ADDUS HOMECARE CORPORATION DOWNERS GROVE, Ill., March 7, 2016 /PRNewswire/ -- Addus HomeCare Corporation (NASDAQ: ADUS), a comprehensive provider of home and community-based personal care services provided in the home and focused on the dual eligible population, today announced its financial results for the fourth quarter and year ended December 31, 2015.
For the fourth quarter, net service revenues were $84.8 million, a 2.6% increase from $82.6 million for the fourth quarter of 2014. Net income from continuing operations was $3.1 million, or $0.27 per diluted share, for the fourth quarter of 2015 compared with $3.6 million, or $0.33 per diluted share, for the prior-year fourth quarter. Adjusted diluted net income per share from continuing operations for the fourth quarter of 2015 was $0.29 compared with $0.36 for the fourth quarter for 2014. Adjusted diluted net income per share from continuing operations per share excludes (i) for 2015 a net $0.02 expense impact comprised of a $0.09 benefit from Worker Opportunity Tax Credits that relate to the first three quarters of 2015; a $0.05 expense caused by a higher reserve estimate for workers compensation to adjust for a lowering of reserves in the third quarter of 2015; a $0.03 expense due to transaction expenses related to the South Shore Home Health Services acquisition; and a $0.03 expense from an accrual related to an IRS audit of prior years; and (ii) for 2014 a $0.03 expense related to M&A transaction expenses. Adjusted EBITDA was $5.4 million for the fourth quarter of 2015 compared with $7.1 million for the same prior-year quarter. (See page 7 for a reconciliation of all non-GAAP and GAAP financial measures.)
For 2015, net service revenues increased 7.6% to $336.8 million from $312.9 million for 2014. Net income from continuing operations was $11.4 million, or $1.02 per diluted share, for 2015 compared with $12.0 million, or $1.08 per diluted share, for 2014. Adjusted diluted net income per share was $1.12 for 2015 and $1.14 for 2014. Adjusted EBITDA was $23.6 million for 2015 compared with $23.8 million for 2014.
Adjusting 2015 and 2014 revenues to exclude revenue from previously announced closed locations, total net service revenues and same store revenues rose 6.1% and 2.9%, respectively, for the fourth quarter of 2015 compared with the fourth quarter of 2014. For the full year, adjusted net service revenues grew 10.0% for 2015 compared with 2014 and 6.8% on a same store basis.
Commenting on the results, Dirk Allison, who was appointed President and Chief Executive Officer of Addus on January 18, 2016, said, "The Company's heightened focus on organic growth is reflected in the sequential-quarter improvement in key operating metrics. For the fourth quarter, billable hours per day increased sequentially at an annualized rate of 12.1%. Revenues per day for the fourth quarter of 2015 increased sequentially at an annualized rate of 13.2%.
"While Addus remains fundamentally committed to providing high quality services, we are also focused on our cost structure, which has continued to be higher than we would like. In the fourth quarter, our costs were higher due in part to an increase in general liability claims and an increased A/R reserve. We also believe that certain of our operating costs are higher than they need to be.
"We have already begun to institute additional measures and processes to ensure that the investments we make generate appropriate returns. Expense reduction initiatives are ongoing in many areas, including in payroll following our 2015 system conversion, telecommunications and IT spending, and our centralized care center infrastructure. We expect to see meaningful reductions in these and other costs by the end of 2016, while improving our operational efficiency and support for high quality care. As we implement these initiatives, there may be some one-time charges, which we would expect to discuss further at the end of the first quarter."
Mr. Allison concluded, "The completion of the South Shore acquisition, which we expect will be accretive to our 2016 financial results, provides Addus a strong start to achieving our goals for 2016. Addus is well positioned as the leading pure-play home care company. We have the opportunity to leverage attractive industry growth dynamics through the ongoing execution of our organic growth and acquisition strategies."
Addus completed the fourth quarter with $4.1 million in cash, no bank debt and $58.3 million of availability under its revolving credit facility. Net cash used in operating activities was $4.7 million for the fourth quarter of 2015 while cash provided by operating activities was $4.1 million for the full year. In conjunction with the completion of the South Shore acquisition in February 2016, the Company borrowed $22 million on its term loan facility.
The Company believes a material weakness in internal controls over financial reporting existed as of December 31, 2015, principally related to controls over its payroll system and related processes. During 2015, the Company converted to a new payroll system, which contributed to operational issues resulting in a failure of controls. Over the past few weeks, the Company has started the process of making changes to address this control deficiency. The Company will report such material weakness in Item 9A of its Annual Report on Form 10-K for the 2015 fiscal year.
Non-GAAP Financial Measures
The information provided in this release includes adjusted diluted net income per share, Adjusted EBITDA and adjusted net service revenue, which are non-GAAP financial measures. The Company defines adjusted diluted net income per share as diluted net income per share, adjusted for M&A expenses, costs incurred to exit certain exited sites, tax benefit from prior-period worker opportunity tax credits, increased prior-period general liability claims and incremental costs for Sarbanes-Oxley Section 404 compliance. The Company defines Adjusted EBITDA as earnings before interest expense, taxes, depreciation, amortization, M&A expenses and stock-based compensation expense. The Company defines adjusted net service revenue as revenue adjusted for the closure of certain sites. The Company has provided, in the financial statement tables included in this press release, a reconciliation of adjusted diluted net income per share to diluted net income per share, a reconciliation of Adjusted EBITDA to net income and a reconciliation of adjusted net service revenue to net service revenue, in each case, the most directly comparable GAAP measure. Management believes that adjusted diluted net income per share, adjusted EBITDA and adjusted net service revenue 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.
Conference Call
Addus will host a conference call on Tuesday, March 8, 2016, 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 17828912. A telephonic replay of the conference call will be available through midnight on March 22, 2016, by dialing (855) 859-2056 (international dial-in number is (404) 537-3406) and entering pass code 17828912.
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.
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. 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 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, estimation inaccuracies in future revenues, margins, earnings and growth, 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, 2015 and its Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 6, 2015, 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. 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 is a comprehensive provider of home and community-based services that primarily are personal in nature, provided in the home and focused on the dual eligibility 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, managed care organizations, commercial insurers and private individuals. 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 For the Year Ended
December 31,
Ended December 31,
------------------
2015 2014 2015 2014
---- ---- ---- ----
Net service revenues $84,760 $82,636 $336,815 $312,942
Cost of service revenues 62,567 59,989 245,492 229,207
------ ------ ------- -------
Gross profit 22,193 22,647 91,323 83,735
26.2% 27.4% 27.1% 26.8%
General and administrative expenses 17,966 16,259 70,582 61,834
Depreciation and amortization 1,212 1,146 4,717 3,830
----- ----- ----- -----
Total operating expenses 19,178 17,405 75,299 65,664
------ ------ ------ ------
Operating income from continuing operations 3,015 5,242 16,024 18,071
Total interest expense, net 235 196 739 680
--- --- --- ---
Income from continuing operations before income taxes 2,780 5,046 15,285 17,391
Income tax (benefit) expense from continuing operations (271) 1,403 3,932 5,428
---- ----- ----- -----
Net income from continuing operations 3,051 3,643 11,353 11,963
Discontinued operations:
Income from Home Health Business, net of tax 270 280 270 280
--- --- --- ---
Earnings from discontinued operations 270 280 270 280
--- --- --- ---
Net income $3,321 $3,923 $11,623 $12,243
====== ====== ======= =======
Net income per share:
Continuing Operations $0.27 $0.33 $1.02 $1.08
===== ===== ===== =====
Discontinued Operations $0.02 $0.02 $0.02 $0.02
===== ===== ===== =====
Weighted average number of common shares outstanding:
Diluted 11,220 11,143 11,189 11,114
====== ====== ====== ======
Cash Flow Information: For the Three Months For the Year
Ended December 31, Ended December 31,
------------------ ------------------
2015 2014 2015 2014
---- ---- ---- ----
Net cash (used in) provided by operating activities $(4,680) $(562) $4,106 $7,028
Net cash (used in) investing activities (5,012) (484) (10,724) (12,496)
Net cash (used in) provided by financing activities (1,081) 285 (2,641) 3,266
------ --- ------ -----
Net change in cash (10,773) (761) (9,259) (2,202)
Cash at the beginning of the period 14,877 14,124 13,363 15,565
------ ------ ------ ------
Cash at the end of the period $4,104 $13,363 $4,104 $13,363
====== ======= ====== =======
ADDUS HOMECARE CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Amounts in thousands)
(Unaudited)
December 31,
------------
2015 2014
---- ----
Assets
------
Current assets
Cash $4,104 $13,363
Accounts receivable, net 84,959 68,333
Prepaid expenses and other current assets 4,858 7,168
Deferred tax assets 8,640 8,508
----- -----
Total current assets 102,561 97,372
------- ------
Property and equipment, net 8,619 7,695
----- -----
Other assets
Goodwill 68,844 64,220
Intangible assets, net 10,351 10,347
Investment in joint venture 900 900
Other assets 1,337 269
----- ---
Total other assets 81,432 75,736
------ ------
Total assets $192,612 $180,803
======== ========
Liabilities and stockholders' equity
------------------------------------
Current liabilities
Accounts payable $4,748 $3,951
Accrued expenses 35,082 37,268
Current portion of capital lease obligations 1,109 986
Current portion of contingent earn-out obligation 1,250 1,000
----- -----
Total current liabilities 42,189 43,205
------ ------
Capital lease obligations, less current portion 1,882 2,677
Contingent earn-out obligation, less current portion - 1,120
Deferred tax liability 6,815 5,845
----- -----
Total long-term liabilities 8,697 9,642
----- -----
Total liabilities 50,886 52,847
------ ------
Total stockholders' equity 141,726 127,956
------- -------
Total liabilities and stockholders' equity $192,612 $180,803
======== ========
ADDUS HOMECARE CORPORATION AND SUBSIDIARIES
Key Statistical and Financial Data
(Unaudited)
For the Three Months For the Year
Ended December 31, Ended December 31,
------------------ ------------------
2015 2014 2015 2014
---- ---- ---- ----
General:
Adjusted EBITDA (in thousands) (1) $5,394 $7,076 $23,627 $23,759
States served at period end - - 22 22
Locations at period end - - 119 129
Employees at period end - - 21,395 18,054
Home & Community:
Average billable census - same store (2) 31,917 32,080 32,038 31,019
Average billable census - acquisitions (3) 680 - 718 -
Average billable census total 32,597 32,080 32,756 31,019
Billable hours (in thousands) 4,930 4,825 19,556 18,335
Average billable hours per census per month 50.4 50.1 49.8 49.3
Billable hours per business day 77,032 75,385 76,390 71,903
Revenues per billable hour $17.19 $17.13 $17.22 $17.07
Percentage of Revenues by Payor:
State, local and other governmental programs 77.3% 80.3% 77.7% 86.4%
Managed care organizations 18.8 15.4 18.3 9.1
Private duty 2.9 3.2 3.0 3.4
Commercial 1.0% 1.1% 1.0% 1.1%
(1) We define Adjusted EBITDA as earnings before discontinued operations, interest expense, taxes, depreciation, amortization, M&A expenses, stock-based compensation expense and IRS accrual adjustment. 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) Exited sites would have reduced same store census for the three months ended December 31, 2014 by 1,101 and twelve months ended December 31, 2014 by 1,346.
(3) The average billable census in acquisitions of 2,914 and 2,294 for the three months and twelve months ended December 31, 2014, respectively, was reclassified to average billable census - same stores for comparability purposes.
ADDUS HOMECARE CORPORATION AND SUBSIDIARIES
(Unaudited)
For the Three Months For the Year Ended
Ended December 31, December 31,
------------------ ------------
2015 2014 2015 2014
---- ---- ---- ----
Reconciliation of Adjusted EBITDA
to Net Income: (1)
Net income $3,321 $3,923 $11,623 $12,243
Less: (Earnings) from discontinued operations, net of tax (270) (280) (270) (280)
Net income from continuing operations 3,051 3,643 11,353 11,963
Interest expense, net 234 196 739 680
Income tax (benefit) expense from continuing operations (270) 1,403 3,932 5,428
Depreciation and amortization 1,213 1,146 4,717 3,830
M&A expenses 455 423 1,013 1,031
Stock-based compensation expense 411 265 1,573 827
IRS Accrual 300 - 300 -
--- --- --- ---
Adjusted EBITDA $5,394 $7,076 $23,627 $23,759
====== ====== ======= =======
Reconciliation of Diluted Earnings per Share to Adjusted Diluted Earnings per Share: (2)
Diluted earnings per share $0.27 $0.33 $1.02 $1.08
Acquisition-related transaction expense per share 0.03 0.03 0.07 0.06
Worker Opportunity Tax Credits per share (0.09) - -
Cost associated with IRS accrual per share 0.03 - 0.03 -
Reserve adjustment for Workers Compensation per share 0.05 -
---- ---
Adjusted diluted earnings per share $0.29 $0.36 $1.12 $1.14
===== ===== ===== =====
Reconciliation of Net Service Revenues to Adjusted Net Service Revenues: (3)
Net service revenues $84,760 $82,636 $336,815 $312,942
Revenue associated with the closure (141) (2,875) (5,549) (11,768)
of certain sites
---
Adjusted net service revenues $84,619 $79,761 $331,266 $301,174
======= ======= ======== ========
(1) We define Adjusted EBITDA as earnings before interest expense, taxes, depreciation, amortization, M&A expenses, stock-based compensation expense and IRS accrual adjustment. 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 diluted earnings per share as earnings per share, adjusted for M&A expenses, cost associated with IRS accrual, tax benefit from worker opportunity tax credits and reserve adjustment for workers compensation. 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.
(3) We define Adjusted net service revenues as revenue adjusted for the closure of certain sites. Adjusted net service revenues 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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SOURCE Addus HomeCare Corporation
