ 55,009      $ 13,243      $ —        $ 68,252   

Cost of service revenues

     41,076        7,066        —          48,142   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     13,933        6,177        —          20,110   

Gross profit percentage

     25.3     46.6       29.5

General and administrative expenses

     7,304        5,208        3,981        16,493   

Depreciation and amortization

     609        129        189        927   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     7,913        5,337        4,170        17,420   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

   $ 6,020      $ 840      $ (4,170   $ 2,690   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income percentage

     10.9     6.3     -6.1     3.9
     For the Three Months Ended June 30, 2010  
     Home &
Community
    Home
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   

Gross profit percentage

     25.3     46.4       29.4

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   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income percentage

     10.1     13.0     -5.8     4.9
     For the Six Months Ended June 30, 2011  
     Home &
Community
    Home
Health
    Corporate     Total  

Net service revenues

   $ 109,152      $ 25,942      $ —        $ 135,094   

Cost of service revenues

     81,853        14,077        —          95,930   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     27,299        11,865        —          39,164   

Gross profit percentage

     25.0     45.7       29.0

General and administrative expenses

     14,735        10,070        7,807        32,612   

Depreciation and amortization

     1,219        257        380        1,856   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     15,954        10,327        8,187        34,468   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

   $ 11,345      $ 1,538      $ (8,187   $ 4,696   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income percentage

     10.4     5.9     -6.1     3.5
     For the Six Months Ended June 30, 2010  
     Home &
Community
    Home
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   

Gross profit percentage

     25.4     45.9       29.3

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   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income percentage

     10.3     10.8     -5.9     4.5


Key Statistical and Financial Data (Unaudited) (3)

 

     For the Three Months Ended June 30,     For the Six Months Ended June 30,  
     2011     2010     2011     2010  

General:

        

Adjusted EBITDA (in thousands) (1)

   $ 3,714      $ 4,289      $ 6,697      $ 7,989   

States served at period end

         19        16   

Locations at period end

         125        122   

Employees at period end

         13,366        13,123   

Home & Community

        

Average weekly census

     21,036        20,648        20,948        20,421   

Billable hours (in thousands)

     3,229        3,252        6,414        6,424   

Billable hours per business day

     50,456        50,819        50,506        50,582   

Revenues per billable hour

   $ 17.03      $ 16.65      $ 17.02      $ 16.63   

Home Health

        

Average weekly census:

        

Medicare

     1,475        1,602        1,470        1,533   

Non-Medicare

     1,528        1,493        1,521        1,515   

Medicare admissions (2)

     2,274        2,179        4,547        4,315   

Medicare revenues per episode completed

   $ 2,581      $ 2,633      $ 2,692      $ 2,598   

Percentage of Revenues by Payor:

        

State, local or other governmental

     80     79     80     80

Medicare

     13     13     13     12

Other

     7     8     7     8

 

(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.
(3) Key statistical and financial data for the three and six months ended June 30, 2011 includes the acquisition of Advantage Health Systems, Inc.


Adjusted EBITDA (1) (Unaudited)

 

     For the Three Months Ended June 30,      For the Six Months Ended June 30,  
     2011      2010      2011      2010  

Reconciliation of Adjusted EBITDA to Net Income:

           

Net income

   $ 1,333       $ 1,654       $ 2,186       $ 3,012   

Net interest expense

     668         750         1,381         1,468   

Income tax expense

     689         868         1,129         1,484   

Depreciation and amortization

     927         951         1,856         1,897   

Stock-based compensation expense

     97         66         145         128   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

   $ 3,714       $ 4,289       $ 6,697       $ 7,989   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(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.