Addus HomeCare Reports Second Quarter 2014 Results - Hawaii News Now - KGMB and KHNL

Addus HomeCare Reports Second Quarter 2014 Results

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SOURCE Addus HomeCare Corporation

Second Quarter Financial Highlights

- 17.1% increase in revenue over prior year quarter with total net service revenues of $77.0 million

- Net income of $2.7 million, or $0.25 per diluted share

- Acquisition of Aid & Assist in Tennessee positions Addus in key managed care state

DOWNERS GROVE, Ill., July 31, 2014 /PRNewswire/ -- Addus HomeCare Corporation (Nasdaq: ADUS), a comprehensive provider of home and community based services which are primarily social in nature and are provided in the home, focused on the dual eligible population, announced today its financial results for the second quarter ended June 30, 2014.

Second Quarter Review

Total net service revenues from continuing operations for the second quarter of 2014 were $77.0 million, a 17.1% increase compared to $65.8 million in the prior year quarter.  Same store sales accounted for 6.7% increase with 10.4% generated by recently completed acquisitions.  Net income from continuing operations was $2.7 million, or $0.25 per diluted share, compared to $0.24 per diluted share in 2013.  Acquisitions contributed $245K of net income or $0.02 per diluted share. 

Mark Heaney, President and Chief Executive Officer of Addus HomeCare, stated: "We are pleased with our performance for the quarter.  Revenue growth, both for our same stores and for our new acquisitions remains strong, driven by an 8.7% increase in average census in the quarter in our same stores." 

Mr. Heaney also said, "We welcome the employees of Aid & Assist who give us a stronger presence in Tennessee, a key managed care state.  Our first month of ownership has been very positive. The next step in the integration process is to merge our existing business into Aid for improved efficiency and effectiveness."

Heaney continued, "Focusing on the needs of our growing managed care payors continues to be a strategic focus of the organization.  Our pilot programs with Aetna and Centene are progressing well and we are seeing increased census from these important projects.  Based on projections from the State of Illinois, we anticipate between 20% to 30% of our Illinois caseload will transition to managed care in September."

Same store average census grew 8.7%.  Acquired census added an additional 7.9% for total census growth of 16.6% compared to the prior year quarter.  Billable hours per business day increased 20.9%, offset by a slight decline in average revenues per billable hour.

Four consistently underperforming offices were closed in the quarter.  These offices, located in New Jersey and Washington represented approximately $2.6 million in annualized revenues.

General and administrative expenses include $536K of one time M&A expense which reduced earnings by $0.03 per diluted share.

The estimated increase in Work Opportunity Tax Credits to be awarded in 2014 reduced our effective tax rate for the quarter to 30.9%, with an estimated overall rate for 2014 of 32.8%.  This increased earnings by an estimated $0.02 per diluted share.  Proforma earnings per share were $0.26 per diluted share after taking into effect M&A expenses and the change in our effective tax rate.   

Net income from continuing operations increased 5.7% to $2.7 million.  Adjusted EBITDA increased 27.8% in the quarter to $5.9 million.

Cash flow for the quarter was positive with $14.3 million provided by operating activities, driven by solid operational performance and substantial payments on accounts receivable from the State of Illinois.  The Company ended the quarter with $19.5 million in cash and $40 million available under its revolving line of credit.

Six Month Review

Total net service revenues for the six months ended June 30, 2014 were $148.6 million, a 15.5% increase compared to $128.8 million in the same prior year period. 

Net income from continuing operations for the six months ended June 30, 2014 was $5.1 million, or $0.46 per diluted share, compared to $5.3 million or $0.48 per diluted share, in the prior year period.  This decline in earnings was due to the M&A expenses noted above and an increase in depreciation and amortization expenses related primarily to acquisitions, which reduced earnings by an additional $0.03 per diluted share.   

2013 results were favorably affected by substantially lower effective tax rates in 2013 than experienced in 2014 (32.8% in 2014 vs. 28.5% in 2013).  The net effect of the lower tax rates in 2013 was to increase earnings in that year by $0.03 per diluted share.  Proforma earnings per diluted share would have been $0.49 per diluted share in 2014 after taking into effect M&A expenses noted above, compared to proforma adjusted earnings per diluted share of $0.45 in 2013 after normalizing for the lower tax rate experienced in that year, representing a 8.9% increase over 2013 results.  

Adjusted EBITDA for the six months ended June 30, 2014 increased 14.9% to $10.4 million. Cash flow for the six month period ended June 30, 2014 was positive with $16.9 million provided by operating activities.   

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 discontinued operations, interest expense, taxes, depreciation, amortization, M&A 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 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.

Conference Call

Addus will report its 2014 second quarter results on Thursday, July 31, 2014. Management will conduct a conference call to discuss its results at 5:00 p.m. Eastern time on July 31, 2014. The toll-free dial-in number is (866) 318-8618, international dial-in number is (617) 399-5137, with the passcode: 27134714. A telephonic replay of the conference call will be available through midnight on August 7, 2014, by dialing (888) 286-8010, international dial-in number is (617) 801-6888 and entering the passcode: 27510159.

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 home and community based services which are primarily social in nature and are provided in the home, focused on the dual eligible population.  Addus' services include personal care and assistance with activities of daily living, and adult day care.  Addus' consumers are individuals 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 anticipated transition to managed care providers, expected benefits and 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, 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 17, 2014, and in Addus HomeCare's Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 7, 2014, 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).

Investor Contact:

Dennis Meulemans
Chief Financial Officer
Phone: (630)-296-3400
Email: DMeulemans@addus.com

 

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




Same Store


Acquisitions


Total






2014


2013






















Net service revenues


$     70,158


$       6,807


$    76,965


$    65,755


Cost of service revenues


51,604


4,781


56,385


49,142












Gross profit


18,554


2,026


20,580


16,613




26.4%


29.8%


26.7%


25.3%


General and administrative expenses


13,743


1,656


15,399


12,092


Depreciation and amortization


1,068


15


1,083


541


Total operating expenses


14,811


1,671


16,482


12,633












Operating income from continuing operations


3,743


355


4,098


3,980












Total interest expense, net


151


-


151


142












Income from continuing operations before taxes


3,592


355


3,947


3,838


Income tax expense 


1,108


110


1,218


1,256












Net income from continuing operations


2,484


245


2,729


2,582












Discontinued operations:




















    Loss from home health business, net of tax


-


-


-


(150)












Loss from discontinued operations


-


-


-


(150)












Net income


$       2,484


$          245


$  2,729


$  2,432












Net income per share:










    Basic 










         Continuing operations


$         0.23


$         0.02


$    0.25


$    0.24


         Discontinued operations


-


-


-


(0.01)












    Basic income per share


$         0.23


$         0.02


$    0.25


$    0.23












    Diluted










         Continuing operations


$         0.23


$         0.02


$    0.25


$    0.23


         Discontinued operations


-


-


-


(0.01)












    Diluted income per share


$         0.23


$         0.02


$    0.25


$    0.22












Weighted average number of common shares outstanding:










     Basic


10,903


10,903


10,903


10,785


     Diluted


11,138


11,138


11,138


11,016




















































Cash Flow Information:






For the Three Months Ended June 30








2014


2013












Net cash provided by operating activities






$    14,263


$    21,221


Net cash used in investing activities






(11,687)


(228)












Net change in cash






2,576


20,993


Cash at the beginning of the period






16,965


17,784


Cash at the end of the period






$    19,541


$    38,777


 

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 Six Months Ended June 30




Same Store


Acquisitions


Total






2014


2013






















Net service revenues


$    136,674


$      11,974


$   148,648


$   128,753


Cost of service revenues


101,116


8,284


109,400


96,342












Gross profit


35,558


3,690


39,248


32,411




26.0%


30.8%


26.4%


25.2%


General and administrative expenses


27,061


2,741


29,802


23,602


Depreciation and amortization


1,553


25


1,578


1,087


Total operating expenses


28,614


2,766


31,380


24,689












Operating income from continuing operations


6,944


924


7,868


7,722












Total interest expense, net


305


-


305


350












Income from continuing operations before taxes


6,639


924


7,563


7,372


Income tax expense 


2,172


308


2,480


2,103












Net income from continuing operations


4,467


616


5,083


5,269












Discontinued operations:




















    Loss from home health business, net of tax


-


-


-


(687)


    Gain on sale of  home health business, net of tax


-


-


-


11,111












Earnings from discontinued operations


-


-


-


10,424












Net income


$       4,467


$          616


$    5,083


$  15,693












Net income per share:










    Basic 










         Continuing operations


$         0.41


$         0.06


$     0.47


$     0.49


         Discontinued operations


-


-


-


0.97












    Basic income per share


$         0.41


$         0.06


$     0.47


$     1.46












    Diluted










         Continuing operations


$         0.40


$         0.06


$     0.46


$     0.48


         Discontinued operations


-


-


-


0.96












    Diluted income per share


$         0.40


$         0.06


$     0.46


$     1.44












Weighted average number of common shares outstanding:










     Basic


10,878


10,878


10,878


10,779


     Diluted


11,121


11,121


11,121


10,920




















































Cash Flow Information:






For the Six Months Ended June 30








2014


2013












Net cash provided by operating activities






$  16,933


$  34,246


Net cash (used in) provided by investing activities






(13,171)


19,252


Net cash provided by (used in) financing activities






214


(16,458)












Net change in cash






3,976


37,040


Cash at the beginning of the period






15,565


1,737


Cash at the end of the period






$  19,541


$  38,777


 

Condensed Consolidated Balance Sheets

(Amounts in thousands)















June 30, 2014


June 30, 2013


(Unaudited)

Assets








Current assets




Cash

$        19,541


$        38,777

Accounts receivable, net 

48,725


43,605

Prepaid expenses and other current assets

4,555


5,754

Deferred tax assets

8,326


7,258





Total current assets

81,147


95,394





Property and equipment, net

6,958


2,502





Other assets




Goodwill

64,324


50,456

Intangible assets, net 

11,753


5,691

Investment in joint venture

900


900

Other assets

53


212

Total other assets

77,030


57,259





Total assets

$      165,135


$      155,155





Liabilities and stockholders' equity








Current liabilities




Accounts payable

$          4,769


$          5,415

Accrued expenses

37,438


36,365

Deferred revenue

3


10





Total current liabilities

42,210


41,790





Deferred tax liability

3,441


3,097





Total stockholders' equity

119,484


110,268





Total liabilities and stockholders' equity

$      165,135


$      155,155

 

Key Statistical and Financial Data (Unaudited)



















For the Three Months Ended June 30


For the Six Months Ended June 30



2014


2013


2014


2013


General:


















Adjusted EBITDA (in thousands) (1)

$   5,922


$   4,633


$   10,373


$   9,026


States served at period end





22


19


Locations at period end





133


93


Employees at period end





17,754


14,854











Home & Community


















Average billable census - same store

28,453


26,173


28,163


26,501


Average billable census - acquisitions

2,070


-


1,847


-


Average billable census total

30,523


26,173


30,010


26,501


Billable hours (in thousands)

4,536


3,872


8,773


7,586


Average billable hours per census per month

49.5


49.0


48.7


48.0


Billable hours per business day

72,006


59,569


69,076


58,806


Revenues per billable hour

$16.97


$16.98


$  16.94


$16.97




















Percentage of Revenues by Payor:


















State, local and other governmental programs

89

%

94

%

90

%

94

%

Managed Care

6


1


5


1


Private duty

4


4


4


4


Commercial

1

%

1

%

1

%

1

%










(1) We define Adjusted EBITDA as earnings before discontinued operations, interest expense, taxes, depreciation, amortization, M&A expenses 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. 

 

Adjusted EBITDA (1) (Unaudited)

For the Three Months Ended June 30


For the Six Months Ended June 30


2014


2013


2014


2013

Reconciliation of Adjusted EBITDA to Net Income:
















Net income

$   2,729


$   2,432


$   5,083


$  15,693

Less: (Earnings) from discontinued operations, net of tax

-


150


-


(10,424)









Net income from continuing operations

2,729


2,582


5,083


5,269









Interest expense, net

151


142


305


350

Income tax expense from continuing operations

1,218


1,256


2,480


2,103

Depreciation and amortization

1,078


541


1,573


1,087

M&A expenses

536


-


601


-

Stock-based compensation expense

210


112


331


217









Adjusted EBITDA

$   5,922


$   4,633


$  10,373


$   9,026

































(1) We define Adjusted EBITDA as earnings before discontinued operations, interest expense, taxes, depreciation, amortization, M&A expenses 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. 

 

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