Addus HomeCare Announces Third-Quarter 2020 Financial Results

FRISCO, Texas, Nov. 2, 2020 /PRNewswire/ -- Addus HomeCare Corporation (NASDAQ: ADUS), a provider of home care services, today announced its financial results for the third quarter and nine months ended September 30, 2020.

Net service revenues increased 14.8% for the third quarter to $194.0 million from $169.0 million for the third quarter of 2019. Net income increased 85.6% to $9.1 million for the third quarter of 2020 from $4.9 million for the third quarter last year, while net income from continuing operations per diluted share was $0.57 compared with $0.39 for the same period a year ago. Adjusted net income from continuing operations per diluted share was $0.76 for the third quarter of 2020 compared with $0.75 for the third quarter of 2019.

Adjusted net income for the third quarter of 2020 excludes COVID-19 adjustment of $0.02, M&A expenses of $0.02, restructure and other costs of $0.08, which consisted primarily of the impairment of right of use assets from the Company's former corporate office space, and stock-based compensation expense of $0.07. Adjusted net income from continuing operations per diluted share for the third quarter of 2019 excludes interest income from the State of Illinois of $0.02, the impact of a retroactive Illinois rate increase of $0.12, M&A expenses of $0.10, restructure and other costs of $0.08, and stock-based compensation expense of $0.08. Adjusted EBITDA increased 12.2% to $19.5 million for the third quarter of 2020 from $17.4 million for the third quarter of 2019. (See page 8 for a reconciliation of all non-GAAP and GAAP financial measures in this news release.)

For the first nine months of 2020, net service revenues increased 24.6% to $568.8 million from $456.4 million for the first nine months of 2019. Net income increased 70.2% to $24.7 million for the first nine months of 2020 from $14.5 million for the first nine months of last year, while net income from continuing operations per diluted share increased to $1.55 from $1.10. Adjusted net income from continuing operations per diluted share grew 28.4% to $2.26 for the first nine months of 2020 from $1.76 for the same period in 2019.

Commenting on the results, Dirk Allison, President and Chief Executive Officer, said, "We are pleased with our consistent profitable growth as reflected in our third quarter financial and operating performance. This is in spite of the effects of the ongoing pandemic, as well as the short-term negative impact of the July 1, 2020, minimum wage increase in our Chicago market, which is scheduled to be funded by a reimbursement rate increase on January 1, 2021. We experienced improving volumes during the third quarter as some COVID–19 restrictions were lifted, although our census has not fully returned to pre-pandemic levels. With the number of COVID-19 cases currently spiking across the country, we may see an ongoing impact to our volumes, but we believe Addus is well positioned to meet expected demand as conditions evolve and more customers return to us for safe and cost-effective care. Across our operations and service areas, we are proud of the dedicated efforts of our employees and caregivers and all healthcare workers who have continued to provide the essential home care services that are especially vital as the COVID-19 pandemic persists." 

At September 30, 2020, the Company had cash of $170.3 million and bank debt of $61.7 million, with availability under its revolving credit facility of $219.0 million. Net cash provided by operating activities was $22.4 million for the third quarter of 2020.

Mr. Allison added, "Acquisitions have continued to be an important part of our growth strategy, and we have the capital structure to allow us to pursue acquisition opportunities as they occur. We have continued to identify new growth opportunities in all segments of our business and on November 1, 2020, we completed the acquisition of County HomeMakers, Inc., a personal care operator in Pennsylvania, with 800 employees in 22 locations serving over 1,000 clients. County HomeMakers had annual revenues of $14.8 million in 2019, and we expect this acquisition will be immediately accretive to our 2020 financial results. Importantly, this acquisition aligns with our strategy to expand coverage in existing states where we already have a presence, especially markets like Pennsylvania with managed Medicaid. We welcome the professional team associated with County HomeMakers to the Addus family, and we look forward to a smooth operational integration.

"Looking ahead, while we continue to face the ongoing challenges related to the COVID-19 pandemic, we are mindful of our critical role in providing home care services that allow individuals to avoid the risks found in settings outside of their homes. Our top priority is to protect the health and safety of the patients and customers we serve and our caregivers and other employees, and we remain steadfast in our mission. Our results to date in 2020 reflect our ability to execute our strategy through a very challenging period, and we remain confident Addus will have continued success as a leading provider of comprehensive home care services. We look forward to the opportunities ahead to provide quality care to more individuals while delivering value to our shareholders," Mr. Allison concluded.

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 as net income before the net-of-tax amounts of interest income from the State of Illinois, COVID-19 adjustments for temporary rate increases and expenses, M&A expenses, stock-based compensation expense, restructure charges, severance and other costs and loss on the sale of assets associated with Hospice Partners of Kansas. The Company defines adjusted EBITDA as net income before interest expense, interest income, other non-operating income, COVID-19 adjustments for temporary rate increases and expenses, taxes, depreciation, amortization, interest income from the State of Illinois, M&A expenses, stock-based compensation expense, restructure charges, severance and other costs and loss on the sale of assets associated with Hospice Partners of Kansas. The Company defines adjusted diluted earnings per share as earnings per share adjusted for interest income from the State of Illinois, COVID–19 expenses, M&A expenses, stock compensation expense and restructure expense, severance and other costs and loss on the sale of assets associated with Hospice Partners of Kansas.  The Company has provided, in the financial statement tables included in this press release, a reconciliation of adjusted net income to net income, a reconciliation of adjusted EBITDA to net income and a reconciliation of adjusted diluted earnings per share to earnings per share, in each case, the most directly comparable GAAP measure. Management believes that adjusted net income, adjusted EBITDA and adjusted diluted earnings per share 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. With respect to COVID–19 expenses, the Company views these expenses as unrelated to the Company's long-term performance, since they are directly related to the sudden onset COVID-19 pandemic. With respect to COVID-19 temporary rate increases, the Company similarly views these as unrelated to the Company's long-term performance and has adjusted for those increases, net of the amount required to be passed through to caregivers as a condition of the increase.

Conference Call

Addus will host a conference call on Tuesday, November 3, 2020, 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 8552728. A telephonic replay of the conference call will be available through midnight on November 17, 2020, by dialing (855) 859-2056 (international dial-in number is (404) 537–3406) and entering pass code 8552728.

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 will also be available on the Company's website for one month, beginning approximately two 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 "preliminary," "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, the anticipated impact to our business operations, reimbursements and patient population due to the recent COVID-19 global pandemic, caused by a novel strain of the coronavirus (COVID-19), 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 August 10, 2020, which is available at www.sec.gov. The financial information described herein and the periods to which they relate are preliminary estimates that are subject to change and finalization. There is no assurance that the final amounts and adjustments will not differ materially from the amounts described above, or that additional adjustments will not be identified, the impact of which may be material. 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 HomeCare

Addus HomeCare is a provider of home care services that primarily include personal care services that assist with activities of daily living, as well as hospice and home health services. Addus HomeCare's consumers are primarily persons who, without these services, are at risk of hospitalization or institutionalization, such as the elderly, chronically ill and disabled. Addus HomeCare's payor clients include federal, state and local governmental agencies, managed care organizations, commercial insurers and private individuals. Addus HomeCare currently provides home care services to approximately 44,000 consumers through 215 locations across 25 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 September 30,


For the Nine Months
Ended September 30,


2020


2019


2020


2019

Net service revenues

$  193,987


$  168,993


$  568,779


$  456,415

Cost of service revenues

137,686


123,817


401,646


334,719

Gross profit

56,301


45,176


167,133


121,696


29.0%


26.7%


29.4%


26.7%

General and administrative expenses

40,806


35,085


125,189


94,109

(Gain) loss on sale of assets

(73)


-


281


-

Depreciation and amortization

3,045


2,756


8,872


7,365

Total operating expenses

43,778


37,841


134,342


101,474

Operating income from continuing operations

12,523


7,335


32,791


20,222

Total interest expense, net

593


80


1,733


1,068

Income before income taxes

11,930


7,255


31,058


19,154

Income tax expense

2,811


1,769


6,374


4,080

Net income from continuing operations

9,119


5,486


24,684


15,074









Discontinued operations:








Loss from Home Health Business, net of tax

-


(574)


-


(574)

Loss from discontinued operations

-


(574)


-


(574)

Net income

$      9,119


$      4,912


$    24,684


$    14,500









Net income (loss) per diluted share:








Continuing operations

$        0.57


$        0.39


$        1.55


$        1.10

Discontinued operations

$             -


$       (0.04)


$             -


$       (0.04)









Weighted average number of common shares 
     outstanding - diluted

15,957


14,203


15,934


13,687









Cash Flow Information:

For the Three Months
Ended September 30


For the Nine Months
Ended September 30


2020


2019


2020


2019

Net cash provided by operating activities

$    22,412


$    12,163


$    73,299


$      8,084

Net cash used in investing activities

(12,542)


(24,497)


(17,507)


(56,301)

Net cash provided by financing activities

1,912


197,152


2,825


217,420









Net change in cash

11,782


184,818


58,617


169,203

Cash at the beginning of the period

158,549


54,792


111,714


70,406

Cash at the end of the period

$  170,331


$  239,610


$  170,331


$  239,609

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)




September 30,


2020


2019

Assets






Current assets




Cash

$  170,331


$  239,609

Accounts receivable, net

118,623


126,026

Prepaid expenses and other current assets

10,426


8,822

Total current assets

299,380


374,457





Property and equipment, net

19,305


11,527





Other assets




Goodwill

286,552


162,016

Intangible assets, net

52,873


41,119

Operating lease assets

35,842


17,972

Deferred tax assets, net

1,479


2,216

Total other assets

376,746


223,323





Total assets

$  695,431


$  609,307





Liabilities and Stockholders' Equity






Current liabilities




Accounts payable

$    17,270


$    14,741

Accrued expenses

33,395


19,306

Accrued payroll

26,315


25,722

Accrued workers compensation

14,668


14,399

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

2,095


970

Total current liabilities

93,743


75,138





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

59,561


59,248

Long-term lease liability, less current portion

33,977


12,559

Other long-term liabilities

550


163

Total long-term liabilities

94,088


71,970





Total liabilities

187,831


147,108





Total stockholders' equity

507,600


462,199





Total liabilities and stockholders' equity

$  695,431


$  609,307

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Net Service Revenues by Segment

(Amounts in thousands)

(Unaudited)






For the Three Months
Ended September 30,


For the Nine Months
Ended September 30,


2020


2019


2020


2019

Personal care

$  165,916


$  153,753


$  482,849


$  419,124

Hospice

23,986


10,874


73,723


27,228

Home health

4,085


4,366


12,207


10,063

Total revenue

$  193,987


$  168,993


$  568,779


$  456,415

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Key Statistical and Financial Data

(Unaudited)






For the Three Months
Ended September 30


For the Nine Months
Ended September 30


2020


2019


2020


2019

Personal Care








States served at period end

-


-


24


24

Locations at period end

-


-


153


153

Average billable census - same store

37,778


38,871


37,550


38,808

Average billable census - acquisitions (1)

811


471


893


471

Average billable census total

38,589


39,342


38,443


39,279

Billable hours (in thousands)

7,778


7,785


22,825


21,918

Average billable hours per census per month

66.9


65.5


65.6


61.5

Billable hours per business day

117,841


117,956


116,454


112,400

Revenues per billable hour

$      21.29


$      19.76


$      21.11


$      19.13

Organic growth








      Revenue

4.8%


7.2%


8.8%


6.3%





Hospice








Locations served at period end

-


-


30


14

Admissions

1,399


563


4,393


1,548

Average daily census

1,681


791


1,762


659

Average length of stay

108.6


120.6


103.4


121.9

Patient days

154,609


72,261


482,765


178,792

Revenue per patient day

$    155.14


$    150.48


$    152.71


$    152.29

Organic growth








      Revenue

(5.6)%


25.8%


0.0%


-%

      Average daily census

(6.2)%


24.2%


3.9%


-%





Home Health








Locations served at period end

-


-


10


12

New admissions

1,096


910


3,186


2,325

Recertifications

607


764


2,006


1,949

Total volume

1,703


1,674


5,192


4,274

Visits

28,073


31,477


91,580


75,188

Organic growth








      Revenue

(8.9)%


48.1%


(0.6)%


-%

      Total volume

12.2%


3.1%


5.8%


-%





Percentage of Revenues by Payor:








Personal Care








State, local and other governmental programs

51.5%


48.9%


50.3%


52.8%

Managed care organizations

43.2


44.5


44.1


40.6

Private duty

3.1


3.7


3.2


3.8

Commercial

1.5


1.8


1.5


1.6

Other

0.7%


1.1%


0.9%


1.2%





Hospice








Medicare

93.4%


92.4%


92.8%


92.7%

Managed care organizations

4.7


5.4


5.0


5.2

Other

1.9%


2.2%


2.2%


2.1%





Home Health








Medicare

78.0%


76.5%


79.2%


79.0%

Managed care organizations

20.3


22.0


19.0


18.6

Other

1.7%


1.5%


1.8%


2.4%





(1)

The average billable census in acquisitions of 951 and 945 for the three and nine months ended September 30, 2019, was reclassified to average
billable census - same stores for comparability purposes. The average billable census for the three and nine months ended September 30, 2020,
was prorated for the date of the acquisition.

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures

(Amounts in thousands, except per share data)

(Unaudited)






For the Three Months
Ended September 30


For the Nine Months
Ended September 30


2020


2019


2020


2019

Reconciliation of Adjusted EBITDA to Net Income: (1)




Net income

$          9,119


$          4,912


$       24,684


$       14,500

Loss from discontinued operations, net of tax (2)

-


574


-


574









Net income from continuing operations

9,119


5,486


24,684


15,074

Interest expense, net

593


541


1,733


1,642

Interest income from Illinois

-


(461)


-


(574)

Impact of retroactive Illinois rate increase

-


2,485


-


2,485

(Gain) loss on sale of assets

(73)


-


281


-

Secondary offering costs

-


127


-


127

Income tax expense

2,811


1,769


6,374


4,080

Depreciation and amortization

3,045


2,756


8,872


7,365

COVID-19 adjustment, net

702


-


1,228


-

M&A expenses

338


1,946


3,883


3,182

Stock-based compensation expense

1,462


1,470


3,987


4,186

Restructure and other costs

1,529


1,290


4,921


2,363

Adjusted EBITDA

$       19,526


$       17,409


$       55,963


$       39,930









Reconciliation of Adjusted Net Income to Net Income: (3)




Net income

$          9,119


$          4,912


$       24,684


$       14,500

Loss from discontinued operations, net of tax (2)

-


574


-


574

Interest income from Illinois, net of tax

-


(353)


-


(448)

Impact of retroactive Illinois rate increase, net of tax

-


1,903


-


1,903

(Gain) loss on sale of assets, net of tax

(56)


-


223


-

COVID-19 adjustment, net of tax

537


-


976


-

M&A expenses, net of tax

258


1,495


3,047


2,495

Stock-based compensation expense, net of tax

1,119


1,108


3,154


3,279

Restructure and other costs, net of tax

1,169


1,063


3,896


1,942

Adjusted net income

$       12,146


$       10,702


$       35,980


$       24,245









Reconciliation of Net Income per Diluted Share to Adjusted Net Income per Diluted Share: (4)




Net income per diluted share

$           0.57


$           0.35


$           1.55


$           1.06

Loss from discontinued operations per diluted share (2)

-


0.04


-


0.04

Interest income from Illinois per diluted share

-


(0.02)


-


(0.03)

Impact of retroactive Illinois rate increase

    per diluted share

-


0.12


-


0.12

Loss on sale of assets per diluted share

-


-


0.01


-

COVID-19 adjustment, net, per diluted share

0.02


-


0.06


-

M&A expenses per diluted share

0.02


0.10


0.19


0.17

Restructure and other costs per diluted share

0.08


0.08


0.25


0.15

Stock-based compensation expense per diluted share

0.07


0.08


0.20


0.25

Adjusted net income per diluted share

$           0.76


$           0.75


$           2.26


$           1.76









(1)

We define Adjusted EBITDA as earnings before interest expense, interest income from the state of Illinois, other non-operating income, taxes,
depreciation, amortization, COVID-19 adjustment, M&A expenses, stock-based compensation expense, restructure expenses and other costs
and loss on the sale of assets associated with Hospice Partners of Kansas. 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)

As a result of the settlement of outstanding litigation, the results for the third quarter of 2019 included a charge of $574,000, or $0.04 per diluted
share, net of tax, for discontinued operations related to the loss from home health business.

(3)

We define Adjusted Net Income as net income before interest income from the state of Illinois, COVID-19 adjustment, M&A expenses, stock–based
compensation expense, restructure expenses and other costs and loss on the sale of assets associated with Hospice Partners of Kansas. 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.

(4)

We define Adjusted diluted earnings per share as earnings per share, adjusted for interest income from the State of Illinois, COVID-19 adjustment,
M&A expenses, stock compensation expense and restructure expense and other costs and loss on the sale of assets associated with Hospice Partners
of Kansas. 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.

 

 

Cision View original content:http://www.prnewswire.com/news-releases/addus-homecare-announces-third-quarter-2020-financial-results-301165217.html

SOURCE Addus HomeCare Corporation

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