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 3, 2015

 

 

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 Rd.

Downers Grove, IL

  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 August 3, 2015, Addus HomeCare Corporation issued a press release announcing its earnings for the fiscal quarter ended June 30, 2015. A copy of the press release is furnished as Exhibit 99.1 to this report.

The information in this Item of the Current Report, including the attached Exhibit, is being furnished and shall not be deemed “filed” for the 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 August 3, 2015


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 3, 2015     By:  

/s/ Donald Klink

    Name:   Donald Klink
    Title:   Chief Financial Officer


Exhibit Index

 

Exhibit
No.

  

Description

99.1    Press release of Addus HomeCare Corporation dated August 3, 2015
EX-99.1

Exhibit 99.1

 

 

LOGO

 

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

ADDUS HOMECARE ANNOUNCES SECOND QUARTER 2015 RESULTS

Net service revenues increase 11.5% year over year to $85.8 million

Adjusted diluted EPS grows 15.4% year over year to $0.30; Diluted EPS grows 16.0% to $0.29

Adjusted EBITDA increases 16.1% year over year to $6.9 million

Downers Grove, Illinois (August 3, 2015) – Addus HomeCare Corporation (NASDAQ: ADUS), a comprehensive provider of home and community-based services that are primarily personal in nature, provided in the home and focused on the dual eligible population, today announced its financial results for the second quarter and six months ended June 30, 2015.

For the second quarter, net service revenues increased 11.5% to $85.8 million from $77.0 million for the second quarter of 2014. Net income was $3.3 million, or $0.29 per diluted share, for the second quarter of 2015 compared with $2.7 million, or $0.25 per diluted share, for same quarter last year. Adjusted earnings per diluted share increased 15.4% to $0.30 for the second quarter of 2015 from $0.26 for the second quarter of 2014. Adjusted EBITDA increased 16.1% to $6.9 million for the second quarter of 2015 from $5.9 million for the second quarter of 2014. (See page 7 for a reconciliation of all non-GAAP and GAAP financial measures.)

For the first six months of 2015, net service revenues rose 12.8% to $167.7 million from $148.6 million for the first six months of 2014. Net income increased to $5.4 million, or $0.48 per diluted share, for the first half of 2015 from $5.1 million, or $0.46 per diluted share, for the comparable period in 2014. Adjusted earnings per diluted share increased 8.2% to $0.53 for the first half of 2015 from $0.49 for the first half of 2014. Adjusted EBITDA increased 18.4% to $12.3 million for the first six months of 2015 from $10.4 million for the first six months of 2014.

“Our team produced another good quarter of quality care, growth and financial performance,” commented Mark Heaney, President and Chief Executive Officer of Addus HomeCare. “We generated 11.5% growth in revenues and expanded margins despite the still slower than normal - but improved - pace of referrals in Illinois related to the state’s ongoing transition to managed care. Our sequential-quarter same-store census for Illinois increased 1.6% for the second quarter compared to a 0.2% sequential-quarter decline in the first quarter. We expect referrals in Illinois, and other states transitioning care to MCOs, to continue to be uneven, but we remain confident the overall transition of care to MCOs by the states represents a substantial long-term growth opportunity for Addus.

“We experienced higher costs during the second quarter related to the ongoing installation of our new human resources and payroll information system. These costs were primarily related to expanding the functionality of the system and increased training. The additional costs in the quarter totaled $0.02 per diluted share.”

The Company’s revenue growth for the second quarter reflected 8.8% growth in average billable census compared to the second quarter of 2014. Average billable hours per census per month increased 1.6% to 50.3 for the latest quarter, while revenues per billable hour increased 0.9% to $17.12. Gross margin

 

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ADUS Reports Second Quarter 2015 Results

Page 2

August 3, 2015

 

increased to 27.6% for the latest quarter from 26.7% for the second quarter last year, primarily due to the margin profiles of our acquisitions. Adjusted EBITDA margin was 8.0% for the second quarter of 2015 compared with 7.7% for the same quarter in 2014.

Addus had $42.0 million in cash at the end of the second quarter of 2015, no bank debt and $40 million of availability under its revolving credit facility. Net cash provided by operating activities was $35.9 million for the second quarter of 2015 compared with $12.3 million for the second quarter last year.

Heaney concluded, “For the second half of 2015, we are focused on driving organic growth, improving the performance of our acquired businesses and cost management. We have exited certain underperforming locations that we expect will reduce second-half revenue by approximately $4.5 to $5.5 million, while having a positive EPS impact. We also continue to evaluate additional accretive acquisitions and work toward the closing of our previously announced definitive agreement to acquire South Shore Home Health Services, Inc., a New York state-licensed home care services agency with 2014 revenues of approximately $47 million.

“We believe Addus is the personal care company best positioned to partner with MCOs, due to our consistently good care, our continuing investment in technology, our scale and broad geographic footprint, and our acquisition strategy focused on states transitioning, or likely to transition, care to MCOs in the nearer term. The demographics of our industry, combined with the opportunity for improved health outcomes and value-based reimbursement are compelling for Addus. We believe that, combined, they expand our potential for long-term growth and increased stockholder value.”

Non-GAAP Financial Measures

The information provided in this release includes adjusted diluted earnings per share from continuing operations and adjusted EBITDA, which are non-GAAP financial measures. The Company defines adjusted diluted earnings per share as diluted earnings per share, adjusted for M&A expenses, incremental SOX 404 compliance expense and tax benefit from worker opportunity tax credits. The Company defines adjusted EBITDA as earnings before 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 diluted earnings per share to diluted earnings per share and a reconciliation of adjusted EBITDA to net income, in each case, the most directly comparable GAAP measure. Management believes that adjusted diluted earnings per share and adjusted EBITDA 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.

Conference Call

Addus will host a conference call on Tuesday, August 4, 2015, beginning at 9:00 a.m. Eastern time. The toll-free dial-in number is (877) 930-8289 (international dial-in number is (253) 336-8714), pass code 61717163. A telephonic replay of the conference call will be available through midnight on August 18, 2015, by dialing (855) 859-2056 (international dial-in number is (404) 537-3406) and entering pass code 61717163.

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.

 

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ADUS Reports Second Quarter 2015 Results

Page 3

August 3, 2015

 

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 consummation of acquisitions, 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 16, 2015, 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).

About Addus

Addus is a comprehensive provider of home and community-based services that are primarily 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)

 

     For the Three Months Ended June 30,     For the Six Months Ended June 30,  
     2015     2014     2015     2014  

Income Statement Information:

        

Net service revenues

   $ 85,809      $ 76,965      $ 167,724      $ 148,648   

Cost of service revenues

     62,127        56,385        122,116        109,400   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     23,682        20,580        45,608        39,248   
     27.6     26.7     27.2     26.4

General and administrative expenses

     17,423        15,399        34,576        29,802   

Depreciation and amortization

     1,161        1,083        2,307        1,578   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     18,584        16,482        36,883        31,380   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     5,098        4,098        8,725        7,868   

Total interest expense, net

     169        151        342        305   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before taxes

     4,929        3,947        8,383        7,563   

Income tax expense

     1,676        1,218        2,968        2,480   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 3,253      $ 2,729      $ 5,415      $ 5,083   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income per share:

        

Basic

   $ 0.30      $ 0.25      $ 0.49      $ 0.47   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.29      $ 0.25      $ 0.48      $ 0.46   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of common shares outstanding:

        

Basic

     10,989        10,903        10,970        10,878   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     11,212        11,138        11,188        11,121   
  

 

 

   

 

 

   

 

 

   

 

 

 
     For the Three Months Ended June 30,     For the Six Months Ended June 30,  
     2015     2014     2015     2014  

Cash Flow Information:

        

Net cash provided by operating activities

   $ 35,948      $ 12,333      $ 35,044      $ 15,003   

Net cash (used in) investing activities

     (554     (9,757     (5,535     (11,241

Net cash (used in) provided by financing activities

     (766     —          (848     214   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net change in cash

     34,628        2,576        28,661        3,976   

Cash at the beginning of the period

     7,396        16,965        13,363        15,565   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash at the end of the period

   $ 42,024      $ 19,541      $ 42,024      $ 19,541   
  

 

 

   

 

 

   

 

 

   

 

 

 


Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)

 

     June 30,  
     2015      2014  

Assets

     

Current assets

     

Cash

   $ 42,024       $ 19,541   

Accounts receivable, net

     47,063         48,725   

Prepaid expenses and other current assets

     4,249         4,555   

Deferred tax assets

     8,508         8,326   
  

 

 

    

 

 

 

Total current assets

     101,844         81,147   
  

 

 

    

 

 

 

Property and equipment, net

     8,062         6,958   
  

 

 

    

 

 

 

Other assets

     

Goodwill

     66,002         64,324   

Intangible assets, net

     10,946         11,753   

Investment in joint venture

     900         900   

Other assets

     261         53   
  

 

 

    

 

 

 

Total other assets

     78,109         77,030   
  

 

 

    

 

 

 

Total assets

   $ 188,015       $ 165,135   
  

 

 

    

 

 

 

Liabilities and stockholders’ equity

     

Current liabilities

     

Accounts payable

   $ 3,507       $ 4,769   

Accrued expenses

     39,586         37,438   

Current portion of capital lease obligations

     1,091         —     

Current portion of contingent earn-out obligation

     920         —     

Deferred revenue

     —           3   
  

 

 

    

 

 

 

Total current liabilities

     45,104         42,210   
  

 

 

    

 

 

 

Contingent earn-out obligation, less current portion

     200         —     

Capital lease obligations, less current portion

     2,440         —     

Deferred tax liability

     5,845         3,441   

Total stockholders’ equity

     134,426         119,484   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 188,015       $ 165,135   
  

 

 

    

 

 

 


Key Statistical and Financial Data (Unaudited)

 

     For the Three Months
Ended June 30,
    For the Six Months
Ended June 30,
 
     2015     2014     2015     2014  

General:

        

Adjusted EBITDA (in thousands) (1)

   $ 6,883     $ 5,927     $ 12,283     $ 10,378  

States served at period end

     —          —          21       22  

Locations at period end

     —          —          127       133  

Employees at period end

     —          —          19,067       17,754  

Home & Community

        

Average billable census - same store

     32,487       28,453       32,217       28,163  

Average billable census - acquisitions

     728       2,070       791       1,847  

Average billable census total

     33,215       30,523       33,008       30,010  

Billable hours (in thousands)

     5,011       4,536       9,766       8,773  

Average billable hours per census per month

     50.3       49.5       49.3       48.7  

Billable hours per business day

     78,302       72,006       76,896       69,076  

Revenues per billable hour

   $ 17.12     $ 16.97     $ 17.17     $ 16.94  

Percentage of Revenues by Payor:

        

State, local and other governmental programs

     77.7     89.4     77.7     90.1

Managed Care

     18.1       6.2       18.1       5.3  

Private duty

     3.2       1.1       3.2       1.2  

Commercial

     1.0     3.3     1.0     3.4

 

(1) We define Adjusted EBITDA as earnings before 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.


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

Adjusted EBITDA (1) (Unaudited)

   2015      2014     2015      2014  

Reconciliation of Adjusted EBITDA to Net Income:

          

Net income

   $ 3,253       $ 2,729      $ 5,415       $ 5,083   

Interest expense, net

     169         151        341         305   

Income tax expense

     1,676         1,218        2,969         2,480   

Depreciation and amortization

     1,161         1,083        2,307         1,578   

M&A expenses

     209         536        501         601   

Stock-based compensation expense

     415         210        750         331   
  

 

 

    

 

 

   

 

 

    

 

 

 

Adjusted EBITDA

   $ 6,883       $ 5,927      $ 12,283       $ 10,378   
  

 

 

    

 

 

   

 

 

    

 

 

 

Reconciliation of Diluted Earnings per Share to Adjusted Diluted Earnings per
Share: (2)

          

Diluted earnings per share

   $ 0.29       $ 0.25      $ 0.48       $ 0.46   

Acquisition-related transaction expense per share

     0.01         0.03        0.03         0.03   

Worker Opportunity Tax Credits per share

     —           (0.02     —           —     

Incremental Sarbanes-Oxley Section 404 compliance expense per share

     —           —          0.02         —     
  

 

 

    

 

 

   

 

 

    

 

 

 

Adjusted diluted earnings per share

   $ 0.30       $ 0.26      $ 0.53       $ 0.49   
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1) We define Adjusted EBITDA as earnings before 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.
(2) We define Adjusted diluted earnings per share as earnings per share, adjusted for M&A expenses, tax benefit from worker opportunity tax credits and incremental costs for Sarbanes-Oxley Section 404 compliance. 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.