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 AND EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): May 10, 2018 (May 7, 2018)

 

 

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 No.)

6801 Gaylord Parkway, Suite 110,

Frisco, TX

  75034
(Address of Principal Executive Offices)   (Zip Code)

469-535-8200

(Registrant’s telephone number, including area code)

Not Applicable

(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))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 2.02. Results of Operations and Financial Condition

On May 7, 2018, Addus HomeCare Corporation (the “Corporation”) issued a press release (the “Press Release”) announcing, among other matters, the Corporation’s results of operations for the first quarter ended March 31, 2018. A copy of the Press Release is furnished herewith as Exhibit 99.1 to this report and is incorporated herein by reference.

 

Item 7.01. Regulation FD Disclosure.

On May 7, 2018, the Corporation issued the Press Release announcing, among other matters, its results of operations for the first quarter ended March 31, 2018, the text of which is set forth as Exhibit 99.1.

 

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits:

 

Exhibit
No.
  

Description

99.1    Press release of Addus HomeCare Corporation, dated May 7, 2018.


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 10, 2018     By:  

/s/ Brian Poff

    Name:   Brian Poff
    Title:   Chief Financial Officer
EX-99.1

Exhibit 99.1

 

LOGO

 

Contacts:   
Brian W. Poff    Scott Brittain
Executive Vice President,    Corporate Communications, Inc.
  Chief Financial Officer    (615) 324-7308
Addus HomeCare Corporation    scott.brittain@cci-ir.com
(469) 535-8200   
investorrelations@addus.com     

ADDUS HOMECARE ANNOUNCES FIRST-QUARTER 2018 FINANCIAL RESULTS

Net Income Increases 14.1% to $4.9 Million; Adjusted Net Income Grows 25.0% to $5.0 Million

Diluted EPS Increases 13.5% to $0.42; Adjusted Diluted EPS Grows 23.5% to $0.42

Adjusted EBITDA Increases 9.6% to $8.7 Million

Same-Store Sales Increase 4.6%

Frisco, Texas (May 7, 2018) – Addus HomeCare Corporation (NASDAQ: ADUS), a provider of comprehensive home care services, today announced its financial results for the first quarter ended March 31, 2018.

Net service revenues were $109.4 million for the first quarter of 2018, up 7.7% from $101.6 million for the first quarter of 2017. Net income increased 14.1% to $4.9 million for the latest quarter from $4.3 million for the first quarter of 2017, while net income per diluted share increased 13.5% to $0.42 from $0.37. Adjusted net income per diluted share grew 23.5% to $0.42 for the first quarter of 2018 from $0.34 for the first quarter of 2017. Adjusted net income per diluted share for the first quarter of 2018 excludes prompt payment interest income of $0.16 from the state of Illinois; M&A expenses of $0.07; restructuring charges of $0.02; severance and other costs of $0.01; and stock-based compensation expense of $0.06. For the first quarter of 2017, adjusted net income per diluted share excludes a gain on the sale of adult day service centers of $0.11; M&A expenses of $0.01; severance and other costs of $0.05; and stock-based compensation expense of $0.02. Adjusted EBITDA increased 9.6% to $8.7 million for the first quarter of 2018 from $8.0 million for the first quarter of 2017, and adjusted EBITDA margin expanded to 8.0% from 7.8%. (See page 7 for a reconciliation of all non-GAAP and GAAP financial measures in this news release.)

Dirk Allison, President and Chief Executive Officer of Addus, commented, “I am proud of our solid financial results for the first quarter of 2018. First-quarter revenues reflected continuing organic growth, with an increase in same-store revenue of 4.6%, within our target range of 3% to 5%. As a result of tax reform, we also benefited from a reduction in our income tax rate for the first quarter of 2018. Also, clearly evident in the first quarter was the acceleration of the impact of our acquisition strategy. Our financial results for the quarter included the impact of the Options Home Care acquisition in August last year. As we previously announced, we purchased the Arcadia Home Care & Staffing business on April 1st and subsequently closed the Ambercare acquisition – announced February 28th – on May 1st. Ambercare and Arcadia produced combined 2017 revenue of over $100 million and are expected to be immediately accretive to earnings. Our first-quarter financial results and acquisition pipeline position Addus for continued growth during 2018.”

 

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ADUS Announces First-Quarer 2018 Financial Results

Page 2

May 7, 2018

 

As discussed in the Company’s fourth-quarter conference call, Addus’s adoption of ASU 2014-09, Accounting for Contracts with Customers, at the start of 2018 using the modified retrospective approach reduced the year over year comparability of net service revenue and expense items as a percentage of net service revenues, while not affecting net income, adjusted EBITDA and adjusted earnings per diluted share. The adoption of this revenue recognition standard resulted in a decrease of $2.0 million in our net services revenue during the three months ended March 31, 2018.

For the first quarter of 2018, the Company’s revenue growth was driven by relatively balanced increases of 4.0% in billable hours per business day and 3.6% in revenue per billable hour, compared with the first quarter of 2017.

At March 31, 2018, the Company had cash of $63.4 million and bank debt of $43.9 million, while availability under its revolving credit facility was $111.3 million. Net cash provided by operating activities was $14.3 million for the first quarter of 2018.

Mr. Allison concluded, “As our first-quarter results indicate, we are executing on our organic growth and acquisition strategies, and as a leading personal care company, we believe we are positioned to gain further market share in the future. The personal care industry remains strong given the growing recognition in healthcare of the value we provide by helping consumers with essential daily tasks that enable them to stay in their homes. We are confident we have the experience and resources to drive long-term growth in earnings and shareholder value.”

Non-GAAP Financial Measures

The information provided in this release includes adjusted net income per diluted share, adjusted EBITDA and adjusted net service revenues, which are non-GAAP financial measures. The Company defines adjusted net income per diluted share as net income per diluted share, adjusted for interest income from the State of Illinois, M&A expenses, stock-based compensation expense, restructure charges, severance and other costs, and gain on sale of ADS. The Company defines adjusted EBITDA as net income before interest expense, interest income, other non-operating income, taxes, depreciation, amortization, interest income from the State of Illinois, M&A expenses, stock-based compensation expense, restructure charges, severance and other costs, and gain on sale of ADS. The Company defines adjusted net service revenues as net service revenues 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 net income per diluted share to net income per diluted share, a reconciliation of adjusted EBITDA to net income and a reconciliation of adjusted net service revenues to net service revenues, in each case, the most directly comparable GAAP measure. Management believes that adjusted net income per diluted share, adjusted EBITDA and adjusted net service revenues 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 8, 2018, 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 4459288. A telephonic replay of the conference call will be available through midnight on May 22, 2018, by dialing (855) 859-2056 (international dial-in number is (404) 537-3406) and entering pass code 4459288.

 

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ADUS Announces First-Quarer 2018 Financial Results

Page 3

May 7, 2018

 

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 discretionary determinations by government officials, 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, lower than anticipated cost savings, estimation inaccuracies in future revenues, margins, earnings and growth, whether any anticipated receipt of payments will materialize 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 15, 2017, which is available at 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 provider of comprehensive home care services that include, primarily, personal care services that assist with activities of daily living, as well as hospice and home health services. Addus’ consumers are primarily persons who, without these services, 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. Addus currently provides home care services to approximately 39,000 consumers through 156 locations across 25 states. For more information, please visit www.addus.com.

 

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ADUS Announces First-Quarer 2018 Financial Results

Page 4

May 7, 2018

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Income

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

(Unaudited)

 

     For the Three Months
Ended March 31,
 
     2018     2017  

Income Statement Information:

    

Net service revenues

   $ 109,448     $ 101,606  

Cost of service revenues

     81,543       74,289  
  

 

 

   

 

 

 

Gross profit

     27,905       27,317  
     25.5     26.9

General and administrative expenses

     21,459       18,873  

Gain on sale of adult day service centers

     —         (2,065

Provision for doubtful accounts

     78       2,032  

Depreciation and amortization

     1,807       1,516  
  

 

 

   

 

 

 

Total operating expenses

     23,344       20,356  
  

 

 

   

 

 

 

Operating income from continuing operations

     4,561       6,961  

Total interest expense, net

     (1,412     644  

Other non-operating income

     —         (57
  

 

 

   

 

 

 

Income before income taxes

     5,973       6,374  

Income tax expense

     1,115       2,115  
  

 

 

   

 

 

 

Net income

   $ 4,858     $ 4,259  
  

 

 

   

 

 

 

Net income per diluted share

   $ 0.42     $ 0.37  
  

 

 

   

 

 

 

Weighted average number of common shares outstanding - diluted

     11,696       11,581  
     For the Three Months
Ended March 31,
 
     2018     2017  
Cash Flow Information:     

Net cash provided by operating activities

   $ 14,276     $ 9,615  

Net cash (used in) investing activities

     (3,699     1,238  

Net cash (used in) provided by financing activities

     (925     290  
  

 

 

   

 

 

 

Net change in cash

     9,652       11,143  

Cash at the beginning of the period

     53,754       8,013  
  

 

 

   

 

 

 

Cash at the end of the period

   $ 63,406     $ 19,156  
  

 

 

   

 

 

 

 

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ADUS Announces First-Quarer 2018 Financial Results

Page 5

May 7, 2018

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)

 

     March 31,  
     2018      2017  
Assets  

Current assets

     

Cash

   $ 63,406      $ 19,156  

Accounts receivable, net

     83,771        116,174  

Prepaid expenses and other current assets

     7,250        3,959  
  

 

 

    

 

 

 

Total current assets

     154,427        139,289  
  

 

 

    

 

 

 

Property and equipment, net

     7,384        7,049  
  

 

 

    

 

 

 

Other assets

     

Goodwill

     93,090        72,688  

Intangible assets, net

     16,480        14,217  

Deferred tax assets, net

     1,472        3,355  

Investment in joint venture

     —          900  
  

 

 

    

 

 

 

Total other assets

     111,042        91,160  
  

 

 

    

 

 

 

Total assets

   $ 272,853      $ 237,498  
  

 

 

    

 

 

 
Liabilities and Stockholders’ Equity  

Current liabilities

     

Accounts payable

   $ 6,468      $ 5,453  

Accrued expenses

     42,153        44,215  

Current portion of long-term debt, net of debt issuance costs

     2,761        2,551  
  

 

 

    

 

 

 

Total current liabilities

     51,382        52,219  
  

 

 

    

 

 

 

Long-term debt, less current portion, net of debt issuance costs

     39,396        21,877  

Long-term lease liability, less current portion

     407        —    

Contingent earn-out obligation, less current portion

     847        —    
  

 

 

    

 

 

 

Total long-term liabilities

     40,650        21,877  
  

 

 

    

 

 

 

Total liabilities

     92,032        74,096  
  

 

 

    

 

 

 

Total stockholders’ equity

     180,821        163,402  
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 272,853      $ 237,498  
  

 

 

    

 

 

 

 

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ADUS Announces First-Quarer 2018 Financial Results

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May 7, 2018

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Key Statistical and Financial Data

(Unaudited)

 

     For the Three Months
Ended March 31,
 
     2018     2017  

General:

    

Adjusted EBITDA (in thousands) (1)

   $ 8,734     $ 7,971  

States served at period end

     23       24  

Locations at period end

     115       111  

Employees at period end

     26,358       23,060  

Home & Community

    

Average billable census - same store (2)

     32,671       33,948  

Average billable census - acquisitions (3)

     1,523       —    

Average billable census total

     34,194       33,948  

Billable hours (in thousands)

     6,030       5,800  

Average billable hours per census per month

     58.8       56.9  

Billable hours per business day

     92,768       89,223  

Revenues per billable hour

   $ 18.15     $ 17.52  

Percentage of Revenues by Payor:

    

State, local and other governmental programs

     61.5     64.9

Managed care organizations

     34.6       32.3  

Private duty

     3.4       2.1  

Commercial

     0.5     0.7

 

(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 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, 2017 by 333.
(3) The average billable census in acquisitions of 1,179 for the three months ended March 31, 2017 was reclassified to average billable census - same stores for comparability purposes. The average billable census for the three months ended March 31, 2018 was prorated for the date of the acquisition.

 

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ADUS Announces First-Quarer 2018 Financial Results

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May 7, 2018

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures

(amounts in thousands, except per share data)

(Unaudited)

 

     For the Three Months
Ended March 31,
 
     2018     2017  

Reconciliation of Adjusted EBITDA to Net Income: (1)

    

Net income

   $ 4,858     $ 4,259  

Interest expense, net

     841       644  

Interest income from Illinois

     (2,253     —    

Gain on sale of adult day service centers

     —         (2,065

Other non-operating income

     —         (57

Income tax expense

     1,115       2,115  

Depreciation and amortization

     1,807       1,516  

M&A expenses

     1,002       244  

Stock-based compensation expense

     859       427  

Restructuring charges

     324       —    

Severance and other costs

     181       888  
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 8,734     $ 7,971  
  

 

 

   

 

 

 

Reconciliation of Adjusted Net Income to Net Income: (2)

 

Net income

   $ 4,858     $ 4,259  

Interest income from Illinois, net of tax

     (1,831     —    

Gain on sale of adult day service centers, net of tax

     —         (1,353

M&A expenses, net of taxes

     815       165  

Stock-based compensation expense, net of tax

     698       289  

Restructuring charges, net of tax

     263       —    

Severance and other costs, net of tax

     147       600  
  

 

 

   

 

 

 

Adjusted net income

   $ 4,950     $ 3,960  
  

 

 

   

 

 

 

Reconciliation of Adjusted Diluted Earnings per Share to Diluted Earnings per Share. : (3)

 

Diluted earnings per share

   $ 0.42     $ 0.37  

Gain on sale of adult day service centers per diluted share

     —         (0.11

Interest income from Illinois

     (0.16     —    

M&A expenses per diluted share

     0.07       0.01  

Restructuring charges per diluted share

     0.02       —    

Severance and other costs per diluted share

     0.01       0.05  

Stock-based compensation expense per diluted share

     0.06       0.02  
  

 

 

   

 

 

 

Adjusted diluted earnings per share

   $ 0.42     $ 0.34  
  

 

 

   

 

 

 

Reconciliation of Adjusted Net Service Revenues to Net Service Revenues: (4)

 

Net service revenues

   $ 109,448     $ 101,606  

Revenue associated with the closure of certain sites

     4       (1,037
  

 

 

   

 

 

 

Adjusted net service revenues

   $ 109,452     $ 100,569  
  

 

 

   

 

 

 

 

(1) We define Adjusted EBITDA as earnings before interest expense, interest income, other non-operating income, taxes, depreciation, amortization, M&A expenses, stock-based compensation expense, restructure expenses, severance and other costs and gain on the sale of ADS. 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 Net Income as net income before interest income from the state of Illinois, M&A expenses, stock-based compensation expense, restructure expenses, severance and other costs and gain on the sale of ADS. Adjusted Net Income 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 diluted earnings per share as earnings per share, adjusted for interest income from the State of Illinois, M&A expenses, stock compensation expense and restructure expense, severance and other costs and gain on the sale of ADS. 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.
(4) 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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