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): March 11, 2013

 

 

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 March 13, 2013, Addus HomeCare Corporation (the “Corporation”) issued a press release announcing its earnings for the fiscal quarter and year ended December 31, 2012. 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 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On March 11, 2013, the Corporation made special, one-time option grants and restricted stock grants under its 2009 Stock Incentive Plan to certain executive officers, which were in addition to, and outside the Corporation’s annual performance-based executive bonus plan. The Corporation granted 100,000 stock options and 50,000 shares of restricted stock to Mark Heaney, the Corporation’s Chief Executive Officer. The Corporation granted 7,500 stock options to Dennis Meulemans, the Corporation’s Chief Financial Officer. The restricted stock and stock options were granted pursuant to a Restricted Stock Award Agreement and Nonqualified Option Award Agreements, as applicable, substantially on the terms of the Corporation’s standard form thereof. The restricted stock and stock options vest equally over a four year period. Each of the foregoing grants was approved by the Corporation’s compensation committee.

Also on March 11, 2013, the Corporation’s compensation committee approved increases in the annual base salary of certain executive officers. Mr. Heaney’s annual base salary increased from $325,000 to $400,000 effective March 11, 2013 and Mr. Meulemans’ annual base salary increased from $250,000 to $265,000 effective March 11, 2013.

 

Item 9.01. Financial Statements and Exhibits

 

(d) Exhibits:

 

Exhibit No.

  

Description

99.1    Press release of Addus HomeCare Corporation dated March 13, 2013.


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: March 13, 2013   By:   /s/ Dennis Meulemans
   

 

  Name:   Dennis Meulemans
  Title:   Chief Financial Officer


Exhibit Index

 

Exhibit No.

  

Description

99.1    Press release of Addus HomeCare Corporation dated March 13, 2013.
EX-99.1

Exhibit 99.1

 

LOGO

Investor Contact:

Dennis Meulemans

Chief Financial Officer

Phone: (847) 303-5300

Email: DMeulemans@addus.com

Addus HomeCare Reports Fourth Quarter 2012 Results

Completes Sale of Home Health Assets

Fourth Quarter Financial Highlights

 

   

Total net service revenues of $63.8 million

 

   

Total net income of $3.7 million, or $0.35 per diluted share

 

   

The Company completed the sale of substantially all of the assets of its Home Health business effective on March 1, 2013 for $20 million cash and retained a ten percent interest in the business in Illinois and California. The results of the Home Health business sold are reflected as discontinued operations for all periods presented.

 

   

Net income from continuing operations of $3.5 million, or $0.33 per diluted share

Palatine, IL, March 13, 2013—Addus HomeCare Corporation (Nasdaq: ADUS), a provider of home-based social and medical services focused on the elderly dual eligible population, announced today its financial results for the fourth quarter and year ended December 31, 2012.

Fourth Quarter Review

Total net service revenues for the fourth quarter of 2012 were $63.8 million, a 9.4% increase compared to $58.3 million in the prior year quarter. Net income, including discontinued operations, was $3.7 million, or $0.35 per diluted share, a 50% increase over the prior year quarter. Net income from continuing operations was $3.5 million, or $0.33 per diluted share, a 20.2% increase when compared to prior year quarter. Continuing operations includes the results of operations previously included in the Home & Community segment and three agencies previously included in the Home Health segment.

Mark Heaney, President and Chief Executive Officer of Addus HomeCare, stated, “Our Home & Community segment continued to demonstrate positive growth during the fourth quarter and we are pleased with the sale of our Home Health business.”


Gross profit margins have declined when compared to the prior year quarter due to an increase in workers compensation expense. Fourth quarter results from continuing operations for 2012 were positively affected by Workers Opportunity Tax Credits realized in the quarter, which substantially reduced income tax expense. Fourth quarter 2011 results from continuing operations included two extraordinary items; the revaluation of contingent consideration and the receipt of prompt payment interest from the State of Illinois. Income tax expense was negatively affected in 2011 by the goodwill impairment charge taken in 2011 on the Home Health business.

On a pro forma basis, earnings from continuing operations were $0.30 per diluted share in 2012, after normalizing the effective tax rate to 34.1%. Earnings from continuing operations in the fourth quarter of 2011 were $0.22 per diluted share after excluding: the effect of the revaluation of contingent consideration related to the acquisition of CarePro and the prompt payment interest received from the State of Illinois and after normalizing the annual effective tax rate to 33.0%.

Twelve Month Review

Total net service revenues from continuing operations for the twelve months ended December 31, 2012 were $244.3 million, a 6.2% increase compared to $230.1 million for the same prior year period. Net income for 2012, including discontinued operations, was $7.6 million or $0.71 per diluted share, compared to a reported loss in 2011 of $2.0 million or $(0.18) per diluted share. Net income from continuing operations was $9.3 million, or $0.86 per diluted share, a 10.4% increase when compared to the prior year.

On a pro forma basis, earnings from continuing operations in 2012 were $0.83 per diluted share after excluding the gain from the sale of an agency which occurred in the first quarter of 2012. Pro forma earnings from continuing operations in 2011 were $0.61 per diluted share after excluding the effect of the revaluation of contingent consideration related to the acquisition of CarePro and the prompt payment interest received from the State of Illinois.

The business is cyclical in nature. Payroll taxes are higher in the early quarters of the year and are reduced in the later quarters. It is anticipated unemployment taxes will increase in 2013 as a result of scheduled increases in both federal and state unemployment tax rates.

Sale of Home Health Business

Effective March 1, 2013, the Company completed the sale to subsidiaries of LHC Group, Inc. of substantially all of the assets used in the Company’s Home Health business in Arkansas, Nevada and South Carolina, and 90% of the Home Health business in California and Illinois with the Company retaining a 10% ownership interest in those locations. The purchase price of the assets totaled approximately $20 million in cash. The net proceeds from the transaction are being used to pay off outstanding debt and for general corporate purposes.


The operations represented by these assets are reflected in the Company’s financial statements as discontinued operations. The revenues and expenses related to the business are reflected in the financial statements net of taxes, with taxes calculated at the statutory rates for each year. Approximately $240,000 and $346,000 of Corporate General and Administrative expenses have been included in the cost of discontinued operations for the fourth quarter of 2012 and 2011 respectively. Corporate General and Administrative expenses of $1.4 million and $1.5 million have been included in the annual results for 2012 and 2011, respectively.

The Company expects the benefits of completing this transaction will be increased management focus on developing its core Home & Community business and the expansion of its programs offered to managed care plans; lower debt; and a stronger balance sheet.

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, revaluation of contingent consideration, net interest (income) expense, 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 by providing investors with insight and consistency in the Company’s financial reporting and presents a basis for comparison of the Company’s business operations among periods, and to facilitate comparisons with the results of the Company’s peers.

Conference Call

Addus will report its 2012 fourth quarter and year-end financial results on Wednesday, March 13, 2013. Management will conduct a conference call to discuss its results at 10:00 a.m. Eastern time on March 13, 2013. The toll-free dial-in number is (866) 700- 6293 (international dial-in number is 617-213-8835), with the passcode: 51146580. A telephonic replay of the conference call will be available through midnight on March 22, 2013, by dialing (888) 286-8010 (international dial-in number is 617-801-6888) and entering the passcode 98751970.

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 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 and adult day care. Addus focuses on serving the needs of the elderly dual eligible population. 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. For more information, please visit www.addus.com.

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 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 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 16, 2012, and in Addus HomeCare’s Quarterly Reports on Form 10-Q, filed with the Securities and Exchange Commission on May 10, 2012, August 9, 2012 and November 1, 2012, 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 December 31,     For the Year Ended December 31,  
     2012     2011     2012     2011  

Income Statement Information:

        

Net service revenues

   $ 63,775      $ 58,304      $ 244,315      $ 230,105   

Cost of service revenues

     46,238        41,475        180,264        168,632   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     17,537        16,829        64,051        61,473   

General and administrative expenses

     11,652        11,945        46,362        45,858   

Gain on sale of agency

     —          —          (495     —     

Revaluation of contingent consideration

     —          (469     —          (469

Depreciation and amortization

     624        705        2,521        3,167   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     12,276        12,181        48,388        48,556   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income from continuing operations

     5,261        4,648        15,663        12,917   

Interest income

     (27     (2,263     (155     (2,263

Interest expense

     358        595        1,723        2,524   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total interest expense, net

     331        (1,668     1,568        261   

Income from operations before taxes

     4,930        6,316        14,095        12,656   

Income tax expense

     1,427        3,402        4,807        4,244   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income from continuing operations

     3,503        2,914        9,288        8,412   
  

 

 

   

 

 

   

 

 

   

 

 

 

Discontinued operations:

        

Earnings (loss) from discontinued operations, net of tax

     242        (418     (1,653     (10,393
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 3,745      $ 2,496      $ 7,635      $ (1,981
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) per common share:

        

Basic and diluted

        

Continuing operations

   $ 0.33      $ 0.27      $ 0.86      $ 0.78   

Discontinued operations

     0.02        (0.04     (0.15     (0.96
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted income (loss) per common share

   $ 0.35      $ 0.23      $ 0.71      $ (0.18
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of common shares outstanding:

        

Basic

     10,772        10,754        10,764        10,752   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     10,807        10,756        10,784        10,752   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

      For the Three Months Ended December 31,     For the Year Ended December 31,  
     2012     2011     2012     2011  

Cash Flow Information:

        

Net cash provided by operating activities

   $ 6,069      $ 4,132      $ 15,405      $ 15,947   

Net cash used in investing activities

     (101     (274     (619     (1,051

Net cash used in financing activities

     (5,944     (3,135     (15,069     (13,692
  

 

 

   

 

 

   

 

 

   

 

 

 

Net change in cash

     24        723        (283     1,204   

Cash at the beginning of the period

     1,713        1,297        2,020        816   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash at the end of the period

   $ 1,737      $ 2,020      $ 1,737      $ 2,020   
  

 

 

   

 

 

   

 

 

   

 

 

 


Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)

 

     December 31, 2012      December 31, 2011  

Assets

     

Current assets

     

Cash

   $ 1,737       $ 2,020   

Accounts receivable, net

     71,303         72,368   

Prepaid expenses and other current assets

     7,293         8,137   

Assets held for sale

     245         239   

Deferred tax assets

     7,258         6,336   
  

 

 

    

 

 

 

Total current assets

     87,836         89,100   
  

 

 

    

 

 

 

Property and equipment, net

     2,489         2,251   
  

 

 

    

 

 

 

Other assets

     

Goodwill

     50,536         50,695   

Intangible assets, net

     6,370         8,044   

Deferred tax assets

     2,328         4,089   

Other assets

     298         513   
  

 

 

    

 

 

 

Total other assets

     59,532         63,341   
  

 

 

    

 

 

 

Total assets

   $ 149,857       $ 154,692   
  

 

 

    

 

 

 

Liabilities and stockholders’ equity

     

Current liabilities

     

Accounts payable

   $ 4,117       $ 5,266   

Accrued expenses

     32,717         29,313   

Current maturities of long-term debt

     208         6,569   

Deferred revenue

     2,148         2,145   
  

 

 

    

 

 

 

Total current liabilities

     39,190         43,293   
  

 

 

    

 

 

 

Long-term debt, less current maturities

     16,250         24,958   

Total stockholders’ equity

     94,417         86,441   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 149,857       $ 154,692   
  

 

 

    

 

 

 


Key Statistical and Financial Data (Unaudited)

 

     For the Three Months Ended December 31,     For the Twelve Months Ended December 31,  
     2012     2011     2012     2011  

General:

        

Adjusted EBITDA (in thousands) (1)

   $ 6,330      $ 4,351      $ 15,786      $ 15,200   

States served at period end

         19        19   

Locations at period end

         96        96   

Employees at period end

         13,836        12,463   

Home & Community

        

Average billable census

     25,508        24,285        25,104        23,877   

Billable hours (in thousands)

     3,754        3,438        14,388        13,504   

Average billable hours per census per month

     49        47        48        47   

Billable hours per business day

     56,879        52,892        55,126        51,938   

Revenues per billable hour

   $ 16.99      $ 16.96      $ 16.98      $ 17.04   

Percentage of Revenues by Payor:

        

State, local and other govermental programs

     95     95     95     94

Commercial

     1        1        1        1   

Private duty

     4     4     4     5

 

(1) We define Adjusted EBITDA as earnings before goodwill and intangible asset impairment charge, revaluation of contingent consideration, net interest (income) expense, 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.


Adjusted EBITDA (1) (Unaudited)

   For the Three Months Ended December 31,     For the Twelve Months Ended December 31,  
     2012      2011     2012      2011  

Reconciliation of Adjusted EBITDA to Net Income:

          

Net income (loss)

   $ 3,745       $ 2,496      $ 7,635       $ (1,981

Goodwill and intangible asset impairment charge

     —            —           —            15,989   

Revaluation of contingent consideration

     —            (469     —            (469

Net interest expense

     331         (1,668     1,568         261   

Income tax expense (benefit)

     1,566         3,131        3,708         (2,485

Depreciation and amortization

     626         771        2,534         3,554   

Stock-based compensation expense

     62         90        341         331   
  

 

 

    

 

 

   

 

 

    

 

 

 

Adjusted EBITDA

   $ 6,330       $ 4,351      $ 15,786       $ 15,200   
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1) We define Adjusted EBITDA as earnings before goodwill and intangible asset impairment charge, revaluation of contingent consideration, net interest (income) expense, 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.