Addus HomeCare Reports Second Quarter 2012 Results

Second Quarter Financial Highlights

- Total net service revenues were $70.3 million

- Net income of $1.5 million, or $0.14 per diluted share

News provided by

Addus HomeCare Corporation

Aug 02, 2012, 04:02 ET

PALATINE, Ill., Aug. 2, 2012 /PRNewswire/ -- Addus HomeCare Corporation (Nasdaq: ADUS), a provider of home-based social and medical services focused on the elderly dual eligible population, announced today its financial results for the second quarter ended June 30, 2012.

Second Quarter Review

Total net service revenues for the second quarter of 2012 were $70.3 million, a 3.0% increase compared to $68.3 million in the prior year quarter.  Net income for the second quarter was $1.5 million, or $0.14 per diluted share, compared to $1.3 million or $0.12 per diluted share, in the prior year quarter. 

Mark Heaney, President and Chief Executive Officer of Addus HomeCare, stated, "Our Home & Community segment continued its steady growth during the second quarter and we maintained our focus on performance improvements in our Home Health segment."  

Home & Community segment net service revenues for the second quarter of 2012 were $58.7 million, a 6.6% increase from the prior year quarter.  Home & Community operating income, including depreciation and amortization but excluding corporate expenses, increased 17.6% to $7.1 million, or 12.1% of revenue, in the second quarter, compared to $6.0 million, or 10.9% of revenue, in the prior year quarter.  This improvement was primarily due to an increase in average census and related billable hours, improved field productivity, lower bad debt expense as well as a continued focus on cost control.

Home Health segment net service revenues for the second quarter of 2012 were $11.6 million, a 12.2% decrease over the prior year quarter. Home Health had an operating loss, including depreciation and amortization but excluding corporate expenses, of approximately $0.1 million, or (0.4)% of revenues, compared to operating income of $0.8 million, or 6.3% of revenues, in the prior year quarter.

Six Month Review

Total net service revenues for the six months ended June 30, 2012 were $138.2 million, a 2.3% increase compared to $135.1 million in the same prior year period.  Net income for the six months ended June 30, 2012 was $2.1 million, or $0.19 per diluted share, compared to $2.2 million or $0.20 per diluted share, in the same prior year period.

Home & Community segment net service revenues for the six months ended June 30, 2012 were $115.6 million, a 5.9% increase from the same prior year period. Home & Community operating income, including depreciation and amortization but excluding corporate expenses, increased 19.0% to $13.5 million, or 11.7% of revenue for the six months ended June 30, 2012, compared to $11.3 million, or 10.4% of revenue, in the same prior year period. This improvement was primarily due to an increase in average census and related billable hours, improved field productivity, lower bad debt expense as well as a continued focus on cost control.

Home Health segment net service revenues for the six months ended June 30, 2012 were $22.6 million, a 12.8% decrease over the same prior year period.  Home Health had an operating loss, including depreciation and amortization but excluding corporate expenses, of $1.2 million, or (5.3)% of revenues, compared to operating income of $1.5 million, or 5.9% of revenues, in the same prior year period. Home Health segment net service revenues for the six months ended June 30, 2012 included an adjustment recorded in the first quarter of 2012 to estimates of accrued Medicare revenues totaling $0.9 million, which reduced profitability by $0.8 million. 

Non-GAAP Financial Measures

The information provided in this release includes Adjusted EBITDA, a non-GAAP financial measure, which the Company defines as earnings before goodwill and intangible asset impairment charge, revaluation of contingent consideration, net interest (income) expense, taxes, depreciation, amortization, 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 2012 second quarter financial results after the market close on Thursday, August 2, 2012.  Management will conduct a conference call to discuss its results at 5 p.m. Eastern time on August 2, 2012. The toll-free dial-in number is (866) 813-5647 (international dial-in number is 847-619-6249), with the passcode: 32963600. A telephonic replay of the conference call will be available through midnight on August 9, 2012, by dialing (888) 843-7419 (international dial-in number is 630-652-3042) and entering the passcode 32963600.

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 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 focuses on serving the needs of the elderly dual eligible population. 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. For more information, please visit www.addus.com.

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, the uncertainty regarding the outcome of discussions with managed care organizations, changes in tax rates 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 16, 2012, and in Addus HomeCare's Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 10, 2012, 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.

Investor Contact:
Dennis Meulemans
Chief Financial Officer
Phone: (847) 303-5300
Email: [email protected]

(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,

2012

2011

2012

2011








Net service revenues

$  70,281

$   68,252

$  138,205

$  135,094

Cost of service revenues

49,862

48,142

99,145

95,930








Gross profit

20,419

20,110

39,060

39,164








General and administrative expenses

17,180

16,493

34,211

32,612

Gain on sale of agency

-

-

(495)

-

Depreciation and amortization

635

927

1,269

1,856

Total operating expenses

17,815

17,420

34,985

34,468








Operating income 

2,604

2,690

4,075

4,696








Interest income

-

-

(128)

-

Interest expense

426

668

958

1,381

Total interest (income) expense

426

668

830

1,381








Income from operations before taxes

2,178

2,022

3,245

3,315

Income tax expense 

714

689

1,152

1,129








Net income 

$    1,464

$     1,333

$      2,093

$     2,186








Income per common share:






     Basic and diluted

$     0.14

$      0.12

$        0.19

$       0.20








Weighted average number of common shares outstanding:






     Basic

10,761

10,746

10,761

10,746

     Diluted

10,785

10,770

10,781

10,762








































Cash Flow Information:

For the Six Months Ended June 30,




2012

2011











Net cash provided by operating activities

$    5,732

$   29,098



Net cash used in investing activities

(259)

(632)



Net cash used in financing activities

(6,000)

(5,177)











Net change in cash

(527)

23,289



Cash at the beginning of the period

2,020

816



Cash at the end of the period

$    1,493

$   24,105



 

Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)






June 30, 2012

December 31, 2011

Assets








Current assets



Cash

$              1,493

$            2,020

Accounts receivable, net 

69,141

72,368

Prepaid expenses and other current assets

8,418

8,137

Deferred tax assets

6,336

6,336





Total current assets

85,388

88,861





Property and equipment, net

2,813

2,490





Other assets



Goodwill

50,615

50,695

Intangible assets, net 

7,206

8,044

Deferred tax assets

4,089

4,089

Other assets

399

513

Total other assets

62,309

63,341





Total assets

$           150,510

$        154,692





Liabilities and stockholders' equity








Current liabilities



Accounts payable

$              4,929

$            5,266

Accrued expenses

29,286

29,313

Current maturities of long-term debt

3,527

6,569

Deferred revenue

2,094

2,145





Total current liabilities

39,836

43,293





Long-term debt, less current maturities

22,000

24,958





Total stockholders' equity

88,674

86,441





Total liabilities and stockholders' equity

$           150,510

$        154,692

 

Segment Information (Unaudited)







For the Three Months Ended June 30, 2012

Home & Community

Home Health

Corporate

Total








Net service revenues

$       58,656

$     11,625

$           -

$     70,281

Cost of service revenues

43,532

6,330

-

49,862








Gross profit

15,124

5,295

-

20,419

Gross profit percentage

25.8%

45.5%


29.1%








General and administrative expenses

7,585

5,338

4,257

17,180

Depreciation and amortization

461

4

170

635

Total operating expenses

8,046

5,342

4,427

17,815








Operating income (loss)

$         7,078

$          (47)

$     (4,427)

$       2,604








Operating income percentage

12.1%

-0.4%

-6.3%

3.7%









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 (loss)

$         6,020

$         840

$     (4,170)

$       2,690








Operating income percentage

10.9%

6.3%

-6.1%

3.9%

















For the Six Months Ended June 30, 2012

Home & Community

Home Health

Corporate

Total








Net service revenues

$     115,579

$     22,626

$           -

$    138,205

Cost of service revenues

86,161

12,984

-

99,145








Gross profit

29,418

9,642

-

39,060

Gross profit percentage

25.5%

42.6%


28.3%








General and administrative expenses

14,993

10,845

8,373

34,211

Gain on sale of agency

-

-

(495)

(495)

Depreciation and amortization

927

7

335

1,269

Total operating expenses

15,920

10,852

8,213

34,985








Operating income (loss)

$       13,498

$     (1,210)

$     (8,213)

$       4,075








Operating income percentage

11.7%

-5.3%

-5.9%

2.9%









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 (loss)

$       11,345

$      1,538

$     (8,187)

$       4,696








Operating income percentage

10.4%

5.9%

-6.1%

3.5%

 

Key Statistical and Financial Data (Unaudited)















For the Three Months Ended

June 30,

For the Six Months Ended

June 30,

2012

2011

2012

2011

General:














Adjusted EBITDA (in thousands) (1)

$    3,312

$ 3,695

$ 5,484

$ 6,697

States served at period end

19

19

19

19

Locations at period end

117

129

117

129

Employees at period end

14,289

13,168

14,289

13,168








Home & Community














Average census

23,714

22,753

23,447

22,629

Billable hours (in thousands)

3,477

3,229

6,851

6,414

Billable hours per business day

54,334

50,456

53,522

50,506

Revenues per billable hour

$    16.86

$ 17.03

$ 16.86

$ 17.02








Home Health














Medicare admissions (2)

2,012

2,274

4,183

4,547

Non-Medicare admissions 

1,236

1,707

2,596

3,321

Medicare revenues per episode completed

$    2,551

$ 2,517

$ 2,565

$ 2,528








Percentage of Revenues by Payor:














State, local or other governmental

82%

80%

83%

80%

Medicare

11%

12%

11%

12%

Other

7%

8%

6%

8%








(1) We define Adjusted EBITDA as earnings before goodwill and intangible asset impairment charge, revaluation of contingent consideration, net interest (income) expense, 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

June 30,

For the Six

Months Ended

June 30,

2012

2011

2012

2011

Reconciliation of Adjusted EBITDA to Net Income:














Net income 

$   1,464

$ 1,333

$ 2,093

$ 2,186

Net interest expense

426

668

830

1,381

Income tax expense 

714

689

1,152

1,129

Depreciation and amortization

635

927

1,269

1,856

Stock-based compensation expense

73

78

140

145








Adjusted EBITDA

$   3,312

$ 3,695

$ 5,484

$ 6,697
















(1) We define Adjusted EBITDA as earnings before goodwill and intangible asset impairment charge, revaluation of contingent consideration, net interest (income) expense, 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. 

 

SOURCE Addus HomeCare Corporation

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