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 17, 2014
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 7.01. | Regulation FD Disclosure |
On March 17, 2014, Mark Heaney, President and Chief Executive Officer of Addus HomeCare Corporation, is presenting at the Sidoti – Emerging Growth Investor Forum. A copy of the slides used in the presentation is attached hereto as Exhibit 99.1 and is incorporated by reference herein.
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 9.01. | Financial Statements and Exhibits |
(d) Exhibits:
| Exhibit |
Description | |
| 99.1 | Investor Presentation of Addus HomeCare Corporation dated March 17, 2014 | |
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 17, 2014 | By: | /s/ Dennis Meulemans | ||||
| Name: | Dennis B. Meulemans | |||||
| Title: | Chief Financial Officer | |||||
Exhibit Index
| Exhibit |
Description | |
| 99.1 | Investor Presentation of Addus HomeCare Corporation dated March 17, 2014 | |
Exhibit 99.1
AddusSM HomeCare
Coordinated Personal Home Care
A pre-acute solution to the post-acute problemSM
Sidoti – Emerging Growth Investor Forum
March 17, 2014
AddusSM HomeCare
Serving Families at Home Since 1979
Nancy
Since 2009
Lizabeth
Since 2006
Thomas
Since 2010
Eva
Since 1993
Cathy
Since 1999
Bianca
Since 2001
Duwan
Since 2008
Pam
Since 2002
Pedro
Since 2009
Demetrius
Since 2010
Forward-Looking Statements
The following information contains, or may be deemed to contain, forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The future results of Addus may vary from the results expressed in, or implied by, the following forward-looking statements, possibly to a material degree, and historical results may not be an indication of future performance. For a discussion of some of the important factors that could cause Addus’ results to differ from those expressed in, or implied by, the following forward-looking statements, please refer to Addus’ most recent Annual Report on Form 10-K, and its Quarterly Reports on Form 10-Q, each of which is available at www.SEC.gov, particularly the Sections entitled “Risk Factors”. Addus undertakes no obligation to update or revise any forward-looking statements, except as may be required by law.
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AddusSM HomeCare
Mission
It is the primary mission of Addus HealthCare to improve the health and well being of our consumers through the provision of quality, cost-effective home and community based services.
We will accomplish our goals by fostering an environment in which our employees enthusiastically support and advance our mission.
Reward for accomplishing our mission includes pride in our organization, contribution to the community and a reasonable profit.
AddusSM HealthCare
Serving Families at Home Since 1979
Helen Since 1998
Louis Since 2007
Juana Since 2002
Ana Since 2003
Cristie Since 2008
Zondra Since 2004
Maria Since 2001
Alice Since 2009
Frank Since 2006
Investment Highlights
Large & Growing Market
Broad Range of Services and Payors
Differentiated, Coordinated Care Model
Positioned to Excel under Healthcare Reform
Significant Operational Scale Across National Footprint
History of Growth through Acquisition
Multiple Organic Growth Opportunities
Experienced Management Team
AddusSM HomeCare
About Addus
Who is Addus?
Comprehensive provider of home and community based services, which are primarily social in nature, focused primarily on the Dual Eligible population:
– Personal Care
– Private Duty
– Adult Day Service
Key Facts:
Founded in 1979
16,000+ employees
28,000+ consumers (many dual eligible)
2013 Revenues of $265.9 million
Diversified payor base (200+ payors)
Legend
= Home & Community
= Adult Day Care
= National Support Center
115 Locations Across 23 States
AddusSM HomeCare
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Who We Serve
Focusing on the Dual Eligible Population
Percent of Total Health Care Spending
Concentration of Health Care Spending in the U.S. Population, 2007
100.0% 97.0%
90.0% 81.2%
80.0% 74.6%
Addus HealthCare
Serving Families at Home Since 1979
70.0% 65.2%
60.0% 49.5%
50.0%
40.0%
30.0% 22.9%
20.0%
10.0% 3.0%
0.0%
Top 1% Top 5% Top 10% Top 15% Top 20% Top 50% Bottom 50%
(³$44,482) (³$15,806) (³$8,716) (³$5,798) (³$4,064) (³$786) (<$786)
Percentof Population, Ranked by Health Care Spending
Addus focuses on the top 5% who utilize 50% of resources and expenditures!
Source: Kaiser Family Foundation calculations using data from U.S. Department of Health and Human Services, Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey (MEPS), 2007
AddusSM HomeCare
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Video of Addus Services
To view a video about Addus service visit:
https://www.youtube.com/watch?v=EAaPHI6t-6Y
AddusSM HomeCare
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Addus Dual AdvantageTM
The New Paradigm
Long-term care risk makes it essential that health plan dual eligible members live safely and healthfully at home as long as possible…
AddusSM HomeCare
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Where are we in the Continuum of Care?
Family and
Community ¢
Healthy
Living - Eat
an Apple ¢
Telephone
Reassurance ¢
Transportation ¢¢
Personal
Emergency
Response
(PERS) ¢¢
Meals at
Home ¢¢
Friendly
Visiting
¢¢
Adult Day ¢¢
Companion $
Case
Management $
Tele Health $
Personal Care $
Home Health $
Home
Physicians
$$
Hospice $$
Behavioral
Health $$
Ambulance/ER $$$$
Specialty Diagnostics $$$
Hospital
Intensive Care
$$$$
Hospital $$$$
Rehab Facility
$$$$
Nursing Home
$$$$$
Psychiatric
Inpatient $$$$$
Sub-Acute
Facilities $$$$$
Pre-Acute Acute
AddusSM HomeCare
Long-Term Care Expenditures
Growth in Medicaid Long Term Care Expenditures
$80.0 $70.0 $60.0 $50.0 $40.0 $30.0 $20.0 $10.0 $0.0
1990 1995 2000 2002 2004 2006 2008 2009
Insitutional Care Expenditures(Billions)
Home & Community Based Services Expenditures (Billions).
SOURCE: KCMU and Urban Institute analysis of HCFA/CMS-64 data. June 2011
Medicaid Spending Per Beneficiary
$30,000
$24,500
$25,000
$20,000
$15,000
$9,200
$10,000
$5,000
$0
Nursing Home
Home Care
Source: Kassner, Reinhard, Fox-Grage, Houser, Accius,
Coleman and Milne. AARP Public Policy Institute: “A
Balancing Act: State Long-Term Care Reform,” July 2008
THE LANDSCAPE IS SHIFTING
States are shifting responsibility for care to health plans and managed care Focus on managing and coordinating care for the costly dual eligible population
AddusSM HomeCare
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What is a Dual Eligible?
The integration of benefit programs and funding of acute and long-term care.
Medicare Benefit Payments By Type of Service, 2012
Medicare Advantage 23%
Outpatient Prescription Drugs 10%
Hospital Services 26%
5% Skilled Nursing Facility
Physician Payments 13%
6% Hospital Outpatient Services
4% Home Wealth
Other Services 13%
Total Benefit Payments =$536 Billion
Part A
Part B
Part A and B
Part C
Part D
Medical Expenditures for Dual Eligible Beneficiaries, FY 2009
Long-Term Care
$90.5 Billion
67.2%
Medicare Premiums and Cost-Sharing $12.0 Billion 8.9%
Home and Community Based Care $33.4 Billion 24.8%
Medicare Covered Services $23.5 Billion 17.5%
Institutional Care $57.1 Billion 42.4%
Other Acute $7.1 Billion 5.3%
Prescribed Drugs $1.5 Billion 1%
Total Spending = $134.7 Billion
Dually eligible beneficiaries compromise 20% of the Medicare
Population and 15% of the Medical population, 2008
Medicare 37 million
Dual Eligibles 9 million
Medicaid 51 million
Total Medicare beneficiaries, 2008:
46 million
Total Medicaid beneficiaries, 2008:
60 million
SOURCE: Kaiser Family Foundation analysis of the Medicare Current Beneficiary Survey 2008 and Kaiser Commission on Medicaid and the Uninsured and Urban Institute estimates data from FY 2008 MSIS and CMS Form-64.
Sources: Kaiser Commission on Medicaid and the Uninsured, April 2011
Combined Medicare and Medicaid spending is estimated at $300 B for the dual population.
AddusSM HomeCare
States Pursuing a Dual Program
THE LANDSCAPE IS SHIFTING
States are shifting responsibility for care to health plans and managed care Focus on managing and coordinating care for the costly dual eligible population
MCO Plans/Programs already implemented
2013 Implementation Plans
2014 Implementation Plans
No Implementation Plans
Addus location(s)
Source: Kaiser Commission on Medicaid and the Uninsured, May 2012
AddusSM Home Care
Health Plan’s Worst Nightmare
The Choice is Obvious!
Emergency Room
$1,700/visit
Total Episodic Cost & one-year of Nursing Home $75,620
Ambulance $1,000/ride
Acute Care Hospital $12,320/stay
Vs.
Home Personal Care
$9,200/year
Nursing Home
$42,000/year
Rehab Facility
$18,600/stay
Sources: Consumer Health Ratings.com
CMS.gov
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AddusSM Home Care
Addus Dual AdvantageTM
The Addus Homecare Aid - A Powerful Resource
No one knows more about the member…
No one is in a better position to positively effect health outcomes…
…Than the Addus Home Care Aide
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AddusSM Home Care
Integrated Clinical Strategy Begins in the Home
AddusSM Home Care
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A System Connecting the Aid to the Health Plan
Service Excellence
Connect Aide to Health System
Touch Member based on Acuity
Bring Aide into Addus Culture
Empower Aide through Self-Service
People Process Technology
Centralize Transactions by Areas of Excellence
Drive Health Outcomes
Continuous Training
Increase Employee Interaction
Eliminate Paper
Use Technology to Touch Members
Operating Platform
Application Software
Central Data Repository
Interoperability
Mobile Tools
IPads &Smart Phones
Smart Messaging
Picture & Videos
MCO AddusSM HomeCare 16
Addus Dual AdvantageTM
A Model for Extending the Reach of Health Plan Case Managers
Clients
Employees
Addus HealthCare
Illinois Clients & Employees
Serving the dual eligible population at home:
Complicated
Logistics intense
Highly transactional
Requires disciplined processes
Provides tremendous opportunity for case management extension!
AddusSM HomeCare
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Addus Dual AdvantageTM
Strong Union Relationships Drive Addus Success
Addus Named to American Rights at Work, a leading labor policy and advocacy organization, inaugural “Labor Day List: Partnerships that Work”
The LABOR DAY LIST:
Partnerships that Work
SEUI.ORG
SERVICE EMPLOYEES INTERNATIONAL UNION, CTW, CLC
Organized since 1985
More than 11,000 Addus Home Care Aides are members of SEIU Nationally
National Collective Bargaining & Neutrality Agreement
13 Local Collective Bargaining Economic Agreements
Serve as Taft –Hartley Trustee for Health Care in Illinois & Washington
Serve as Trustee on Training Trust in Illinois & Washington
AddusSM HomeCare
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Home Care Programs Improve Outcomes
Nursing home admissions fell, in spite of rising populations; substantial savings
HCBS Strategies Study
Illinois Residents Age 75+
Total Population vs. Nursing Home Residents
1,000,000 80,000 800,000 78,000 76,000 600,000 74,000 400,000 72,000 200,000
70,000 0 68,000 1980 2008
Illinois 75+ Population
Medicaid 75+ Nursing Home Population
Source: CCP Cost Effectiveness: Comparison of CCP growth with Nursing Facility Prevalence Reductions HCBS Strategies Inc. February 10, 2010
Scripps Gerontology Center Study
Ohio Residents Age 60+
Total Population vs. Nursing Home Residents
2,300,000 50,000 2,200,000
48,000 2,100,000 46,000
44,000 2,000,000
42,000 1,900,000
40,000 1,800,000
38,000 1,700,000
36,000
1997 2009
Ohio 60+ Population
Medicaid 60+ Nursing Home Population
Source: Coming of Age: Tracking the Progress and Challenges of Delivering Long-Term Services and Supports in Ohio Scripps Gerontology Center, Miami University of Ohio, June 2011
The home is the lowest cost setting in which to provide care, and is preferred by consumers and families
AddusSM HomeCare
Census - Revenue - EBITDA Trends
Census from Continuing Operations
30,000 28,000 26,000 24,000 22,000 20,000 18,000 12/31/11 12/31/12 12/31/13
CAGR: 3.8%
CAGR: 5.0%
Revenue from Continuing Operations ($ in millions) $310.0 $290.0 $270.0 $250.0 $230.0 $210.0 $190.0 $170.0 $150.0 12/31/11 12/31/12 12/31/13
We define Adjusted EBITDA as earnings before discontinued operations, preferred stock dividends, reevaluation of contingent consideration, interest expense, taxes, depreciation, amortization, and stock-based compensation expense. Adjusted EBITDA is a performance measure used by management that is not calculated in accordance with generally accepted accounting principles in the United States (GAAP). It should not be considered in isolation or as a substitute for net income, operating income or any other measure of financial performance calculated in accordance with GAAP.
EBITDA
($ in thousands)
$24,000 $22,000 $20,000 $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 12/31/11 12/31/12 12/31/13
CAGR: 4.4%
AddusSM HomeCare
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Condensed Consolidated Statements of Income
Continuing Operations
($ in millions)
Year Ended
12/31/2009 12/31/2010 12/31/2011 12/31/2012 12/31/2013
Net Service Revenues
$219.9 $230.1 $230.1 $244.3 $265.9
Cost of Service Revenues
(162.7) (170.4) (168.6) (180.2) (198.2)
General Administrative
(45.1) (47.0) (45.4) (45.9) (50.1)
Operating Margin
$12.1 $12.7 $16.1 $18.2 $17.6
Gross Margin Percentage
26.0% 25.9% 26.7% 26.2% 25.5%
Operating Margin Percentage
5.5% 5.5% 7.0% 7.4% 6.6%
Note: Operating Margin is defined as Net Service Revenues less Cost of Service Revenues and General Administrative expenses and does not include depreciation and amortization. Operating Margin is a performance measure used by management that is not calculated under generally accepted accounting principles in the United States (GAAP). It should not be considered in isolation or as a substitute for net income, operating income or any other measure of financial performance calculated in accordance with GAAP. Nine month data for periods ended 9/30/2013 and 9/30/2012 amounts are unaudited.
AddusSM HomeCare
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Select Balance Sheet Information
($ in millions)
Key Balances
12/31/2009 12/31/2010 12/31/2011 12/31/2012 12/31/2013
Cash
$0.5 $0.8 $2.0 $1.7 $15.6
Accounts receivable, net
70.5 71.0 72.4 71.3 61.4
Total Assets
161.3 166.9 154.7 149.9 163.9
Debt, including current maturities
49.2 45.2 31.5 16.5 -
Stockholders’ equity
$80.6 $88.1 $86.4 $94.4 $113.9
Debt to capital ratio
37.9% 33.9% 26.7% 14.8% 0.0%
AddusSM HomeCare
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Strategies for Future Growth
Organic Growth
Managed Care
Acquisitions
AddusSM HomeCare
EBITDA Reconciliation
Continuing Operations
($ in millions) Year Ended
12/31/2009 12/31/2010 12/31/2011 12/31/2012 12/31/2013
Net Income $ (1.8) $ 6.0 $ (2.0) $ 7.6 $ 19.1
Less: (Earnings) loss from discontinued ops (2.4) (1.7) 10.4 1.7 (8.0)
Net Income from continuing operations (4.2) 4.3 8.4 9.3 11.2
Preferred stock dividends 5.4 - - - -
Revaluation of contingent consideration - - (0.5) - -
Interest Income (0.2) (2.3) (0.2) (0.2)
Interest Expense 6.8 3.2 2.5 1.7 0.7
Income Tax Expense from Continuing Operations (0.1) 1.9 4.3 4.8 3.8
Depreciation and amortization 4.1 3.4 3.2 2.5 2.2
Stock based compensation expense 0.3 0.3 0.3 0.3 0.5
Adjusted EBITDA (1) $ 12.3 $ 12.9 $ 15.9 $ 18.4 $ 18.1
(1) We define Adjusted EBITDA as earnings before discontinued operations, preferred stock dividends, revaluation of contingent consideration, interest expense, taxes, depreciation, amortization, severance costs related to former chairman 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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AddusSM HomeCare