Addus HomeCare Reports Second Quarter 2011 Results

Aug 04, 2011, 16:00 ET from Addus HomeCare Corporation

PALATINE, Ill., Aug. 4, 2011 /PRNewswire/ --

Second Quarter Financial Highlights

  • Total net service revenues grew 1.6% to $68.3 million, with comparable growth rates in both the Home & Community and Home Health Divisions
  • Net income of $1.3 million, or $0.12 per diluted share
  • Accounts Receivable DSO has improved by 19 days to 65 days

Addus HomeCare Corporation (Nasdaq: ADUS), a comprehensive provider of home-based social and medical services, announced today its financial results for the second quarter ended June 30, 2011.

Mark Heaney, President and Chief Executive Officer of Addus HomeCare, stated: “In the second quarter, we continued to integrate our new senior management team, including our new Vice President for Home Health, who joined us in July.  In addition, we are initiating a search for a Chief Sales and Marketing Officer to lead our sales team.  We are of course pleased that the State of Illinois made a significant payment in the quarter.”

Second Quarter Review

Total net service revenues for the second quarter of 2011 were $68.3 million, a 1.6% increase compared to the prior year quarter.  The acquisition of CarePro contributed approximately $3.3 million in net service revenues in the second quarter of 2011.  

Second quarter 2011 net income was $1.3 million, or $0.12 per diluted share.  Net income was $1.7 million or $0.16 per diluted share in the prior year quarter.  

Home & Community segment net service revenues for the second quarter of 2011 were $55.0 million, a 1.6% increase from the prior year quarter.  Home & Community segment revenues included approximately $2.4 million from CarePro operations.  Excluding locations closed in late 2010 and program eliminations in select states totaling $1.8 million in revenue, same store sales increased by $0.2 million, or approximately 0.4%.  Home & Community operating income, including depreciation and amortization but excluding corporate expenses, was $6.0 million, or 10.9% of revenue in the second quarter, compared to $5.5 million, or 10.1% of revenue, in the prior year quarter.  

Home Health segment net service revenues for the second quarter of 2011 were $13.2 million, a 1.7% increase over the prior year quarter, despite a reduction in Medicare revenues estimated at $0.4 million as a result of the rate cut enacted in 2011.  Home Health segment revenues include approximately $0.9 million from CarePro operations. Home Health operating income, including depreciation and amortization but excluding corporate expenses, was $0.8 million, or 6.3% of revenues, compared to $1.7 million, or 13.0% of revenues in the prior year quarter.  

Cash flow from operations was $17.6 million for the second quarter of 2011 compared to cash used in operations of $0.8 million in the second quarter of 2010. This improvement reflects a significant payment received late in the second quarter from the State of Illinois.  Subsequent to June 30, 2011, the cash generated from operations was used to reduce the outstanding balance on the Company’s line of credit and other debt.

Six Month Review

Total net service revenues for the six months ended June 30, 2011 were $135.1 million, a 2.5% increase compared to the prior year period.  The acquisition of CarePro contributed approximately $6.8 million in net service revenues in the first half of 2011.  

Net income for the first half of 2011 was $2.2 million, or $0.20 per diluted share.  This compares to net income of $3.0 million, or $0.29 per diluted share in the same period of 2010.

Home & Community segment net service revenues for the six months ended June 30, 2011 were $109.2 million, a 2.2% increase compared to the prior year period.  Home & Community segment revenues included approximately $4.9 million from CarePro operations.  Excluding locations closed in late 2010 and program eliminations in select states totaling $3.8 million in revenue, same store sales increased by $1.2 million, or approximately 1.1%.  Home & Community operating income, including depreciation and amortization but excluding corporate expenses, was $11.3 million, or 10.4% of revenue in the first half of 2011, compared to $11.0 million, or 10.3% of revenue, in the prior year period.  

Home Health segment net service revenues for the six months ended June 30, 2011 were $25.9 million, a 4.1% increase compared to the prior year period.  Home Health segment revenues include approximately $1.9 million from CarePro operations.  After adjusting for the Medicare rate reduction in 2011 of approximately $0.8 million, same store sales decreased by $0.1 million, or 0.3%.  Home Health operating income, including depreciation and amortization but excluding corporate expenses, was $1.5 million, or 5.9% of revenues for the first half of 2011, compared to $2.7 million, or 10.8% of revenues in the prior year period.  

Cash flow from operations was $29.1 million for the first half of 2011 compared to $0.8 million in the same period in 2010 due largely to the improved payments received from the State of Illinois, combined with an overall improvement in collections from all other payors.  Subsequent to June 30, 2011, the cash from operations was used to reduce the outstanding balance on the Company’s line of credit and other debt.

Non-GAAP Financial Measures

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 2011 second quarter results after the market close on Thursday, August 4, 2011.  Management will conduct a conference call to discuss its results at 5 p.m. Eastern time on August 4, 2011. The toll-free number is (866) 730-5770 (international callers should call 857-350-1594), with the passcode: 30071147. A telephonic replay of the conference call will be available through midnight on August 18, 2011 by dialing (888) 286-8010 (international callers should call 617-801-6888) and entering the passcode 89988113.

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, 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 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 28, 2010, and in Addus HomeCare’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 4, 2011, 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 and Cash Flow Information

(amounts and shares in thousands, except per share data)

(Unaudited)









Income Statement Information:

For the Three Months Ended June 30,


For the Six Months Ended June 30,


2011


2010


2011


2010









Net service revenues

$                            68,252


$                              67,165


$                          135,094


$                            131,770

Cost of service revenues

48,142


47,429


95,930


93,214









Gross profit

20,110


19,736


39,164


38,556









General and administrative expenses

16,493


15,513


32,612


30,695

Depreciation and amortization

927


951


1,856


1,897

Total operating expenses

17,420


16,464


34,468


32,592









Operating income

2,690


3,272


4,696


5,964









Interest expense, net

668


750


1,381


1,468









Income from operations before taxes

2,022


2,522


3,315


4,496

Income tax expense

689


868


1,129


1,484









Net income

$                              1,333


$                                1,654


$                              2,186


$                                3,012









Income per common share:








    Basic

$                                0.12


$                                  0.16


$                                0.20


$                                  0.29

    Diluted

$                                0.12


$                                  0.16


$                                0.20


$                                  0.29









Weighted average number of common shares outstanding:








    Basic

10,746


10,500


10,746


10,500

    Diluted

10,770


10,500


10,762


10,500









































Cash Flow Information:

For the Six Months Ended June 30,




2011


2010













Net cash provided by operating activities

$                            29,098


$                                   795





Net cash used in investing activities

(632)


(695)





Net cash provided by (used in) financing activities

(5,177)


317













Net change in cash

23,289


417





Cash at the beginning of the period

816


518





Cash at the end of the period

$                            24,105


$                                   935







Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)






June 30, 2011


December 31, 2010

Assets








Current assets




Cash

$                             24,105


$                                  816

Accounts receivable, net

51,285


70,954

Prepaid expenses and other current assets

9,090


7,704

Deferred tax assets

6,338


6,324





Total current assets

90,818


85,798





Property and equipment, net

2,576


2,923





Other assets




Goodwill

63,851


63,930

Intangible assets, net

12,193


13,570

Other assets

612


703

Total other assets

76,656


78,203





Total assets

$                           170,050


$                           166,924





Liabilities and stockholders' equity








Current liabilities




Accounts payable

$                               5,246


$                               3,304

Accrued expenses

31,465


26,529

Current maturities of long-term debt

6,000


5,158

Deferred revenue

2,328


2,141





Total current liabilities

45,039


37,132





Long-term debt, less current maturities

34,027


40,027

Deferred tax liabilities

562


562

Other long-term liabilities

-


1,112





Total stockholders' equity

90,422


88,091





Total liabilities and stockholders' equity

$                           170,050


$                           166,924



Segment Information (Unaudited)









For the Three Months Ended June 30, 2011


Home & Community


Home Health


Corporate


Total









Net service revenues

$                           55,009


$                           13,243


$                                  -


$                           68,252

Cost of service revenues

41,076


7,066


-


48,142









Gross profit

13,933


6,177


-


20,110

Gross profit percentage

25.3%


46.6%




29.5%









General and administrative expenses

7,304


5,208


3,981


16,493

Depreciation and amortization

609


129


189


927

Total operating expenses

7,913


5,337


4,170


17,420









Operating income

$                             6,020


$                                840


$                           (4,170)


$                             2,690









Operating income percentage

10.9%


6.3%


-6.1%


3.9%










For the Three Months Ended June 30, 2010


Home & Community


Home Health


Corporate


Total









Net service revenues

$                           54,144


$                           13,021


$                                  -


$                           67,165

Cost of service revenues

40,450


6,979


-


47,429









Gross profit

13,694


6,042


-


19,736

Gross profit percentage

25.3%


46.4%




29.4%









General and administrative expenses

7,581


4,196


3,736


15,513

Depreciation and amortization

621


158


172


951

Total operating expenses

8,202


4,354


3,908


16,464









Operating income

$                             5,492


$                             1,688


$                           (3,908)


$                             3,272









Operating income percentage

10.1%


13.0%


-5.8%


4.9%


















For the Six Months Ended June 30, 2011


Home & Community


Home Health


Corporate


Total









Net service revenues

$                         109,152


$                           25,942


$                                  -


$                         135,094

Cost of service revenues

81,853


14,077


-


95,930









Gross profit

27,299


11,865


-


39,164

Gross profit percentage

25.0%


45.7%




29.0%









General and administrative expenses

14,735


10,070


7,807


32,612

Depreciation and amortization

1,219


257


380


1,856

Total operating expenses

15,954


10,327


8,187


34,468









Operating income

$                           11,345


$                             1,538


$                           (8,187)


$                             4,696









Operating income percentage

10.4%


5.9%


-6.1%


3.5%










For the Six Months Ended June 30, 2010


Home & Community


Home Health


Corporate


Total









Net service revenues

$                         106,845


$                           24,925


$                                  -


$                         131,770

Cost of service revenues

79,724


13,490


-


93,214









Gross profit

27,121


11,435


-


38,556

Gross profit percentage

25.4%


45.9%




29.3%









General and administrative expenses

14,903


8,420


7,372


30,695

Depreciation and amortization

1,235


321


341


1,897

Total operating expenses

16,138


8,741


7,713


32,592









Operating income

$                           10,983


$                             2,694


$                           (7,713)


$                             5,964









Operating income percentage

10.3%


10.8%


-5.9%


4.5%



Key Statistical and Financial Data (Unaudited) (3)

















For the Three Months Ended June 30,


For the Six Months Ended June 30,


2011


2010


2011


2010

General:
















Adjusted EBITDA (in thousands) (1)

$                  3,714


$                 4,289


$               6,697


$                7,989

States served at period end





19


16

Locations at period end





125


122

Employees at period end





13,366


13,123









Home & Community
















Average weekly census

21,036


20,648


20,948


20,421

Billable hours (in thousands)

3,229


3,252


6,414


6,424

Billable hours per business day

50,456


50,819


50,506


50,582

Revenues per billable hour

$                  17.03


$                 16.65


$               17.02


$                16.63









Home Health
















Average weekly census:








Medicare

1,475


1,602


1,470


1,533

Non-Medicare

1,528


1,493


1,521


1,515

Medicare admissions (2)

2,274


2,179


4,547


4,315

Medicare revenues per episode completed

$                  2,581


$                 2,633


$               2,692


$                2,598









Percentage of Revenues by Payor:
















State, local or other governmental

80%


79%


80%


80%

Medicare

13%


13%


13%


12%

Other

7%


8%


7%


8%









(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.

(3) Key statistical and financial data for the three and six months ended June 30, 2011 includes the acquisition of Advantage Health Systems, Inc.



Adjusted EBITDA (1) (Unaudited)

For the Three Months Ended June 30,


For the Six Months Ended June 30,


2011


2010


2011


2010

Reconciliation of Adjusted EBITDA to Net Income:
















Net income

$                     1,333


$                1,654


$                  2,186


$               3,012

Net interest expense

668


750


1,381


1,468

Income tax expense

689


868


1,129


1,484

Depreciation and amortization

927


951


1,856


1,897

Stock-based compensation expense

97


66


145


128









Adjusted EBITDA

$                     3,714


$                4,289


$                  6,697


$               7,989

















(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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