Addus HomeCare Reports Fourth Quarter 2010 Results

Mar 03, 2011, 16:01 ET from Addus HomeCare Corporation

PALATINE, Ill., March 3, 2011 /PRNewswire/ --

Fourth Quarter Financial Highlights

  • Total net service revenues grew 6.7% to $70.1 million
  • Home & Community segment net service revenues increased 5.4% to $56.6 million
  • Home Health segment net service revenues increased 12.9% to $13.5 million
  • Net income of $1.5 million, or $0.14 per diluted share
  • Accounts Receivable DSO improved by 7 days to 90 days

Addus HomeCare Corporation (Nasdaq: ADUS), a comprehensive provider of home-based social and medical services, announced today its financial results for the three months and year ended December 31, 2010.

Mark Heaney, President and Chief Executive Officer of Addus HomeCare, stated: "Our fourth quarter results reflect continued progress toward our plan. The Home & Community business performed reasonably well in a challenging environment while the Home Health segment increased revenues 7.9% over the prior quarter and 12.9% year-over-year.  We continue to focus on improvements in both segments including investments in sales and marketing programs and the execution of our Integrated Services program.

"We are seeing improvements in our accounts receivable collections including the State of Illinois.  The increased cash payments received from the State of Illinois and other payors before year end improved our overall liquidity position.   In addition, we are continuing our efforts to centralize our billing and collection processes, which we expect will yield positive results.  Looking ahead into 2011, we will continue to focus on driving profitable growth in both our Home & Community and Home Health segments," Heaney added.

Fourth Quarter Review

Total net service revenues for the fourth quarter 2010 were $70.1 million, a 6.7% increase compared to $65.7 million in the prior year quarter.  The acquisition of CarePro contributed approximately $3.2 million in revenues in the fourth quarter.  

Fourth quarter 2010 net income was $1.5 million, or $0.14 per diluted share.  This compares to a net loss after preferred stock dividends of ($3.7) million, or ($0.48) per diluted share in the prior year quarter.  Excluding certain one-time items and prior to deducting preferred stock dividends in the fourth quarter 2009, net income was $0.6 million, or $0.07 per diluted share.

Home & Community segment net service revenues for the fourth quarter of 2010 were $56.6 million, a 5.4% increase compared to $53.7 million in the prior year quarter.  Home & Community segment revenues included approximately $2.6 million from CarePro operations and organic growth of $0.3 million.  Excluding the quarter-over-quarter impact of locations closed in 2010 totaling $0.9 million in revenue, organic revenue growth from continuing operations was 2.3%.  Home & Community operating income, including depreciation and amortization but excluding corporate expenses, was $5.8 million, or 10.2% of revenue, compared to $4.6 million, or 8.6% of revenue, in the prior year quarter.  

Home Health segment net service revenues for the fourth quarter of 2010 were $13.5 million, a 12.9% increase compared to $12.0 million in the prior year quarter.  Home Health segment revenues include approximately $0.6 million from CarePro operations and organic growth of $0.9 million, or 7.7%.  Home Health operating income, including depreciation and amortization but excluding corporate expenses, was $1.6 million, or 11.5% of revenues, compared to $1.2 million, or 9.7% of revenues in the prior year quarter.  

Full Year 2010 Review

Total net service revenues for the year ended December 31, 2010 were $271.7 million, a 4.8% increase compared to $259.3 million in the prior year period.  The acquisition of CarePro in 2010 contributed approximately $5.7 million in revenues.  

Net income for the year ended December 31, 2010 of $6.0 million, or $0.57 per diluted share.  This compares to a net loss after preferred stock dividends of ($1.8) million, or ($0.66) per diluted share for the year ended December 31, 2009.  Excluding one-time items, and prior to deducting preferred stock dividends, net income for 2009 was $6.0 million or $2.16 per diluted share.

Home & Community segment net service revenues for the full year 2010 were $220.8 million, a 5.1% increase compared to $210.1 million in the prior year period. CarePro operations contributed $4.6 million of the increase in revenue.  Excluding the year-over-year impact of locations closed in 2010 totaling $1.2 million in revenue, organic revenue growth from continuing operations was 3.5%.  Home & Community operating income, including depreciation and amortization but excluding corporate expenses, was $22.7 million or 10.3% of revenues, compared to $20.4 million, or 9.7% of revenues in the prior year period.  

Home Health segment net service revenues for the year ended December 31, 2010 were $51.0 million, a 3.6% increase compared to $49.2 million in the prior year period. Home Health segment revenues include approximately $1.1 million attributable to CarePro operations.  Home Health operating income, including depreciation and amortization but excluding corporate expenses, was $5.3 million or 10.4% of revenues, compared to $6.8 million, or 13.7% of revenues in the prior year period.  

The information provided in this release includes Adjusted EBITDA, a non-GAAP financial measure, which the Company defines as net income plus depreciation and amortization, net interest expense, income tax expense and stock-based compensation expense.  The Company has provided, in the financial statement tables included in this press release, a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP measure. Management believes that Adjusted EBITDA is 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 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 report its 2010 fourth quarter and year-end financial results after the market close on Thursday, March 3, 2011.  Management will conduct a conference call to discuss its results at 5 p.m. Eastern time on March 3, 2011. The toll-free number is (866) 788-0547 (international callers should call 857-350-1685), with the passcode: 86231686. A telephonic replay of the conference call will be available through midnight on March 10, 2011 by dialing (888) 286-8010 (international callers should call 617-801-6888) and entering the passcode 79269733.

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.

About Addus

Addus is a comprehensive provider of a broad range of social and medical services in the home. Addus' services include personal care and assistance with activities of daily living, skilled nursing and rehabilitative therapies, and adult day care. Addus' consumers are individuals with special needs 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, the Veterans Health Administration, commercial insurers and private individuals.

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 expected benefits and costs of acquisitions, management plans related to acquisitions, the possibility that expected benefits may not materialize as expected, the failure of a target company's business to perform as expected, Addus HomeCare's inability to successfully implement integration strategies, changes in reimbursement, changes in government regulations, changes in Addus HomeCare's relationships with referral sources, increased competition for Addus HomeCare's services, increased competition for joint venture and acquisition candidates, changes in the interpretation of government regulations, and other risks set forth in the Risk Factors section in Addus HomeCare's Prospectus, filed with the Securities and Exchange Commission on October 29, 2009, in Addus HomeCare's Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 29, 2010, and in Addus HomeCare's Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on November 10, 2010, 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)

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,

2010

2009

2010

2009

Net service revenues

$ 70,120

$ 65,697

$ 271,732

$ 259,305

Cost of service revenues

48,929

46,105

191,853

182,693

Gross profit

21,191

19,592

79,879

76,612

General and administrative expenses

16,869

17,566

63,841

59,924

Depreciation and amortization

1,091

1,235

4,046

4,913

Total operating expenses

17,960

18,801

67,887

64,837

Operating income

3,231

791

11,992

11,775

Interest expense, net

681

3,584

3,004

6,773

Income (loss) from operations before taxes

2,550

(2,793)

8,988

5,002

Income tax expense (benefit)

1,013

(1,009)

2,960

1,400

Net income (loss)

1,537

(1,784)

6,028

3,602

Less: Preferred stock dividends

-

(1,946)

-

(5,387)

Net income (loss) attributable to common shareholders

$   1,537

$ (3,730)

$     6,028

$   (1,785)

Income (loss) per common share:

    Basic

$     0.14

$   (0.48)

$       0.57

$     (0.66)

    Diluted

$     0.14

$   (0.48)

$       0.57

$     (0.66)

Weighted average number of common shares outstanding:

    Basic

10,745

7,715

10,604

2,707

    Diluted

10,745

7,715

10,606

2,707

Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)

December 31, 2010

December 31, 2009

Assets

Current assets

Cash

$                         816

$                         518

Accounts receivable, net

70,954

70,491

Prepaid expenses and other current assets

7,704

6,937

Deferred tax assets

6,324

5,700

Income taxes receivable

-

732

Total current assets

85,798

84,378

Property and equipment, net

2,923

3,133

Other assets

Goodwill

63,930

59,482

Intangible assets, net

13,570

13,082

Deferred tax assets

-

509

Other assets

703

731

Total other assets

78,203

73,804

Total assets

$                  166,924

$                  161,315

Liabilities and stockholders' equity

Current liabilities

Accounts payable

$                      3,304

$                      3,763

Accrued expenses

26,529

25,557

Current maturities of long-term debt

5,158

7,388

Deferred revenue

2,141

2,189

Total current liabilities

37,132

38,897

Long-term debt, less current maturities

40,027

41,851

Deferred tax liabilities

562

-

Other long-term liabilities

1,112

-

Total stockholders' equity

88,091

80,567

Total liabilities and stockholders' equity

$                  166,924

$                  161,315

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands)

(Unaudited)

For the Year Ended

December 31, 2010

December 31, 2009

Net Income

$                   6,028

$                   3,602

Adjustments to reconcile net income to net cash provided by operating activities

Depreciation and amortization

4,046

4,913

Deferred income taxes

447

(735)

Change in fair value of financial instrument

(191)

(586)

Stock-based compensation

255

297

Contingent purchase price deemed interest expense

-

1,802

Write-off of debt issuance costs

-

794

Amortization of debt issuance costs

179

590

Provision for doubtful accounts

4,429

4,514

Changes in operating assets and liabilities:

Accounts receivable

(4,892)

(25,768)

Prepaid expenses and other assets

(767)

(1,790)

Accounts payable

(459)

(116)

Accrued expenses

944

3,816

Deferred revenue

(48)

14

Income taxes

732

(272)

Net cash (used in) provided by operating activities

10,703

(8,925)

Acquisitions of businesses, net of acquired cash

(5,588)

(14,177)

Purchases of property and equipment

(612)

(671)

Net cash used in investing activities

(6,200)

(14,848)

Net proceeds from issuance of common stock

-

47,480

Payments on term-loan

-

(53,368)

Net payments on revolving credit loans

-

(7,694)

Borrowings on new term loan

5,000

-

Net borrowings (repayments) on new credit facility

(5,250)

38,500

Payments on preferred stock dividends

-

(1,673)

Payments on dividend notes

(1,250)

(5,117)

Net borrowings (repayments) on other notes

(2,554)

806

Debt issuance costs

(151)

(756)

Net cash provided by (used in) financing activities

(4,205)

18,178

Net change in cash

298

(5,595)

Cash at the beginning of period

518

6,113

Cash at the end of the period

$                      816

$                      518

Segment Information (Unaudited)

For the Three Months Ended December 31, 2010

Home & Community

Home Health

Corporate

Total

Net service revenues

$                      56,596

$        13,524

$            -

$   70,120

Cost of service revenues

42,100

6,829

-

48,929

Gross profit

14,496

6,695

-

21,191

Gross profit percentage

25.6%

49.5%

30.2%

General and administrative expenses

7,971

4,982

3,916

16,869

Depreciation and amortization

739

159

193

1,091

Total operating expenses

8,710

5,141

4,109

17,960

Operating income

$                        5,786

$          1,554

$    (4,109)

$     3,231

Operating income percentage

10.2%

11.5%

-5.9%

4.6%

For the Three Months Ended December 31, 2009

Home & Community

Home Health

Corporate

Total

Net service revenues

$                      53,720

$        11,977

$            -

$   65,697

Cost of service revenues

39,544

6,561

-

46,105

Gross profit

14,176

5,416

-

19,592

Gross profit percentage

26.4%

45.2%

29.8%

General and administrative expenses

8,710

4,069

4,787

17,566

Depreciation and amortization

844

188

203

1,235

Total operating expenses

9,554

4,257

4,990

18,801

Operating income

$                        4,622

$          1,159

$    (4,990)

$        791

Operating income percentage

8.6%

9.7%

-7.6%

1.2%

For the Year Ended December 31, 2010

Home & Community

Home Health

Corporate

Total

Net service revenues

$                    220,752

$        50,980

$            -

$ 271,732

Cost of service revenues

164,636

27,217

-

191,853

Gross profit

56,116

23,763

-

79,879

Gross profit percentage

25.4%

46.6%

29.4%

General and administrative expenses

30,745

17,817

15,279

63,841

Depreciation and amortization

2,686

638

722

4,046

Total operating expenses

33,431

18,455

16,001

67,887

Operating income

$                      22,685

$          5,308

$  (16,001)

$   11,992

Operating income percentage

10.3%

10.4%

-5.9%

4.4%

For the Year Ended December 31, 2009

Home & Community

Home Health

Corporate

Total

Net service revenues

$                    210,107

$        49,198

$            -

$ 259,305

Cost of service revenues

156,623

26,070

-

182,693

Gross profit

53,484

23,128

-

76,612

Gross profit percentage

25.5%

47.0%

29.5%

General and administrative expenses

29,732

15,607

14,585

59,924

Depreciation and amortization

3,355

769

789

4,913

Total operating expenses

33,087

16,376

15,374

64,837

Operating income

$                      20,397

$          6,752

$  (15,374)

$   11,775

Operating income percentage

9.7%

13.7%

-5.9%

4.5%

Key Statistical and Financial Data (Unaudited)

For the Three Months Ended December 31,

For the Year Ended December 31,

2010

2009

2010

2009

General:

Adjusted EBITDA (in thousands) (1)

$ 4,380

$ 2,111

$ 16,293

$ 16,985

States served at period end

19

16

Locations at period end

129

122

Employees at period end

13,284

12,559

Home & Community

Average weekly census

21,337

20,198

20,878

20,182

Billable hours (in thousands)

3,337

3,235

13,132

12,835

Billable hours per business day

53,823

50,547

51,905

50,333

Revenues per billable hour

$ 16.94

$ 16.61

$   16.81

$   16.37

Home Health

Average weekly census:

Medicare

1,481

1,393

1,485

1,427

Non-Medicare

1,566

1,464

1,491

1,528

Medicare admissions (2)

2,140

1,937

8,330

7,734

Medicare revenues per episode completed

$ 2,727

$ 2,593

$   2,634

$   2,569

Percentage of Revenues by Payor:

State, local or other governmental

79%

81%

80%

81%

Medicare

13%

12%

12%

12%

Other

8%

7%

8%

7%

(1) We define Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, and stock-based compensation expense. 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) Medicare admissions represents the aggregate number of new cases approved for Medicare services during a specified period.

Adjusted EBITDA (1) (Unaudited)

For the Three Months Ended December 31,

For the Year Ended December 31,

2010

2009

2010

2009

Reconciliation of Adjusted EBITDA to Net Income:

Net income (loss)

$ 1,537

$ (1,784)

$   6,028

$   3,602

Net interest expense

681

3,584

3,004

6,773

Income tax expense (benefit)

1,013

(1,009)

2,960

1,400

Depreciation and amortization

1,091

1,235

4,046

4,913

Stock-based compensation expense

58

85

255

297

Adjusted EBITDA

$ 4,380

$  2,111

$ 16,293

$ 16,985

(1) We define Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, and stock-based compensation expense. 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.

Investor Contact:

Amy Glynn / Nick Laudico

The Ruth Group

Phone:  (646) 536-7023 / 7030

Email:  aglynn@theruthgroup.com

Email:  nlaudico@theruthgroup.com

SOURCE Addus HomeCare Corporation



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