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): May 2, 2016
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 May 2, 2016, Addus HomeCare Corporation issued a press release announcing its earnings for the fiscal quarter ended March 31, 2016. 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 May 2, 2016. | |
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: May 2, 2016 | 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 May 2, 2016. | |
Exhibit 99.1
| 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 FIRST-QUARTER 2016 RESULTS
Net service revenues increase 13.1% year over year to $92.6 million
Process and cost improvement initiatives well underway
Adjusted diluted EPS grows 21.7% to $0.28; GAAP diluted EPS is $0.01, including write-offs
Downers Grove, Illinois (May 2, 2016) – Addus HomeCare Corporation (NASDAQ: ADUS), a comprehensive provider of personal care services primarily provided in the home and focused on the dual eligible population, today announced its financial results for the first quarter ended March 31, 2016.
For the first quarter, net service revenues increased 13.1% to $92.6 million from $81.9 million for the first quarter of 2015. Net income was $0.2 million, or $0.01 per share, for the first quarter of 2016 compared with net income of $2.2 million, or $0.19 per diluted share, for the first quarter of 2015. The results for the first quarter of 2016 include write-offs of $3.5 million, $2.2 million of which were related to senior management severance and other related costs, with the remainder related to process improvement and expense reduction initiatives launched in the quarter. Excluding these costs, adjusted net income per diluted share was $0.28 for the first quarter of 2016, an increase of 21.7% compared with $0.23 for the first quarter last year. (See page 7 for a reconciliation of all non-GAAP and GAAP financial measures.)
Dirk Allison, President and Chief Executive Officer of Addus, commented “Addus produced a strong start to 2016 in the first quarter. Revenue and adjusted EPS grew at a higher rate than in the past year. We implemented a variety of initiatives to support our strategies for growth while ensuring that costs are in line with revenues. In addition, we completed the acquisition of South Shore.”
The Company’s revenue growth for the first quarter reflected an 10.8% increase in billable hours per business day compared with the first quarter last year. First-quarter billable hours per business day grew 8.6% compared with the fourth quarter of 2015. With a 0.4% increase in revenues per billable hour, comparable-quarter revenue per day increased 11.3% versus the first quarter of 2015.
“As discussed in our fourth-quarter 2015 earnings release and conference call, we have been focused on process improvement initiatives that result in expense reduction and improvement in our operating efficiency and scalability to support our growth,” added Mr. Allison. “We have completed a substantial portion of the plan and are actively implementing a number of these initiatives. These initiatives resulted in $1.3 million write-offs for the first quarter. In total, we expect these initiatives to result in write-offs of $3.5 million over the first half of 2016, approximately $0.4 million of which will be cash. These initiatives are expected to produce aggregate annualized cost savings of approximately $4.1 million.”
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ADUS Reports First-Quarter 2016 Results
Page 2
May 2, 2016
Details are as follows:
| • | The closing of our Contact Center facility, as part of returning control of customer service and scheduling to our local teams, resulted in a $0.2 million first-quarter write-off, and an expected $2.3 million second quarter write-off ($0.4 million of which is cash). These initiatives are expected to generate $1.2 million in annualized savings beginning in the second quarter; |
| • | Changes in our telecommunications operations, resulted in a $0.2 million first-quarter write off and will generate an expected $1.6 million in annualized savings, with the majority occurring in the second half of the year; |
| • | Changes in our payroll process are expected to result in $1.3 million in annualized savings beginning early in the fourth quarter; and |
| • | The write-off of development costs relating to software that will no longer be used by Addus, resulted in a $0.9 million write-off in the first quarter. |
“We are pleased with the progress made on these and other initiatives, which we expect to drive meaningful cost reductions by the end of 2016. Through a disciplined focus on ensuring our investments in new initiatives generate appropriate returns, we expect to enhance our ability to provide our consumers with high quality, cost-effective care, improve our ability to add value to existing and new customer relationships, and sustain long-term profitable growth both organically and through acquisition.”
Addus completed the first quarter with $9.1 million in cash, $22.0 million of long-term debt related to the acquisition of South Shore, $10.0 million of bank debt and $42.8 million of availability under its revolving credit facility. Net cash used in operating activities was $6.0 million for the first quarter of 2016, compared with $0.9 million for the prior-year first quarter.
Non-GAAP Financial Measures
The information provided in this release includes adjusted diluted net income per share, Adjusted EBITDA and adjusted net service revenue, which are non-GAAP financial measures. The Company defines adjusted diluted net income per share as diluted net income per share, adjusted for M&A expenses, restructure charges, severance and other costs and stock compensation. The Company defines Adjusted EBITDA as earnings before interest expense, taxes, depreciation, amortization, M&A expenses, stock-based compensation expense, restructure charges and severance and other costs. The Company defines adjusted net service revenue as revenue adjusted for the closure of certain sites. The Company has provided, in the financial statement tables included in this press release, a reconciliation of adjusted diluted net income per share to diluted net income per share, a reconciliation of Adjusted EBITDA to net income and a reconciliation of adjusted net service revenue to net service revenue, in each case, the most directly comparable GAAP measure. Management believes that adjusted diluted net income per share, adjusted EBITDA and adjusted net service revenue 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, May 3, 2016, 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 86487320. A telephonic replay of the conference call will be available through midnight on May 17, 2016, by dialing (855) 859-2056 (international dial-in number is (404) 537-3406) and entering pass code 86487320.
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ADUS Reports First-Quarter 2016 Results
Page 3
May 2, 2016
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.
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. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. 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 and integration of acquisitions, anticipated transition to managed care providers, our ability to successfully execute our growth strategy, unexpected increases in SG&A and other expenses, expected benefits and unexpected 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, higher than anticipated costs, estimation inaccuracies in future revenues, margins, earnings and growth, 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 11, 2016, 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. In addition, these forward-looking statements necessarily depend upon assumptions, estimates and dates that may be incorrect or imprecise and involve known and unknown risks, uncertainties and other factors. Accordingly, any forward-looking statements included in this press release do not purport to be predictions of future events or circumstances and may not be realized. (Unaudited tables and notes follow).
About Addus
Addus is a comprehensive provider of home and community-based services that primarily are personal in nature, provided in the home and focused on the dual eligibility 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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ADUS Reports First-Quarter 2016 Results
Page 4
May 2, 2016
ADDUS HOMECARE CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(amounts and shares in thousands, except per share data)
(Unaudited)
| Income Statement Information: | For the Three Months Ended March 31, |
|||||||
| 2016 | 2015 | |||||||
| Net service revenues |
$ | 92,602 | $ | 81,915 | ||||
| Cost of service revenues |
68,283 | 59,989 | ||||||
|
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|
|
|
|||||
| Gross profit |
24,319 | 21,926 | ||||||
| 26.3 | % | 26.8 | % | |||||
| General and administrative expenses |
22,188 | 17,153 | ||||||
| Depreciation and amortization |
1,478 | 1,146 | ||||||
|
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|
|
|
|||||
| Total operating expenses |
23,666 | 18,299 | ||||||
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| Operating income from continuing operations |
653 | 3,627 | ||||||
| Total interest expense, net |
419 | 173 | ||||||
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| Income before income taxes |
234 | 3,454 | ||||||
| Income tax expense |
77 | 1,292 | ||||||
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| Net income |
$ | 157 | $ | 2,162 | ||||
|
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| Net income per diluted share: |
$ | 0.01 | $ | 0.19 | ||||
|
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| Weighted average number of common shares outstanding: |
||||||||
| Diluted |
11,178 | 11,162 | ||||||
| Cash Flow Information: | For the Three Months Ended March 31, |
|||||||
| 2016 | 2015 | |||||||
| Net cash (used in) provided by operating activities |
$ | (5,959 | ) | $ | (904 | ) | ||
| Net cash (used in) investing activities |
(20,791 | ) | (4,981 | ) | ||||
| Net cash (used in) provided by financing activities |
31,726 | (82 | ) | |||||
|
|
|
|
|
|||||
| Net change in cash |
4,976 | (5,967 | ) | |||||
| Cash at the beginning of the period |
4,104 | 13,363 | ||||||
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| Cash at the end of the period |
$ | 9,080 | $ | 7,396 | ||||
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ADUS Reports First-Quarter 2016 Results
Page 5
May 2, 2016
ADDUS HOMECARE CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Amounts in thousands)
(Unaudited)
| March 31, | ||||||||
| 2016 | 2015 | |||||||
| Assets |
||||||||
| Current assets |
||||||||
| Cash |
$ | 9,080 | $ | 7,396 | ||||
| Accounts receivable, net |
105,771 | 74,370 | ||||||
| Prepaid expenses and other current assets |
3,933 | 6,158 | ||||||
| Deferred tax assets |
8,640 | 8,508 | ||||||
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|
|||||
| Total current assets |
127,424 | 96,432 | ||||||
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| Property and equipment, net |
7,683 | 8,075 | ||||||
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| Other assets |
||||||||
| Goodwill |
73,931 | 66,088 | ||||||
| Intangible assets, net |
19,280 | 11,540 | ||||||
| Investment in joint venture |
900 | 900 | ||||||
| Other assets |
— | 255 | ||||||
|
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|
|
|||||
| Total other assets |
94,111 | 78,783 | ||||||
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| Total assets |
$ | 229,218 | $ | 183,290 | ||||
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| Liabilities and stockholders’ equity |
||||||||
| Current liabilities |
||||||||
| Accounts payable |
$ | 4,275 | $ | 2,995 | ||||
| Accrued expenses |
41,201 | 38,295 | ||||||
| Current portion of long-term debt |
2,217 | 993 | ||||||
| Current portion of contingent earn-out obligation |
1,250 | 1,000 | ||||||
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| Total current liabilities |
48,943 | 43,283 | ||||||
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| Long-term debt, less current portion |
31,070 | 2,425 | ||||||
| Contingent earn-out obligation, less current portion |
— | 1,120 | ||||||
| Deferred tax liability |
6,815 | 5,845 | ||||||
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| Total long-term liabilities |
37,885 | 9,390 | ||||||
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| Total liabilities |
86,828 | 52,673 | ||||||
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| Total stockholders’ equity |
142,390 | 130,617 | ||||||
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| Total liabilities and stockholders’ equity |
$ | 229,218 | $ | 183,290 | ||||
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ADUS Reports First-Quarter 2016 Results
Page 6
May 2, 2016
ADDUS HOMECARE CORPORATION AND SUBSIDIARIES
Key Statistical and Financial Data
(Unaudited)
| For the Three Months Ended March 31, |
||||||||
| 2016 | 2015 | |||||||
| General: |
||||||||
| Adjusted EBITDA (in thousands) (1) |
$ | 6,655 | $ | 5,400 | ||||
| States served at period end |
23 | 22 | ||||||
| Locations at period end |
120 | 132 | ||||||
| Employees at period end |
21,559 | 20,660 | ||||||
| Home & Community: |
||||||||
| Average billable census - same store (2) |
32,344 | 32,648 | ||||||
| Average billable census - acquisitions (3) |
1,291 | — | ||||||
| Average billable census total |
33,635 | 32,648 | ||||||
| Billable hours (in thousands) |
5,353 | 4,754 | ||||||
| Average billable hours per census per month |
53.7 | 48.5 | ||||||
| Billable hours per business day |
83,648 | 75,468 | ||||||
| Revenues per billable hour |
$ | 17.30 | $ | 17.23 | ||||
| Percentage of Revenues by Payor: |
||||||||
| State, local and other governmental programs |
73.2 | % | 77.7 | % | ||||
| Managed care organizations |
23.1 | 18.3 | ||||||
| Private duty |
2.7 | 3.1 | ||||||
| Commercial |
1.0 | % | 0.9 | % | ||||
| (1) | We define Adjusted EBITDA as earnings adjusted for interest expense, taxes, depreciation, amortization, M&A expenses, stock-based compensation expense and restructure and severance and other costs. 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) | Exited sites would have reduced same store census for the three months ended March 31, 2015 by 959. |
| (3) | The average billable census in acquisitions of 2,914 for the three months ended March 31, 2015 was reclassified to average billable census - same stores for comparability purposes. The average billable census for the three months ended March 31, 2016 was prorated for the date of the acquisition. |
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ADUS Reports First-Quarter 2016 Results
Page 7
May 2, 2016
ADDUS HOMECARE CORPORATION AND SUBSIDIARIES
(Unaudited)
| For the Three Months Ended March 31, |
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| 2016 | 2015 | |||||||
| Reconciliation of Adjusted EBITDA to Net Income: (1) |
||||||||
| Net income |
$ | 157 | $ | 2,162 | ||||
| Interest expense, net |
419 | 173 | ||||||
| Income tax expense |
77 | 1,292 | ||||||
| Depreciation and amortization |
1,478 | 1,146 | ||||||
| M&A expenses |
696 | 291 | ||||||
| Stock-based compensation expense |
337 | 336 | ||||||
| Restructure charge |
895 | — | ||||||
| Severance and other costs |
2,596 | — | ||||||
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| Adjusted EBITDA |
$ | 6,655 | $ | 5,400 | ||||
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| Reconciliation of Diluted Net Income per Share to Adjusted Diluted Earnings per Share: (2) |
||||||||
| Diluted earnings per share |
$ | 0.01 | $ | 0.19 | ||||
| Acquisition-related transaction expense per share |
0.04 | 0.02 | ||||||
| Restructure charge |
0.05 | — | ||||||
| Severance and other costs |
0.16 | — | ||||||
| Stock compensation |
0.02 | 0.02 | ||||||
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| Adjusted diluted earnings per share |
$ | 0.28 | $ | 0.23 | ||||
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| Reconciliation of Net Service Revenues to Adjusted Net Service Revenues: (3) |
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| Net service revenues |
$ | 92,602 | $ | 81,915 | ||||
| Revenue associated with the closure of certain sites |
— | (2,678 | ) | |||||
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| Adjusted net service revenues |
$ | 92,602 | $ | 79,237 | ||||
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| (1) | We define Adjusted EBITDA as earnings before interest expense, taxes, depreciation, amortization, M&A expenses, stock-based compensation expense and restructure and severance and other costs. 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 net income per share as earnings per share, adjusted for M&A expenses, restructure and severance and other costs and stock compensation. 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. |
| (3) | We define Adjusted net service revenues as revenue adjusted for the closure of certain sites. Adjusted net service revenues 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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