Addus HomeCare Announces Fourth Quarter 2014 Results

DOWNERS GROVE, Ill., March 5, 2015 /PRNewswire/ -- Addus HomeCare Corporation (NASDAQ: ADUS), a comprehensive provider of home and community-based services that primarily are social in nature, provided in the home and focused on the dual eligible population, today announced its financial results for the fourth quarter and year ended December 31, 2014.

For the fourth quarter, net service revenues grew 18.3% to $82.6 million from $69.9 million for the fourth quarter of 2013. Net income from continuing operations was $3.6 million for the fourth quarter of 2014, or $0.33 per diluted share, compared with $3.1 million, or $0.28 per diluted share, for the fourth quarter last year. Adjusted diluted earnings per share from continuing operations grew 38.5% to $0.36 for the fourth quarter of 2014, which exclude legal and consulting expenses related to acquisition activity in both 2014 and 2013 and a favorable impact of higher than expected Worker Opportunity Tax Credits realized in 2013. (See page 7 for a reconciliation of all non‑GAAP and GAAP financial measures.)

Net service revenues for 2014 increased 17.7% to $312.9 million from $265.9 million for 2013. Net income from continuing operations for 2014 was $12.0 million, or $1.08 per diluted share, compared with $11.2 million, or $1.01 per diluted share, for 2013. Adjusted diluted earnings per share from continuing operations grew 14.0% to $1.14 in 2014, which exclude expenses related to acquisition activity in both 2014 and 2013 and a favorable impact of higher than expected Worker Opportunity Tax Credits realized in 2013, including amounts related to 2012.

"We had a strong fourth quarter to complete a successful 2014 for Addus," said Mark Heaney, President and Chief Executive Officer of Addus HomeCare. "We produced significant revenue growth and improved profit margins versus the fourth quarter of 2013, driven by double-digit growth in billable census. These results reflected our continued organic growth with traditional payors and the ongoing transition of dual eligible consumers to managed care. As a result of this transition, managed care revenues increased to 15.4% of total net revenues compared with 2.1% for the fourth quarter of 2013. Our fourth quarter results also reflected the full-year impact of our 2013 acquisitions and our acquisition of Aid & Assist at Home in June 2014. We were further pleased to announce our most recent acquisition in early January 2015 of Priority Home Health Care, Inc., in Ohio, a state in the forefront of transitioning its long-term care programs to managed care organizations (MCOs).

"Addus remains fully engaged in positioning itself to benefit from the ongoing transition to MCOs in many states across the country. Our initiatives include our marketing and sales efforts with existing and potential MCO customers and our focused acquisition activities. We also continue our investments in our technology infrastructure to transform a historically paper-based industry and connect our consumers to the healthcare industry electronically. 

"In addition, we strengthened the depth of our executive management team during the fourth quarter by naming Maxine Hochhauser as Chief Operating Officer and promoting Darby Anderson to Chief Business Development and Strategy Officer. These appointments recognize both our near and long-term business development opportunities and our continuing efforts to differentiate Addus through superior execution as the leading home care company serving MCOs."

The Company's 18.3% growth in net revenue for the quarter was driven by an increase in same-store sales of 7.4% and in revenues from acquisitions of 10.9%. These increases reflected a 14.7% rise in average billable census for the quarter. In addition, average billable hours per census per month grew 2.5% for the quarter, and revenue per billable hour increased 0.6%.

Profit margins also increased for the quarter, with gross profit margin up 150 basis points as a percentage of net revenue. These improvements, combined with revenue growth, produced a 46.8% increase in adjusted EBITDA to $7.1 million for the fourth quarter of 2014 from $4.8 million of the same prior-year quarter. (See page 7 for a reconciliation of all non-GAAP and GAAP financial measures.)

At the end of 2014, Addus had $13.4 million in cash, no bank debt and $40 million of availability under its revolving credit facility. Net cash utilized on operations was $0.6 million for the fourth quarter, and net cash generated by operations was $7.0 million for full-year 2014. 

The Company believes the material weaknesses in internal controls that existed on December 31, 2013, have been remediated, which will be reflected in the Company's 2014 Annual Report on Form 10-K; however, the audit and final testing are not yet complete.

Non-GAAP Financial Measures

The information provided in this release includes adjusted diluted earnings per share from continuing operations and adjusted EBITDA, which are non-GAAP financial measures. The Company defines adjusted diluted earnings per share from continuing operations as diluted earnings per share from continuing operations, adjusted for M&A expenses and tax benefit from worker opportunity tax credits. The Company defines adjusted EBITDA as earnings before discontinued operations, interest expense, taxes, depreciation, amortization, M&A expense and stock-based compensation expense. The Company has provided, in the financial statement tables included in this press release, a reconciliation of adjusted diluted earnings per share from continuing operations to diluted earnings per share from continuing operations, and a reconciliation of adjusted EBITDA to net income, in each case, the most directly comparable GAAP measure. Management believes that adjusted diluted earnings per share from continuing operations and adjusted EBITDA 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 to discuss its results for the fourth quarter today beginning at 5:00 p.m. Eastern time. The toll-free dial-in number for the conference call is (866) 383-8009 (international dial-in number is (617) 597-5342), passcode 14146906. A telephonic replay of the conference call will be available through midnight on March 12, 2015, by dialing (888) 286-8010 (international dial-in number is (617) 801-6888) and entering passcode 88120633.

A live broadcast of the 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. 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 anticipated transition to managed care providers, expected benefits and 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, 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 17, 2014, and in Addus HomeCare's Quarterly Reports on Form 10-Q, filed with the Securities and Exchange Commission on May 7, 2014, August 11, 2014 and November 7, 2014, each of 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. (Unaudited tables and notes follow).

About Addus

Addus is a comprehensive provider of home and community-based services that primarily are social in nature, provided in the home and focused on the dual eligible 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.

SOURCE Addus HomeCare Corporation

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