Addus HomeCare Announces Fourth-Quarter 2018 Financial Results

FRISCO, Texas, March 4, 2019 /PRNewswire/ -- Addus HomeCare Corporation (NASDAQ: ADUS), a provider of home care services, today announced its financial results for the fourth quarter and year ended December 31, 2018.

Net service revenues increased 24.8% for the quarter to $139.8 million from $112.0 million for the fourth quarter of 2017. Net income for the quarter was $4.8 million, an increase of 52.6% from $3.1 million for the fourth quarter of 2017.  Net income per diluted share for the fourth quarter of 2018 was $0.36, compared with $0.27 per diluted share for the fourth quarter of 2017, an increase of 33.3%.  Adjusted net income per diluted share increased 22.2% to $0.55 for the fourth quarter of 2018 from $0.45 for the fourth quarter of 2017.  

Adjusted net income per diluted share for the fourth quarter of 2018 excludes M&A expenses of $0.11, stock-based compensation expense of $0.07 and restructuring charges of $0.02.  Adjusted net income per diluted share for the fourth quarter of 2017 excludes a non-cash increase in the provision for income taxes of $1.3 million, or $0.12 per diluted share, due to a write-down of net deferred tax assets pursuant to the Tax Cuts and Jobs Act, M&A expenses of $0.04, stock-based compensation expense of $0.04, and gain on sale and divestiture of $0.01.  (See pages 8-9 for a reconciliation of all non-GAAP and GAAP financial measures in this news release.)

For 2018, net service revenues were $518.1 million, up 21.6% from $426.0 million for 2017. Net income for 2018 increased 27.9% to $17.5 million from $13.7 million for 2017.  Net income per diluted share was $1.41 for 2018, an increase of 20.5% compared with $1.17 per diluted share for 2017.  Adjusted net income per diluted share increased 22.5% to $1.96 for 2018 from $1.60 for 2017. 

Adjusted EBITDA increased 17.0% for the fourth quarter of 2018 to $12.3 million from $10.6 million for the fourth quarter of 2017.  For 2018, Adjusted EBITDA increased 19.1% to $43.9 million from $36.9 million in 2017.

"Addus delivered solid results for the fourth quarter of 2018, marking a strong finish to our year," remarked Dirk Allison, President and Chief Executive Officer of Addus HomeCare Corporation.  "We are pleased with the positive trends in revenue growth for the fourth quarter, with personal care net service revenues up 15.9%, reflecting a 13.2% increase in billable hours per business day and a 0.8% increase in revenue per billable hour, compared with the fourth quarter of 2017.  Same-store revenue increased 2.4% for the fourth quarter, below our target range of 3% to 5%, primarily due to the exclusion of a rate increase to offset the Chicago minimum wage increase in the Illinois current fiscal year budget.

"Our results in 2018 reflect execution of our growth strategy, as we completed several key acquisitions during the year that added over $100 million in annualized revenue.  As expected, we completed the integration of Arcadia and Ambercare during the fourth quarter, allowing us to further expand our market share and diversify our client base in targeted markets," added Mr. Allison.

At the end of 2018, the Company had cash of $70.4 million and bank debt of $20.0 million, while availability under its revolving credit facility was $142.9 million. Net cash provided by operating activities was $8.5 million for the fourth quarter of 2018 and $33.2 million for the full year.

Mr. Allison concluded, "Looking ahead to 2019, we believe we are well positioned to achieve further profitable growth both from our current operations and acquisitions.  Our objectives for organic growth for the year are consistent with our targeted range of 3% to 5% for same-store revenue growth.  In addition, we previously announced a definitive agreement to purchase VIP Health Care Services, with annual revenues of approximately $50 million, and we expect to close this transaction during the second quarter of 2019. We continue to pursue other potential acquisitions in 2019 that fit with our strategic plan, and we have the financial strength to pursue additional growth opportunities that we believe will enhance our market presence and add 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 M&A expenses, stock-based compensation expense, restructure charges, severance and other costs, write off of debt issuance costs, interest income from the State of Illinois 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, M&A expenses, stock-based compensation expense, restructure charges, severance and other costs, interest income from the State of Illinois 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, March 5, 2019, 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 1057938. A telephonic replay of the conference call will be available through midnight on March 19, 2019, by dialing (855) 859-2056 (international dial-in number is (404) 537-3406) and entering pass code 1057938.

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," "will," 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,  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, our ability to effectively integrate, manage and maintain the security of our information systems, higher than anticipated costs, lower than anticipated cost savings, any failure of Illinois to enact a minimum wage offset and/or the timing of any such enactment, 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 14, 2018, its Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 7, 2018, and its Prospectus Supplement filed with the Securities and Exchange Commission on August 16, 2018, which are all 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 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 24 states. For more information, please visit www.addus.com.

 

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 December 31,


For the Year Ended
December 31,


2018


2017(A)


2018


2017(B)

Net service revenues

$  139,803


$  112,028


$  518,119


$  425,994

Cost of service revenues

101,859


81,243


379,843


310,119

Gross profit

37,944


30,785


138,276


115,875


27.1%


27.5%


26.7%


27.2%

General and administrative expenses

28,938


19,662


105,025


76,902

(Gain) loss on sale of assets

38


(402)


38


(2,467)

Depreciation and amortization

1,967


1,853


8,642


6,663

Provision for doubtful accounts

58


2,202


272


8,409

Total operating expenses

31,001


23,315


113,977


89,507

Operating income from continuing operations

6,943


7,470


24,299


26,368

Interest expense

1,179


841


5,016


4,472

Interest income

(125)


(14)


(2,592)


(66)

Other income

-


(52)


-


(217)

Income from continuing operations

   before income taxes

5,889


6,695


21,875


22,179

Income tax expense from continuing operations

1,213


3,695


4,498


8,645

Net income from continuing operations

4,676


3,000


17,377


13,534

Income from discontinued operations, 
      net of tax

126


147


126


147

Earnings from discontinued operations

126


147


126


147

Net income

$       4,802


$      3,147


$    17,503


$    13,681









Net income per share:








   Continuing Operations

$        0.35


$        0.26


$        1.40


$        1.16

   Discontinued Operations

$        0.01


$        0.01


$        0.01


$        0.01









Weighted average number of common shares 
   outstanding – diluted

13,381


11,638


12,383


11,623









Cash Flow Information:

For the Three Months
Ended December 31,


For the Year Ended
December 31,


2018


2017


2018


2017

Net cash provided by operating activities

$      8,524


$    10,193


$    33,203


$    52,771

Net cash (used in) investing activities

(2,058)


(1,160)


(67,789)


(24,268)

Net cash (used in) provided by

   financing activities

(83,537)


(967)


51,238


17,238









Net change in cash

(77,071)


8,066


16,652


45,741

Cash at the beginning of the period

147,477


45,688


53,754


8,013

Cash at the end of the period

$    70,406


$    53,754


$    70,406


$    53,754


(A)  Includes revision to previously reported amounts to increase net service revenues by $70, increase provision for doubtful 
      accounts by $150 and increase income tax expense from continuing operations by $14.

(B)    Includes revision to previously reported amounts to increase net service revenues by $279, increase provision for doubtful 
       accounts by $150 and increase income tax expense from continuing operations by $56.

 

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)



December 31,


2018


2017(A)

Assets






Current assets




Cash

$    70,406


$    53,754

Accounts receivable, net

108,000


92,888

Prepaid expenses and other current assets

7,098


8,379

Total current assets

185,504


155,021





Property and equipment, net

10,658


7,489





Other assets




Goodwill

135,442


90,339

Intangible assets, net

23,784


16,596

Deferred tax assets

-


1,601

Total other assets

159,226


108,536





Total assets

$  355,388


$  271,046





Liabilities and Stockholders' Equity






Current liabilities




Accounts payable

$    12,238


$      6,736

Accrued expenses

49,204


44,596

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

62


3,099

Total current liabilities

61,504


54,431





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

17,222


39,860

Deferred tax liabilities, net

494


-

Other long-term liabilities

635


446

Total long-term liabilities

18,351


40,306





Total liabilities

79,855


94,737





Total stockholders' equity

275,533


176,309





Total liabilities and stockholders' equity

$  355,388


$  271,046


(A) Includes revision to previously reported amounts to increase accounts receivable, net by $3,936, increase accounts payable by 
     $2,465, decrease accrued expenses by $204 and increase other long term liabilities by $446.

 


 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Net Service Revenues by Segment

(Amounts in thousands)

(Unaudited)



For the Three Months
Ended December 31,


For the Twelve Months

Ended December 31,


2018


2017


2018


2017

Personal Care

$  129,805


$  112,028


$  492,413


$  425,994

Hospice

7,085


-


18,850


-

Home Health

2,913


-


6,856


-

Total Revenue

$  139,803


$  112,028


$  518,119


$  425,994


 

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Key Statistical and Financial Data

(Unaudited)



For the Three Months
Ended December 31,


For the Twelve Months

Ended December 31,


2018


2017


2018


2017

General








Adjusted EBITDA (in thousands) (1)

$     12,344


$     10,551


$     43,948


$     36,897

States served at period end

-


-


24


24

Locations at period end

-


-


156


116

Employees at period end

-


-


33,153


26,097









Personal Care








Average billable census - same store (2)

33,992


34,730


34,056


35,343

Average billable census - acquisitions

3,575


-


3,541


-

Average billable census total (2)

37,567


34,730


37,597


35,343

Billable hours (in thousands)

7,069


6,148


26,934


23,833

Average billable hours per census per month

62.1


59.0


59.3


56.2

Billable hours per business day

107,106


94,582


103,195


91,664

Revenues per billable hour

$       18.36


$       18.21


$       18.28


$       17.86









Hospice








Admissions

418


-


1,061


-

Average daily census

528


-


528


-

Average length of stay

120.7


-


136.2


-

Patient days

48,540


-


128,819


-

Revenue per patient day

$     145.97


$              -


$     146.33


$              -









Home Health








New Admissions

716


-


1,757


-

Recertifications

458


-


1,443


-

Total Volume

1,174


-


3,200


-

Visits

19,080


-


53,711


-









Percentage of Revenues by Payor:








Personal Care








State, local and other governmental programs

56.8%


62.4%


58.2%


64.2%

Managed care organizations

36.3


34.8


35.3


33.1

Private duty

4.0


2.2


4.1


2.1

Commercial

1.5


0.6


1.3


0.6

Other

1.4


-


1.1


-









Hospice








Medicare

93.5%


-%


93.6%


-%

Managed care organizations

4.6


-


5.6


-

Other

1.9


-


0.8











Home Health








Medicare

84.0%


-%


88.0%


-%

Managed care organizations

14.5


-


11.0


-

Other

1.5


-


1.0


-









(1)   We define Adjusted EBITDA as net income before interest expense, taxes, depreciation, amortization, M&A expenses, stock-
       based compensation expense, restructure charges 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 December 31, 2017, by 0 and the twelve months 
       ended December 31, 2017 by 148.

 

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures

(amounts in thousands, except per share data)

(Unaudited)



For the Three Months
Ended December 31,


For the Twelve Months
Ended December 31,


2018


2017


2018


2017





Reconciliation of Adjusted EBITDA to Net Income: (1)




Net income

$       4,802


$       3,147


$     17,503


$     13,681

Less: (Earnings) from discontinued operations,

    net of tax

(126)


(147)


(126)


(147)

Net income from continuing operations

4,676


3,000


17,377


13,534









Interest expense, net

828


827


4,451


3,083

Interest income from Illinois

-


-


(2,253)


-

Secondary offering costs

124


-


189


-

Write off debt issuance costs

226


-


226


1,323

Write down deferred tax asset/impact of Tax
  Reform Act

-


1,305


-


1,305

Loss on sale of assets

38


-


38


-

Gain on sale of joint ventures/adult day service
  centers

-


(402)


-


(2,467)

Other non-operating income

-


(52)


-


(217)

Income tax expense

1,213


2,390


4,498


7,340

Depreciation and amortization

1,967


1,853


8,642


6,663

M&A expenses

1,790


774


4,989


2,116

Stock-based compensation expense

1,148


734


4,109


2,552

Restructure charges

297


76


1,035


627

Severance and other costs

37


46


647


1,038

Adjusted EBITDA

$     12,344


$     10,551


$     43,948


$     36,897









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




Net income

$       4,802


$       3,147


$     17,503


$     13,681

Earnings from discontinued operations, net of tax

(126)


(147)


(126)


(147)

Interest income from Illinois, net of tax

-


-


(1,790)


-

Write down deferred tax asset from Tax Reform
  Act per diluted share

-


1,554


-


1,554

Gain on sale of joint ventures/adult day service
  centers, net of tax

-


(276)


-


(1,532)

Write off debt issuance costs, net of tax

-


-


-


909

Other non-operating income, net of tax

-


(36)


-


(149)

M&A expenses, net of tax

1,415


533


3,954


1,455

Stock-based compensation expense, net of tax

903


504


3,256


1,754

Restructuring charges, net of tax

331


52


969


431

Severance and other costs, net of tax

29


32


512


713

Adjusted Net Income

$       7,354


$       5,363


$     24,278


$     18,669










 

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures (Continued)

(amounts in thousands, except per share data)

(Unaudited)



For the Three Months
Ended December 31,


For the Twelve Months
Ended December 31,


2018


2017


2018


2017





Reconciliation of Net Income per Diluted Share to Adjusted Net Income per Diluted Share: (3)




Net income per diluted share

$           0.35


$           0.26


$           1.40


$           1.16

Interest income from Illinois per diluted share

-


-


(0.14)


-

Write down deferred tax asset from Tax Reform 
     Act per diluted share

-


0.12


-


0.12

Write off debt issuance costs per diluted share

-


-


-


0.09

Gain on sale of adult day service centers

    per diluted share

-


-


-


(0.12)

Gain on sale of joint venture divestiture

    per diluted share

-


(0.01)


-


(0.01)

M&A expenses per diluted share

0.11


0.04


0.32


0.12

Restructure charges per diluted share

0.02


-


0.08


0.03

Severance and other costs per diluted share

-


-


0.04


0.06

Stock-based compensation expense

    per diluted share

0.07


0.04


0.26


0.15

Adjusted Net Income Per Diluted Share

$           0.55


$           0.45


$           1.96


$           1.60









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




Net service revenues

$    139,803


$    112,028


$    518,119


$    425,994

Revenues associated with the closure

    of certain sites

-


-


2


(1,339)

Adjusted Net Service Revenues

$    139,803


$    112,028


$    518,121


$    424,655


(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.

 

Cision View original content:http://www.prnewswire.com/news-releases/addus-homecare-announces-fourth-quarter-2018-financial-results-300806099.html

SOURCE Addus HomeCare Corporation

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