Le Lézard
Classified in: Health, Business, Covid-19 virus
Subjects: ERN, CCA

Addus HomeCare Announces Second-Quarter 2020 Financial Results


FRISCO, Texas, Aug. 10, 2020 /PRNewswire/ -- Addus HomeCare Corporation (NASDAQ: ADUS), a provider of home care services, today announced its financial results for the second quarter and six months ended June 30, 2020.

Net service revenues were $184.6 million for the second quarter of 2020, up 23.9% from $148.9 million for the second quarter of 2019. Net income was $6.9 million, up 30.5% compared with $5.3 million for the second quarter of 2019, while net income per diluted share was $0.43, compared with $0.39 per diluted share for the prior-year period. Adjusted net income per diluted share grew 35.2% to $0.73 for the second quarter of 2020 from $0.54 for the second quarter of 2019.

Adjusted net income per diluted share for the second quarter of 2020 excludes loss on sale of assets of $0.02, COVID-19 expenses of $0.01, M&A expenses of $0.09, restructuring and other costs of $0.12, which consisted primarily of costs associated with the Company's re-audit process, and stock-based compensation expense of $0.06.  Adjusted net income per diluted share for the second quarter of 2019 excludes M&A expenses of $0.04, restructuring and other costs of $0.02, and stock-based compensation expense of $0.09.  Adjusted EBITDA increased 49.9% to $18.7 million for the second quarter of 2020 from $12.5 million for the second quarter of 2019. (See page 9 for a reconciliation of all non-GAAP and GAAP financial measures in this news release.)

For the first six months of 2020, net service revenues increased 30.4% to $374.8 million from $287.4 million for the prior-year period.  Net income increased 62.3% to $15.6 million for the first six months of 2020 compared with $9.6 million for the same period in 2019, and net income per diluted share was $0.98 compared with $0.71 per diluted share.  Adjusted net income increased 77.3% to $24.0 million for the first six months of 2020 compared with $13.5 million for the prior-year period, while adjusted net income per diluted share grew 52.0% to $1.52 from $1.00.  Adjusted EBITDA increased 61.8% to $36.4 million for the first six months of 2020 from $22.5 million for the first six months of 2019.

Dirk Allison, President and Chief Executive Officer, commented, "We are proud of our solid financial and operating results for the second quarter, reflecting continued growth in a challenging environment.  Our personal care services, which accounted for 84.7% of our revenue, were up 13.7% over the same period last year, including 9.7% same store growth, as most of our large markets experienced favorable revenue trends in the second quarter.  We also benefitted from the Illinois rate increases for home care services that were effective July 1, 2019, with a further increase beginning January 1, 2020.  As our country has experienced the ongoing and significant impact of the COVID-19 pandemic, Addus has continued to provide the critical and essential home care services that allow individuals to remain in their homes and avoid the potential risks found in external settings and institutional healthcare environments.  We commend the dedicated and heroic efforts of our caregivers and of all healthcare workers, who have worked tirelessly to meet this critical need." 

At June 30, 2020, the Company had cash of $158.6 million and bank debt of $60.0 million, while availability under its revolving credit facility was $223.5 million.  Net cash provided in operating activities was $30.4 million for the second quarter of 2020.

Mr. Allison continued, "Our top priority is to protect the health and safety of the patients and customers we serve and our caregivers and other employees.  Our strong value proposition, including hospice and home care services, is more relevant than ever in this environment, and we believe we are taking deliberate and effective measures across our operations to meet the increasing demand for our services in a safe manner.  Our senior leadership team continues to address the impact of the COVID-19 pandemic on the Company's operations, and we are pleased with our ability to quickly respond to the challenges we are facing.  While much is still unknown, we remain focused on expanding our market presence and enhancing our home care services offering as we reach more consumers and create value for our shareholders."

"In keeping with this focus, we completed the acquisition of Montana-based A Plus Health Care, Inc. on July 1, 2020, and we are pleased to welcome that experienced management team and clinical staff to the Addus family. We will continue to pursue acquisition opportunities and have the financial capacity to execute this strategy, although we are approaching the consummation of any acquisition in the current environment with appropriate caution and diligence," added Allison.

Relief Funds, SEC Filings and Nasdaq Updates

As previously announced, the Company is not participating in the financial relief programs available under the CARES Act and the PPPHCE Act. Under these programs, the Company automatically received a portion of the $175 billion in funding to be distributed to health care providers through the Relief Fund, but the Company has returned all funds.

The Company also confirmed it has filed its Annual Report on Form 10-K for the year ended December 31, 2019, and its Form 10-Qs for each of the three-month periods ending March 31, 2020, and June 30, 2020, respectively, with the Securities and Exchange Commission ("SEC") following completion of its previously announced re-audit of the Company's financial statements for 2017 and 2018 by PricewaterhouseCoopers.  As expected, the re-audit did not result in any material corrections to the Company's historical financial statements.

As previously announced, Addus HomeCare received correspondence from Nasdaq on May 14, 2020, notifying the Company that it was not currently in compliance with Nasdaq Listing Rule 5250(c)(1), as a result of not filing the Form 10-Q for the three month period ending March 31, 2020, and of the ongoing delay in filing the Form 10-K.  Pursuant to Nasdaq rules, Addus HomeCare's securities have remained listed on the Nasdaq Global Select Market during a grace period until September 14, 2020, to regain compliance with the Nasdaq continued listing requirements. With the completion of the SEC filings, Addus HomeCare anticipates being able to now regain compliance.

Non-GAAP Financial Measures

The information provided in this release includes adjusted net income per diluted share, adjusted EBITDA and adjusted net service revenues, which are non-GAAP financial measures. The Company defines adjusted net income as net income before the net-of-tax amounts of interest income from the State of Illinois, COVID-19 adjustments for temporary rate increases and expenses, M&A expenses, stock-based compensation expense, restructure charges, severance and other costs and loss on the sale of assets associated with Hospice Partners of Kansas. The Company defines adjusted EBITDA as net income before interest expense, interest income, other non-operating income, COVID-19 adjustments for temporary rate increases and expenses, taxes, depreciation, amortization, interest income from the State of Illinois, M&A expenses, stock-based compensation expense, restructure charges, severance and other costs and loss on the sale of assets associated with Hospice Partners of Kansas. The Company defines adjusted diluted earnings per share as earnings per share adjusted for interest income from the State of Illinois, COVID?19 expenses, M&A expenses, stock compensation expense and restructure expense, severance and other costs and loss on the sale of assets associated with Hospice Partners of Kansas.  The Company has provided, in the financial statement tables included in this press release, a reconciliation of adjusted net income to net income, a reconciliation of adjusted EBITDA to net income and a reconciliation of adjusted diluted earnings per share to earnings per share, in each case, the most directly comparable GAAP measure. Management believes that adjusted net income, adjusted EBITDA and adjusted diluted earnings per share are 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 to 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. With respect to COVID?19 expenses, the Company views these expenses as unrelated to the Company's long-term performance, since they are directly related to the sudden onset COVID-19 pandemic. With respect to COVID-19 temporary rate increases, the Company similarly views these as unrelated to the Company's long-term performance and has adjusted for those increases, net of the amount required to be passed through to caregivers as a condition of the increase.

Conference Call

Addus will host a conference call on Tuesday, August 11, 2020, beginning at 9:00 a.m. Eastern time. The toll-free dial-in number is (877) 930-8289 (international dial-in number is (253) 336-8714), pass code 7940638. A telephonic replay of the conference call will be available through midnight on August 25, 2020, by dialing (855) 859-2056 (international dial-in number is (404) 537-3406) and entering pass code 7940638.

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 two hours following the conclusion of the live broadcast.

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 "preliminary," "continue," "expect," and similar expressions. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. 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 discretionary determinations by government officials, the consummation and integration of acquisitions, anticipated transition to managed care providers, our ability to successfully execute our growth strategy, unexpected increases in SG&A and other expenses, expected benefits and unexpected costs of acquisitions and dispositions, management plans related to dispositions, the possibility that expected benefits may not materialize as expected, the failure of the business to perform as expected, changes in reimbursement, changes in government regulations, changes in Addus HomeCare's relationships with referral sources, increased competition for Addus HomeCare's services, changes in the interpretation of government regulations, the uncertainty regarding the outcome of discussions with managed care organizations, changes in tax rates, the impact of adverse weather, higher than anticipated costs, lower than anticipated cost savings, estimation inaccuracies in future revenues, margins, earnings and growth, whether any anticipated receipt of payments will materialize, the anticipated impact to our business operations, reimbursements and patient population due to the recent COVID-19 global pandemic, caused by a novel strain of the coronavirus (COVID-19), 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 18, 2019, and Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 9, 2019, which are available at www.sec.gov. The financial information described herein and the periods to which they relate are preliminary estimates that are subject to change and finalization. There is no assurance that the final amounts and adjustments will not differ materially from the amounts described above, or that additional adjustments will not be identified, the impact of which may be material. Addus HomeCare undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, these forward-looking statements necessarily depend upon assumptions, estimates and dates that may be incorrect or imprecise and involve known and unknown risks, uncertainties and other factors. Accordingly, any forward-looking statements included in this press release do not purport to be predictions of future events or circumstances and may not be realized. (Unaudited tables and notes follow).

About Addus

Addus HomeCare is a provider of home care services that primarily include personal care services that assist with activities of daily living, as well as hospice and home health services. Addus HomeCare's consumers are primarily persons who, without these services, are at risk of hospitalization or institutionalization, such as the elderly, chronically ill and disabled. Addus HomeCare's payor clients include federal, state and local governmental agencies, managed care organizations, commercial insurers and private individuals. Addus HomeCare currently provides home care services to approximately 42,000 consumers through 185 locations across 25 states.  For more information, please visit www.addus.com.

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Income

(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,


2020

2019

2020

2019

Net service revenues

$  184,576

$  148,915

$  374,792

$  287,422

Cost of service revenues

129,579

109,222

263,960

210,902

Gross profit

54,997

39,693

110,832

76,520


29.8%

26.7%

29.6%

26.6%

General and administrative expenses

42,097

29,767

84,384

59,024

Loss on sale of assets

353

-

353

-

Depreciation and amortization

2,940

2,535

5,827

4,609

Total operating expenses

45,390

32,302

90,564

63,633

Operating income from continuing operations

9,607

7,391

20,268

12,887

Total interest expense, net

566

585

1,140

988

Income before income taxes

9,041

6,806

19,128

11,899

Income tax expense

2,134

1,514

3,563

2,311

Net income

$      6,907

$      5,292

$    15,565

$      9,588






Net income per diluted share

$        0.43

$        0.39

$        0.98

$        0.71






Weighted average number of common

   shares outstanding ? diluted

15,916

13,433

15,917

13,413






Cash Flow Information:

For the Three Months
Ended June 30,

For the Six Months
Ended June 30,


2020

2019

2020

2019






Net cash provided/(used) in operating activities

$    30,445

$        (881)

$    50,887

$     (4,078)

Net cash used in investing activities

(2,131)

(30,798)

(4,965)

(31,804)

Net cash provided/(used) by financing activities

(228)

20,301

913

20,268






Net change in cash

28,086

(11,378)

46,835

(15,614)

Cash at the beginning of the period

130,463

66,170

111,714

70,406

Cash at the end of the period

$  158,549

$    54,792

$  158,549

$    54,792

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)



June 30,


2020

2019

Assets




Current assets



Cash

$  158,549

$    54,792

Accounts receivable, net

126,389

121,556

Prepaid expenses and other current assets

11,398

9,148

Total current assets

296,336

185,496




Property and equipment, net

14,707

11,428




Other assets



Goodwill

275,433

145,812

Intangible assets, net

53,073

36,480

Operating lease assets

19,825

18,260

Deferred tax assets, net

1,547

2,474

Total other assets

349,878

203,026




Total assets

$  660,921

$  399,950




Liabilities and Stockholders' Equity




Current liabilities



Accounts payable

$    17,201

$    13,230

Accrued expenses

32,674

18,801

Accrued payroll

28,787

22,162

Accrued workers compensation

14,075

13,890

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

948

955

Total current liabilities

93,685

69,038




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

59,048

36,231

Long-term lease liability, less current portion

12,672

12,929

Other long-term liabilities

655

242

Total long-term liabilities

72,375

49,402




Total liabilities

166,060

118,440




Total stockholders' equity

494,861

281,510




Total liabilities and stockholders' equity

$  660,921

$  399,950

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Net Service Revenues by Segment

(Amounts in thousands)

(Unaudited)



For the Three Months 
Ended June 30,

For the Six Months
Ended June 30,


2020

2019

2020

2019

Personal care

$  156,268

$  137,477

$  316,933

$  265,371

Hospice

24,525

8,437

49,737

16,354

Home health

3,783

3,001

8,122

5,697

Total revenue

$  184,576

$  148,915

$  374,792

$  287,422

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Key Statistical and Financial Data

(Unaudited)



For the Three Months 
Ended June 30,

For the Six Months
Ended June 30,


2020

2019

2020

2019

Personal Care





States served at period end



24

24

Locations at period end



150

154

Average billable census - same store

35,479

38,099

36,705

37,834

Average billable census - acquisitions (1)

717

927

855

927

Average billable census total

36,196

39,026

37,560

38,761

Billable hours (in thousands)

7,374

7,269

15,048

14,133

Average billable hours per census per month

67.5

61.6

66.3

60.3

Billable hours per business day

113,447

111,829

115,750

109,557

Revenues per billable hour

$      21.14

$      18.91

$      21.01

$      18.78

Organic growth





      Revenue

9.7%

5.8%

11.8%

5.7%


Hospice





Locations served at period end

-

-

30

13

Admissions

1,339

474

2,994

985

Average daily census

1,743

611

1,803

593

Average length of stay

103.1

126.7

101.0

121.5

Patient days

158,644

54,807

328,156

106,531

Revenue per patient day

$    154.59

$    153.94

$    151.57

$    153.52

Organic growth





      Revenue

2.7%

-

2.7%

-

      Average daily census

3.6%

-

8.7%

-


Home Health





Locations served at period end

-

-

10

10

New Admissions

1,068

700

2,090

1,415

Recertifications

689

543

1,399

1,185

Total Volume

1,757

1,243

3,489

2,600

Visits

29,797

24,157

63,507

43,711

Organic growth





      Revenue

(4.3)%

-

4.1%

-

      New admissions

15.4%

-

13.1%

-


Percentage of Revenues by Payor:





Personal Care





State, local and other governmental programs

50.0%

54.2%

49.7%

55.1%

Managed care organizations

44.3

39.2

44.6

38.3

Private duty

3.2

3.8

3.2

3.8

Commercial

1.5

1.5

1.6

1.5

Other

1.0

1.3

0.9

1.3


Hospice





Medicare

92.8%

92.6%

92.4%

92.9%

Managed care organizations

4.9

5.6

5.2

5.1

Other

2.3

1.8

2.4

2.0


Home Health





Medicare

79.6%

81.2%

79.8%

81.4%

Managed care organizations

18.2

15.9

18.4

15.6

Other

2.2

2.9

1.8

3.0


(1)

The average billable census in acquisitions of 1,373 and 1,261 for the three and six months ended June 30, 2019 was reclassified to average billable census - same stores for comparability purposes.  The average billable census for the three and six months ended June 30, 2020 was prorated for the date of the acquisition.

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures

(Amounts in thousands, except per share data)

(Unaudited)



For the Three Months
Ended June 30,

For the Six Months
Ended June 30,


2020

2019

2020

2019

Reconciliation of Adjusted EBITDA to Net Income: (1)

Net income

$       6,907

$       5,292

$     15,565

$       9,588

Interest expense, net

566

585

1,140

1,101

Interest income from Illinois

-

-

-

(113)

Loss on sale of assets

353

-

353

-

Income tax expense

2,134

1,514

3,563

2,311

Depreciation and amortization

2,940

2,535

5,827

4,609

COVID-19 adjustment, net

263

-

526

-

M&A expenses

1,911

741

3,544

1,236

Stock-based compensation expense

1,118

1,482

2,525

2,714

Restructure and other costs

2,519

330

3,393

1,075

Adjusted EBITDA

$     18,711

$     12,479

$     36,435

$     22,521


Reconciliation of Adjusted Net Income to Net Income: (2)

Net income

$       6,907

$       5,292

$     15,565

$       9,588

Interest income from Illinois, net of tax

-

-

-

(95)

Loss on sale of assets, net of tax

288

-

288

-

COVID-19 expense, net of tax

206

-

428

-

M&A expenses, net of tax

1,499

579

2,898

1,001

Stock-based compensation expense, net of tax

876

1,135

2,063

2,169

Restructuring and other costs, net of tax

1,980

253

2,773

880

Adjusted net income

$     11,734

$       7,259

$     24,014

$     13,543


Reconciliation of Net Income per Diluted Share to Adjusted Net Income per Diluted Share: (3)

Net income per diluted share

$         0.43

$         0.39

$         0.98

$         0.71

Interest income from Illinois per diluted share

-

-

-

(0.01)

Loss on sale of assets per diluted share

0.02

-

0.02

-

COVID-19 adjustment per diluted share

0.01

-

0.03

-

M&A expenses per diluted share

0.09

0.04

0.18

0.07

Restructure and other costs per diluted share

0.12

0.02

0.18

0.07

Stock-based compensation expense

   per diluted share

0.06

0.09

0.13

0.16

Adjusted net income per diluted share

$         0.73

$         0.54

$         1.52

$         1.00


(1)

We define Adjusted EBITDA as earnings before interest expense, interest income from the state of Illinois, other non-operating income, taxes, depreciation, amortization, COVID adjustment, M&A expenses, stock-based compensation expense, restructure expenses and other costs and loss on the sale of assets associated with Hospice Partners of Kansas. 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 as net income before interest income from the state of Illinois, COVID adjustment, M&A expenses, stock?based compensation expense, restructure expenses and other costs and loss on the sale of assets associated with Hospice Partners of Kansas. Adjusted Net Income 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 diluted earnings per share as earnings per share, adjusted for interest income from the State of Illinois, COVID adjustment, M&A expenses, stock compensation expense and restructure expense and other costs and loss on the sale of assets associated with Hospice Partners of Kansas.  Adjusted diluted earnings per 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. 

 

SOURCE Addus HomeCare Corporation


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