ADDUS HOMECARE CORPORATION DOWNERS GROVE, Ill., March 6, 2017 /PRNewswire/ -- Addus HomeCare Corporation (NASDAQ: ADUS), a provider of comprehensive home care services, today announced its financial results for the fourth quarter and year ended December 31, 2016.
For the fourth quarter, net service revenues increased 22.3% to $103.7 million from $84.8 million for the fourth quarter of 2015. Net income from continuing operations was $7.5 million for the latest quarter, up 144.9% from $3.1 million for the fourth quarter of 2015 and was $0.65 per diluted share, up 140.7% from $0.27 per diluted share. Adjusted net income from continuing operations per diluted share grew 34.4% to $0.43 for the fourth quarter of 2016 from $0.32 for the fourth quarter of 2015. (See pages 7 and 8 for a reconciliation of all non-GAAP and GAAP financial measures.)
For the year ended December 31, 2016, net service revenues rose 19.0% to $400.7 million from $336.8 million for 2015. Net income from continuing operations increased 5.1% to $11.9 million for 2016 from $11.4 million for 2015 and increased 2.9% to $1.05 per diluted share from $1.02 per diluted share. Adjusted net income from continuing operations per diluted share was $1.46 for 2016, up 19.7% from $1.22 for 2015. (See pages 7 and 8 for a reconciliation of all non-GAAP and GAAP financial measures.)
"Our financial results for the fourth quarter cap a very successful year for Addus," commented Dirk Allison, President and Chief Executive Officer of Addus. "Our revenue growth and expanded profit margins reflect our initiatives throughout 2016 to streamline Addus and refocus on driving profitable growth.
"Our efforts to improve organic growth are reflected in our 5.1% increase in same store revenues for the quarter compared to the prior year. We launched process improvement and cost reduction initiatives that accounted for the majority of our fourth quarter margin improvement, highlighted by margin improvement of 360 basis points in net income from continuing operations to 7.2% and 260 basis points in adjusted EBITDA margin to 9.0%. We rebuilt our executive team and infrastructure, strengthening our ability to close, integrate, and support future acquisitions. As a result, Addus is well positioned to drive incremental margin improvements and growth, both organically and through acquisition."
The Company's revenue growth for the quarter resulted primarily from the acquisition of South Shore in February 2016, as well as the increase in same store revenues. Revenues reflected a 22.2% year-over-year increase in billable hours per business day, and revenues per billable hour rose 1.6%. The Company's revenue growth, combined with the favorable margin impact of the 2016 process improvement and cost reduction initiatives, generated 72.1% growth in adjusted EBITDA to $9.3 million for the quarter.
Addus completed 2016 with $8.0 million in cash, $24.1 million of bank debt and $79.7 million of availability under its revolving credit facility. Net cash used by operating activities for the fourth quarter was $31.7 million, largely due to the continuing volatility in the Company's accounts receivable with the state of Illinois.
Mr. Allison concluded, "Addus enters 2017 as a growing market leader in a highly fragmented but vital sector of healthcare. We have the management team, experience and resources to execute our growth strategies and to deliver high quality, cost-effective care. We are enthusiastic about our future and our ability to deliver increased shareholder value."
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 per diluted share as net income per diluted share, adjusted for M&A expenses, stock-based compensation expense, restructure charges and severance and other costs. The Company defines adjusted EBITDA as net income before interest expense, taxes, depreciation, amortization, M&A expenses, stock-based compensation expense, restructure charges and severance and other costs. The Company defines adjusted net service revenues as net service revenues 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 net income per diluted share to net income per diluted share, a reconciliation of adjusted EBITDA to net income and a reconciliation of adjusted net service revenues to net service revenues, in each case, the most directly comparable GAAP measure. Management believes that adjusted net income per diluted share, adjusted EBITDA and adjusted net service revenues 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 7, 2017, 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 49572841. A telephonic replay of the conference call will be available through midnight on March 21, 2017, by dialing (855) 859-2056 (international dial-in number is (404) 537-3406) and entering pass code 49572841.
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 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 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 11, 2016, which is available at 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 provider of comprehensive personal care services, which are provided in the home. Addus' services provide assistance with activities of daily living and adult day care. Addus' consumers are primarily persons 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. At December 31, 2016, Addus provided personal care services to over 33,000 consumers through 114 locations across 24 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 For the Year
Ended December 31, Ended December 31,
------------------ ------------------
2016 2015 2016 2015
---- ---- ---- ----
Net service revenues $103,656 $84,760 $400,688 $336,815
Cost of service revenues 75,000 62,567 294,593 245,492
------ ------ ------- -------
Gross profit 28,656 22,193 106,095 91,323
27.6% 26.2% 26.5% 27.1%
General and administrative expenses 19,260 17,966 84,213 70,582
Depreciation and amortization 1,703 1,212 6,647 4,717
----- ----- ----- -----
Total operating expenses 20,963 19,178 90,860 75,299
------ ------ ------ ------
Operating income from continuing operations 7,693 3,015 15,235 16,024
Interest expense 572 258 2,332 786
Interest income (2,766) (23) (2,812) (47)
Other income (80) - (206) -
Income from continuing operations before 9,967 2,780 15,921 15,285
income taxes
Income tax (benefit) expense from 2,496 (271) 3,994 3,932
continuing operations
---
Net income from continuing operations 7,471 3,051 11,927 11,353
Discontinued operations:
Income from Home Health Business, 97 270 97 270
net of tax
---
Earnings from discontinued operations 97 270 97 270
--- --- --- ---
Net income $7,568 $3,321 $12,024 $11,623
====== ====== ======= =======
Diluted net income per share:
Continuing Operations $0.65 $0.27 $1.05 $1.02
===== ===== ===== =====
Discontinued Operations $0.01 $0.02 $0.01 $0.02
===== ===== ===== =====
Weighted average number of common
shares outstanding:
Diluted 11,494 11,220 11,349 11,189
Cash Flow Information: For the Three Months For the Year Ended
Ended December 31, December 31,
------------------ ------------
2016 2015 2016 2015
---- ---- ---- ----
Net cash (used in) provided by operating activities $(31,734) $(4,680) $(743) $4,106
Net cash (used in) investing activities (121) (5,012) (21,738) (10,724)
Net cash (used in) provided by financing activities 422 (1,081) 26,390 (2,641)
--- ------ ------ ------
Net change in cash (31,433) (10,773) 3,909 (9,259)
Cash at the beginning of the period 39,446 14,877 4,104 13,363
------ ------ ----- ------
Cash at the end of the period $8,013 $4,104 $8,013 $4,104
====== ====== ====== ======
ADDUS HOMECARE CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Amounts in thousands)
(Unaudited)
December 31,
------------
2016 2015
---- ----
Assets
Current assets
Cash $8,013 $4,104
Accounts receivable, net 116,999 84,959
Prepaid expenses and other current assets 5,998 4,858
----- -----
Total current assets 131,010 93,921
Property and equipment, net 6,648 8,619
----- -----
Other assets
Goodwill 73,906 68,844
Intangible assets, net 15,413 10,351
Investment in joint venture 900 900
Deferred tax assets, net 3,153 1,825
Other assets - 1,337
--- -----
Total other assets 93,372 83,257
------ ------
Total assets $231,030 $185,797
======== ========
Liabilities and stockholders' equity
Current liabilities
Accounts payable $4,486 $4,748
Accrued expenses 42,603 35,082
Current portion of long-term debt, net of debt issuance costs 2,531 1,109
Current portion of contingent earn-out obligation - 1,250
--- -----
Total current liabilities 49,620 42,189
------ ------
Long-term debt, less current portion, net of debt issuance costs 22,482 1,882
------ -----
Total long-term liabilities 22,482 1,882
------ -----
Total liabilities 72,102 44,071
------ ------
Total stockholders' equity 158,928 141,726
------- -------
Total liabilities and stockholders' equity $231,030 $185,797
======== ========
ADDUS HOMECARE CORPORATION AND SUBSIDIARIES
Key Statistical and Financial Data
(Unaudited)
For the Three Months For the Year Ended
Ended December 31, December 31,
------------------ ------------
2016 2015 2016 2015
---- ---- ---- ----
General:
Adjusted EBITDA (in thousands) (1) $9,284 $5,394 $32,094 $23,627
States served at period end - - 24 22
Locations at period end - - 114 119
Employees at period end - - 23,070 21,395
Home & Community:
Average billable census - same store (2) 32,855 32,471 32,803 32,630
Average billable census - acquisitions (3) 1,242 126 1,141 126
Average billable census total 34,097 32,597 33,944 32,756
Billable hours (in thousands) 5,934 4,930 23,088 19,556
Average billable hours per census per month 58.0 50.4 56.7 49.8
Billable hours per business day 91,288 74,697 88,460 75,214
Revenues per billable hour $17.47 $17.19 $17.35 $17.22
Percentage of Revenues by Payor:
State, local and other governmental programs 66.0 77.3 70.4 77.7
Managed care organizations 30.7 18.8 26.1 18.3
Private duty 2.2 2.9 2.4 3.0
Commercial 1.1 1.0 1.1 1.0
(1) We define Adjusted EBITDA as net income before interest expense, other non-operating income, taxes,
depreciation, amortization, M&A expenses, stock-based compensation expense, restructure charges and
severance and other costs. 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, 2015 by 273 and the
twelve months ended December 31, 2015 by 540.
(3) The average billable census in acquisitions of 554 and 592 for the three months and twelve months ended
December 31, 2015, respectively, was reclassified to average billable census - same stores for comparability
purposes.
ADDUS HOMECARE CORPORATION AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(amounts in thousands, except per share data)
(Unaudited)
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
------------------ ------------------
2016 2015 2016 2015
---- ---- ---- ----
Reconciliation of Adjusted EBITDA to
Net Income: (1)
Net income $7,568 $3,321 $12,024 $11,623
Less: (Earnings) from discontinued (97) (270) (97) (270)
operations, net of tax
---
Net income from continuing operations 7,471 3,051 11,927 11,353
Interest expense 572 258 2,332 786
Interest income (2,766) (23) (2,812) (47)
Other non-operating income (80) - (206) -
Income tax (benefit) expense from 2,496 (271) 3,994 3,932
continuing operations
Depreciation and amortization 1,703 1,212 6,647 4,717
M&A expenses 337 455 1,122 1,013
Stock-based compensation expense (192) 412 1,072 1,573
Restructuring charges (457) - 4,787 -
Severance and other costs 200 - 3,231 -
IRS accrual - 300 - 300
--- --- --- ---
Adjusted EBITDA $9,284 $5,394 $32,094 $23,627
====== ====== ======= =======
Reconciliation of Net Income per Diluted
Share to Adjusted Net Income per
Diluted Share: (2)
Net income per diluted share $0.65 $0.27 $1.05 $1.02
Worker Opportunity Tax Credits per share - (0.09) - -
Cost associated with IRS accrual per share - 0.03 - 0.03
Reserve adjustment for Workers - 0.05 - -
Compensation per share
Interest income from State of Illinois (0.17) - (0.17) -
Normalization of effective tax rate (0.04) - (0.06) -
M&A expenses per diluted share 0.02 0.03 0.07 0.07
Restructuring charges per diluted share (0.03) - 0.30 -
Severance and other costs per diluted share 0.01 - 0.20 -
Stock-based compensation expense per (0.01) 0.03 0.07 0.10
diluted share
---
Adjusted net income diluted share $0.43 $0.32 $1.46 $1.22
===== ===== ===== =====
ADDUS HOMECARE CORPORATION AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures (Continued)
(amounts in thousands, except per share data)
(Unaudited)
For the Three Months For the Twelve Months Ended
December 31,
Ended December 31,
------------------
2016 2015 2016 2015
---- ---- ---- ----
Reconciliation of Net Service Revenues to
Adjusted Net Service Revenues: (3)
Net service revenues $103,656 $84,760 $400,688 $336,815
Revenues associated with the closure of - (596) (1,076) (5,068)
certain sites
Adjusted net service revenues $103,656 $84,164 $399,612 $331,747
======== ======= ======== ========
(1) We define Adjusted EBITDA as net income before interest expense, other non-operating income, taxes,
depreciation, amortization, M&A expenses, stock-based compensation expense, restructuring charges and
severance and other costs. 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 per diluted share as net income per diluted share, adjusted for worker opportunity
tax credits, the IRS accrual, workers compensation, interest income from the State of Illinois, M&A expenses,
normalization of the effective tax rate, stock-based compensation expense, restructuring charges and severance
and other costs. Adjusted net income per diluted 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 net service revenues 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 service revenues or any other measure of financial performance calculated in accordance
with GAAP.
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SOURCE Addus HomeCare Corporation
