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): October 30, 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)

2300 Warrenville Road,

Downers Grove, Illinois

  60515
(Address of principal executive offices)   (Zip Code)

(630) 296-3400

(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 October 30, 2014, Addus HomeCare Corporation issued a press release announcing its earnings for the fiscal quarter ended September 30, 2014. 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 9.01. Financial Statements and Exhibits

(d) Exhibits:

 

Exhibit

No.

  

Description

99.1    Press release of Addus HomeCare Corporation dated October 30, 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: October 30, 2014     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 October 30, 2014.
EX-99.1

Exhibit 99.1

 

LOGO

 

Contacts:   
Dennis Meulemans    Scott Brittain
Chief Financial Officer    Corporate Communications, Inc.
Addus HomeCare    (615) 324-7308
(630) 296-3400    scott.brittain@cci-ir.com
dmeulemans@addus.com   

ADDUS HOMECARE ANNOUNCES THIRD QUARTER 2014 RESULTS

Net service revenues increase 21.3% to $81.7 million

Net income from continuing operations grew to $0.29 per diluted share, up 16.0%

Downers Grove, Illinois (October 30, 2014) – Addus HomeCare Corporation (NASDAQ: ADUS), a comprehensive provider of home and community-based services that primarily are social in nature, provided in the home and focused on the dual eligible population, today announced its financial results for the third quarter and nine months ended September 30, 2014.

For the third quarter, net service revenues increased 21.3% to $81.7 million from $67.3 million for the third quarter of 2013. Net income from continuing operations was $3.2 million for the third quarter of 2014, a 16.9% increase from $2.8 million for the third quarter last year, while net income from continuing operations per diluted share rose 16.0% to $0.29 from $0.25.

Net service revenues for the first nine months of 2014 were $230.3 million, a 17.5% increase from $196.1 million for the same prior-year period. Net income from continuing operations for the first nine months of 2014 was $8.3 million, or $0.75 per diluted share, compared with $8.0 million or $0.73 per diluted share for the same prior year period. Net income from continuing operations for the first nine months of 2014 included a charge for acquisition transaction expense totaling $0.03 per diluted share. Excluding this item, adjusted net income from continuing operations per diluted share increased 6.9% to $0.78 for the first nine months of 2014 from $0.73 for the same period in 2013.

“Addus produced significant profitable growth for the third quarter of 2014, as organic growth and the impact of acquisitions since the third quarter last year drove a 21.3% increase in revenues, our highest quarterly revenue growth as a public company,” commented Mark Heaney, President and Chief Executive Officer of Addus HomeCare. “Our 16.9% growth in net income from continuing operations reflected anticipated expense increases for our technology rollout, SOX 404 compliance efforts and the increased amortization related to our acquisitions. Adjusted EBITDA rose 27.4% to $6.3 million for the third quarter and 18.9% to $16.6 million for the first nine months of 2014.”

 

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ADUS Reports Third Quarter 2014 Results

Page 2

October 30, 2014

 

Third-quarter revenue growth reflected a 7.2% increase in same-store sales, with the remaining 14.1% increase attributable to acquisitions. Average billable census increased 18.4% for the third quarter of 2014 from the third quarter last year. Same-store census grew 7.6%, with acquisitions driving the remaining 10.8% increase in census. Average revenue per billable hour remained relatively stable at $17.03 for the third quarter of 2014 compared with $17.08 for the third quarter last year.

At the end of the third quarter of 2014, Addus had $14.1 million in cash, no bank debt and $40 million of availability under its revolving credit facility. Consistent with historical payment flows from the State of Illinois, net cash used in operations was $7.4 million for the quarter, while net cash provided by operations was $7.6 million for the first nine months of 2014.

Heaney added, “In addition to our financial results, we are also pleased with our initiatives to build our sales capabilities and the resulting organic growth of our existing home and community-based services. We are also gratified by the growth generated from acquisitions, and we continue to evaluate additional opportunities, especially in those states that are more actively engaged in transitioning dual eligible consumers to MCOs. We also continue to make important progress regarding several strategic initiatives that support long-term growth as we enter new states and that give us competitive advantages as we grow existing markets.

“As states transition management of their dual eligible populations to managed care plans, we remain focused on positioning the Company as an integral part of the continuum of care we believe MCOs will be expected to provide these consumers. The growing impact of this transition was evident in the third quarter, as our revenues from managed care increased to 9.5% of total net service revenues for the third quarter compared to 1.0% for the same prior-year quarter. While the majority of the managed care revenues were generated from acquisitions, we noted a shift in same-store MCO census and revenues, with same-store revenues from MCOs growing to 2.4% of total revenue for the third quarter of 2014 compared with 1.0% for the third quarter last year and to 1.5% compared with 0.5% for the nine months ended September 30, 2014 and 2013, respectively.”

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 discontinued operations, interest expense, taxes, depreciation, amortization, M&A 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 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 Reports Third Quarter 2014 Results

Page 3

October 30, 2014

 

Conference Call

Addus will host a conference call to discuss its results for the third quarter today beginning at 5:00 p.m. Eastern time. The toll-free dial-in number for the conference call is (877) 474-9501 (international dial-in number is (857) 244-7554), passcode 10423889. A telephonic replay of the conference call will be available through midnight on November 6, 2014, by dialing (888) 286-8010 (international dial-in number is (617) 801-6888) and entering passcode 54894257.

A live broadcast of the 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.

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 anticipated transition to managed care providers, expected benefits and 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, 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 17, 2014, and in Addus HomeCare’s Quarterly Reports on Form 10-Q, filed with the Securities and Exchange Commission on May 7, 2014, and August 11, 2014, 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).

 

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ADUS Reports Third Quarter 2014 Results

Page 4

October 30, 2014

 

About Addus

Addus is a comprehensive provider of home and community-based services that primarily are social in nature, provided in the home and focused on the dual eligible population. Addus’ services include personal care and assistance with activities of daily living, and adult day care. Addus’ consumers are individuals 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, managed care organizations, commercial insurers and private individuals. For more information, please visit www.addus.com.

 

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ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Income and Cash Flow Information

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

(Unaudited)

 

Income Statement Information:    For the Three Months
Ended September 30,
    For the Nine Months
Ended September 30,
 
     2014     2013     2014     2013  

Net service revenues

   $ 81,658      $ 67,306      $ 230,306      $ 196,059   

Cost of service revenues

     59,818        50,080        169,218        146,422   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     21,840        17,226        61,088        49,637   
     26.7     25.6     26.5     25.3

General and administrative expenses

     15,773        12,424        45,576        36,026   

Depreciation and amortization

     1,106        539        2,684        1,626   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     16,879        12,963        48,260        37,652   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income from continuing operations

     4,961        4,263        12,828        11,985   

Total interest expense (income), net

     180        (24     484        326   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations before taxes

     4,781        4,287        12,344        11,659   

Income tax expense

     1,544        1,517        4,024        3,620   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income from continuing operations

     3,237        2,770        8,320        8,039   
  

 

 

   

 

 

   

 

 

   

 

 

 

Discontinued operations:

        

Loss from home health business, net of tax

     —          (203     —          (890

Gain on sale of home health business, net of tax

     —          —          —          11,111   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 3,237      $ 2,567      $ 8,320      $ 18,260   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) per share:

        

Basic

        

Continuing operations

   $ 0.30      $ 0.26      $ 0.76      $ 0.75   

Discontinued operations

     —          (0.02     —          0.95   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic income per share

   $ 0.30      $ 0.24      $ 0.76      $ 1.70   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

        

Continuing operations

   $ 0.29      $ 0.25      $ 0.75      $ 0.73   

Discontinued operations

     —          (0.02     —          0.93   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted income per share

   $ 0.29      $ 0.23      $ 0.75      $ 1.66   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of common shares outstanding:

        

Basic

     10,927        10,787        10,895        10,783   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     11,154        11,071        11,122        11,006   
  

 

 

   

 

 

   

 

 

   

 

 

 
Cash Flow Information:    For the Three Months
Ended September 30,
    For the Nine Months
Ended September 30,
 
     2014     2013     2014     2013  

Net cash (used in) provided by operating activities

   $ (7,413   $ (9,130   $ 7,590      $ 25,103   

Net cash (used in) provided by investing activities

     (1,958     (183     (13,149     19,082   

Net cash used in (provided by) financing activities

     3,904        —          4,118        (16,458
  

 

 

   

 

 

   

 

 

   

 

 

 

Net change in cash

     (5,467     (9,313     (1,441     27,727   

Cash at the beginning of the period

     19,591        38,777        15,565        1,737   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash at the end of the period

   $ 14,124      $ 29,464      $ 14,124      $ 29,464   
  

 

 

   

 

 

   

 

 

   

 

 

 


Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)

 

     September 30,  
     2014      2013  

Assets

     

Current assets

     

Cash

   $ 14,124       $ 29,464   

Accounts receivable, net

     62,121         54,516   

Prepaid expenses and other current assets

     6,937         6,167   

Deferred tax assets

     8,326         7,258   
  

 

 

    

 

 

 

Total current assets

     91,508         97,405   
  

 

 

    

 

 

 

Property and equipment, net

     7,646         2,471   
  

 

 

    

 

 

 

Other assets

     

Goodwill

     64,237         50,416   

Intangible assets, net

     11,043         5,352   

Investment in joint venture

     900         900   

Other assets

     13         173   
  

 

 

    

 

 

 

Total other assets

     76,193         56,841   
  

 

 

    

 

 

 

Total assets

   $ 175,347       $ 156,717   
  

 

 

    

 

 

 

Liabilities and stockholders’ equity

     

Current liabilities

     

Accounts payable

   $ 3,613       $ 4,379   

Current portion of capital lease obligations

     978         —     

Accrued expenses

     41,434         36,401   

Deferred revenue

     3         19   
  

 

 

    

 

 

 

Total current liabilities

     46,028         40,799   
  

 

 

    

 

 

 

Capital lease obligations, less current portion

     2,926         —     

Deferred tax liability

     3,441         3,097   

Total stockholders’ equity

     122,952         112,821   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 175,347       $ 156,717   
  

 

 

    

 

 

 


Key Statistical and Financial Data (Unaudited)

 

     For the Three Months
Ended September 30,
    For the Nine Months
Ended September 30,
 
     2014     2013     2014     2013  

General:

        

Adjusted EBITDA (in thousands) (1)

   $ 6,305      $ 4,950      $ 16,617      $ 13,976   

States served at period end

     —          —          22        21   

Locations at period end

     —          —          132        94   

Employees at period end

     —          —          17,504        13,660   

Home & Community

        

Average billable census—same store

     29,118        27,058        30,665        26,411   

Average billable census—acquisitions

     2,914        —          2,088        —     

Average billable census total

     32,032        27,058        32,753        26,411   

Billable hours (in thousands)

     4,749        3,941        13,511        11,517   

Average billable hours per census per month

     49.9        48.5        45.8        48.5   

Billable hours per business day

     74,912        59,735        70,737        59,107   

Revenues per billable hour

   $ 17.03      $ 17.08      $ 17.05      $ 17.02   

Percentage of Revenues by Payor:

        

State, local and other governmental programs

     85.9     94.0     88.6     94.0

Managed Care

     9.5        1.0        6.8        0.5   

Private duty

     3.5        4.0        3.5        4.0   

Commercial

     1.1     1.0     1.1     1.5

 

(1) We define Adjusted EBITDA as earnings before discontinued operations, interest expense, taxes, depreciation, amortization, M&A expenses 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 September 30,
    For the Nine Months
Ended September 30,
 
     2014      2013     2014      2013  

Reconciliation of Adjusted EBITDA to Net Income:

          

Net income

   $ 3,237       $ 2,567      $ 8,320       $ 18,260   

Less: (Earnings) from discontinued operations, net of tax

     —           203        —           (10,221
  

 

 

    

 

 

   

 

 

    

 

 

 

Net income from continuing operations

     3,237         2,770        8,320         8,039   

Interest expense, net

     180         (24     484         326   

Income tax expense from continuing operations

     1,544         1,517        4,024         3,620   

Depreciation and amortization

     1,106         539        2,684         1,626   

M&A expenses

     7         —          543         —     

Stock-based compensation expense

     231         148        562         365   
  

 

 

    

 

 

   

 

 

    

 

 

 

Adjusted EBITDA

   $ 6,305       $ 4,950      $ 16,617       $ 13,976   
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1) We define Adjusted EBITDA as earnings before discontinued operations, interest expense, taxes, depreciation, amortization, M&A expenses 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.