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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