Addus HomeCare Announces Fourth-Quarter 2016 Results

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 December 31,

For the Year
Ended December 31,

2016

2015

2016

2015

Net service revenues

$  103,656

$    84,760

$  400,688

$  336,815

Cost of service revenues

75,000

62,567

294,593

245,492

Gross profit

28,656

22,193

106,095

91,323

27.6%

26.2%

26.5%

27.1%

General and administrative expenses

19,260

17,966

84,213

70,582

Depreciation and amortization

1,703

1,212

6,647

4,717

Total operating expenses

20,963

19,178

90,860

75,299

Operating income from continuing operations

7,693

3,015

15,235

16,024

Interest expense

572

258

2,332

786

Interest income

(2,766)

(23)

(2,812)

(47)

Other income

(80)

-

(206)

-

Income from continuing operations before
   income taxes

9,967

2,780

15,921

15,285

Income tax (benefit) expense from
   continuing operations

2,496

(271)

3,994

3,932

Net income from continuing operations

7,471

3,051

11,927

11,353

Discontinued operations:

   Income from Home Health Business,

      net of tax

97

270

97

270

Earnings from discontinued operations

97

270

97

270

Net income

$      7,568

$      3,321

$    12,024

$    11,623

Diluted net income per share:

   Continuing Operations

$        0.65

$        0.27

$        1.05

$        1.02

   Discontinued Operations

$        0.01

$        0.02

$        0.01

$        0.02

Weighted average number of common
  shares outstanding:

      Diluted

11,494

11,220

11,349

11,189

Cash Flow Information:

For the Three Months
Ended December 31,

For the Year Ended
December 31,

2016

2015

2016

2015

Net cash (used in) provided by operating activities

$   (31,734)

$     (4,680)

$        (743)

$      4,106

Net cash (used in) investing activities

(121)

(5,012)

(21,738)

(10,724)

Net cash (used in) provided by financing activities

422

(1,081)

26,390

(2,641)

Net change in cash

(31,433)

(10,773)

3,909

(9,259)

Cash at the beginning of the period

39,446

14,877

4,104

13,363

Cash at the end of the period

$      8,013

$      4,104

$      8,013

$      4,104

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)

December 31,

2016

2015

Assets

Current assets

Cash

$      8,013

$      4,104

Accounts receivable, net

116,999

84,959

Prepaid expenses and other current assets

5,998

4,858

Total current assets

131,010

93,921

Property and equipment, net

6,648

8,619

Other assets

Goodwill

73,906

68,844

Intangible assets, net

15,413

10,351

Investment in joint venture

900

900

Deferred tax assets, net

3,153

1,825

Other assets

-

1,337

Total other assets

93,372

83,257

Total assets

$  231,030

$  185,797

Liabilities and stockholders' equity

Current liabilities

Accounts payable

$      4,486

$      4,748

Accrued expenses

42,603

35,082

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

2,531

1,109

Current portion of contingent earn-out obligation

-

1,250

Total current liabilities

49,620

42,189

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

22,482

1,882

Total long-term liabilities

22,482

1,882

Total liabilities

72,102

44,071

Total stockholders' equity

158,928

141,726

Total liabilities and stockholders' equity

$  231,030

$  185,797

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Key Statistical and Financial Data

(Unaudited)

For the Three Months
Ended December 31,

For the Year Ended
December 31,

2016

2015

2016

2015

General:

Adjusted EBITDA (in thousands) ⁽¹⁾

$      9,284

$      5,394

$    32,094

$    23,627

States served at period end

-

-

24

22

Locations at period end

-

-

114

119

Employees at period end

-

-

23,070

21,395

Home & Community:

Average billable census - same store ⁽²⁾

32,855

32,471

32,803

32,630

Average billable census - acquisitions ⁽³⁾

1,242

126

1,141

126

Average billable census total

34,097

32,597

33,944

32,756

Billable hours (in thousands)

5,934

4,930

23,088

19,556

Average billable hours per census per month

58.0

50.4

56.7

49.8

Billable hours per business day

91,288

74,697

88,460

75,214

Revenues per billable hour

$      17.47

$      17.19

$      17.35

$      17.22

Percentage of Revenues by Payor:

State, local and other governmental programs

66.0

77.3

70.4

77.7

Managed care organizations

30.7

18.8

26.1

18.3

Private duty

2.2

2.9

2.4

3.0

Commercial

1.1

1.0

1.1

1.0

⁽¹⁾   We define Adjusted EBITDA as net income before interest expense, other non-operating income, 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, 2015 by 273 and the
       twelve months ended December 31, 2015 by 540.

⁽³⁾   The average billable census in acquisitions of 554 and 592 for the three months and twelve months ended
       December 31, 2015, respectively, was reclassified to average billable census - same stores for comparability
       purposes.

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,

2016

2015

2016

2015

Reconciliation of Adjusted EBITDA to
     Net Income: ⁽¹⁾

Net income

$      7,568

$      3,321

$    12,024

$    11,623

Less: (Earnings) from discontinued
     operations, net of tax

(97)

(270)

(97)

(270)

Net income from continuing operations

7,471

3,051

11,927

11,353

Interest expense

572

258

2,332

786

Interest income

(2,766)

(23)

(2,812)

(47)

Other non-operating income

(80)

-

(206)

-

Income tax (benefit) expense from
     continuing operations

2,496

(271)

3,994

3,932

Depreciation and amortization

1,703

1,212

6,647

4,717

M&A expenses

337

455

1,122

1,013

Stock-based compensation expense

(192)

412

1,072

1,573

Restructuring charges

(457)

-

4,787

-

Severance and other costs

200

-

3,231

-

IRS accrual

-

300

-

300

Adjusted EBITDA

$      9,284

$      5,394

$    32,094

$    23,627

Reconciliation of Net Income per Diluted
     Share to Adjusted Net Income per
     Diluted Share: ⁽²⁾

Net income per diluted share

$        0.65

$        0.27

$        1.05

$        1.02

Worker Opportunity Tax Credits per share

-

(0.09)

-

-

Cost associated with IRS accrual per share

-

0.03

-

0.03

Reserve adjustment for Workers
     Compensation per share

-

0.05

-

-

Interest income from State of Illinois

(0.17)

-

(0.17)

-

Normalization of effective tax rate

(0.04)

-

(0.06)

-

M&A expenses per diluted share

0.02

0.03

0.07

0.07

Restructuring charges per diluted share

(0.03)

-

0.30

-

Severance and other costs per diluted share

0.01

-

0.20

-

Stock-based compensation expense per
     diluted share

(0.01)

0.03

0.07

0.10

Adjusted net income diluted share

$        0.43

$        0.32

$        1.46

$        1.22

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,

2016

2015

2016

2015

Reconciliation of Net Service Revenues to
     Adjusted Net Service Revenues: ⁽³⁾

Net service revenues

$  103,656

$    84,760

$  400,688

$  336,815

Revenues associated with the closure of
     certain sites

-

(596)

(1,076)

(5,068)

Adjusted net service revenues

$  103,656

$    84,164

$  399,612

$  331,747

⁽¹⁾   We define Adjusted EBITDA as net income before interest expense, other non-operating income, taxes,
       depreciation, amortization, M&A expenses, stock-based compensation expense, restructuring 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⁾   We define Adjusted net income per diluted share as net income per diluted share, adjusted for worker opportunity
       tax credits, the IRS accrual, workers compensation, interest income from the State of Illinois, M&A expenses,
       normalization of the effective tax rate, stock-based compensation expense, restructuring charges and severance
       and other costs.  Adjusted net income per diluted 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. 

⁽³⁾   We define Adjusted net service revenues as net service revenues 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 service revenues or any other measure of financial performance calculated in accordance
       with GAAP.