Addus HomeCare Announces Third-Quarter 2019 Financial Results

FRISCO, Texas, Nov. 4, 2019 /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, 2019.

Net service revenues increased 23.3% for the third quarter to $169.8 million from $137.7 million for the third quarter of 2018. Net income increased 34.0% to $4.9 million for the third quarter of 2019 from $3.6 million for the third quarter last year, while net income per diluted share was $0.34 compared with $0.28 for the same period a year ago. Adjusted net income per diluted share grew 29.2% to $0.62 for the third quarter of 2019 from $0.48 for the third quarter of 2018. Adjusted net income per diluted share for the third quarter of 2019 excludes interest income from the State of Illinois of $0.02, M&A expenses of $0.10, severance and other non-recurring charges of $0.08, and stock-based compensation expense of $0.08. For the third quarter of 2018, adjusted net income per diluted share excludes M&A expenses of $0.11, other non-recurring charges of $0.02, and stock-based compensation expense of $0.07. Adjusted EBITDA increased 27.8% to $14.9 million for the third quarter of 2019 from $11.6 million for the third quarter of 2018. (See page 8 for a reconciliation of all non-GAAP and GAAP financial measures in this news release.)

During the third quarter of 2019, the Company reached a final settlement related to a 2016 qui tam claim filed in the Northern District of Illinois related to the Company's former Illinois home health business, substantially all of which was sold in 2013. As a result of the settlement of this outstanding litigation, the results for the third quarter of 2019 include 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.

For the first nine months of 2019, net service revenues increased 21.2% to $458.7 million from $378.4 million for the first nine months of 2018. Net income increased 18.8% to $15.2 million for the first nine months of 2019 from $12.8 million for the first nine months of last year, while net income per diluted share increased to $1.12 from $1.06. Adjusted net income per diluted share grew 20.6% to $1.70 for the first nine months of 2019 from $1.41 for the same period in 2018.

Commenting on the results, Dirk Allison, President and Chief Executive Officer, said, "We are pleased with our continued profitable growth as reflected in our solid third quarter financial and operating performance. Our third quarter revenue includes strong organic growth, with same-store sales for our personal care services increasing 7.7%, ahead of our target range of 3% to 5%. In addition to overall favorable demand trends during the quarter, additional key drivers for this increase were the expected higher contributions from our New York market due to the state-led narrowing of the provider network and increased reimbursement rates from managed care plans in our Illinois market that commenced July 1, 2019.

"Since the third quarter of 2018 represented our first full quarter of operations for hospice care following the acquisition of Ambercare, we are now reporting comparable same-store sales for hospice and home health services, which showed a 32.3% increase over the third quarter last year. We are excited about the opportunities for continued growth in these important care segments, which enhance our strong value proposition and our ability to meet the increasing demand for comprehensive home care services." 

Mr. Allison added, "In addition to strong organic growth, we have continued to pursue a consistent and targeted acquisition strategy in 2019 with favorable results. On October 1, 2019, we completed our fourth acquisition of the year with the purchase of Hospice Partners of America, LLC, (Hospice Partners) an established provider of hospice services in multiple states. With annualized revenue from Hospice Partners of approximately $55.0 million, the completion of this transaction brings our total acquired annualized revenue in 2019 to approximately $130.0 million. Importantly, the addition of experienced hospice leaders to our current team enhances our ability to develop additional opportunities to expand our market reach for hospice services. We continue to work on the integration of our combined operations and are pleased with our progress to date." 

At the end of the third quarter of 2019 and prior to the closing of the Hospice Partners acquisition, the Company had cash of $239.6 million and bank debt of $60.2 million, with availability under its revolving credit facility of $134.1 million. Net cash provided by operating activities was $12.2 million for the third quarter of 2019.

"Looking ahead, we remain confident in the ongoing strength of our acquisition pipeline. With the completion of our underwritten stock offering on September 9, 2019, and our solid cash position and minimal debt, we have the financial capability to continue to execute this strategy. Combined with consistent organic growth, we believe Addus is well-positioned for continued success as a leading provider of comprehensive home care services. We look forward to the opportunities ahead to continue to provide quality care to our patients 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 per diluted share as net income per diluted share, adjusted for M&A expenses, stock-based compensation expense, severance and other non-recurring 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, severance and other non-recurring 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, November 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 4084731. A telephonic replay of the conference call will be available through midnight on November 19, 2019, by dialing (855) 859-2056 (international dial-in number is (404) 537‑3406) and entering pass code 4084731.

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, 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, 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 42,000 consumers through 186 locations across 26 states. For more information, please visit www.addus.com.

SOURCE Addus HomeCare Corporation