November 01, 2012 at 16:01 PM EDT
Addus HomeCare Reports Third Quarter 2012 Results and Exploration of Strategic Alternatives for the Home Health Division
Third Quarter Financial Highlights

PALATINE, Ill., Nov. 1, 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 third quarter ended September 30, 2012.

Third Quarter Review

Total net service revenues for the third quarter of 2012 were $71.0 million, a 2.3% increase compared to $69.4 million in the prior year quarter.  Net income, before considering the effect of $0.3 million, or $0.02 per diluted share, in severance related costs for the Home Health division was $2.0 million, or $0.19 per diluted share. Net income for the third quarter of 2011, before considering the $16.0 million goodwill and intangible asset impairment charge was $1.8 million, or $0.17 per diluted share.

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

Home & Community segment net service revenues for the third quarter of 2012 were $59.6 million, a 6.1% increase from the prior year quarter.  Home & Community operating income, including depreciation and amortization but excluding corporate expenses, increased 10.7% to $7.5 million, or 12.6% of revenue, in the third quarter, compared to $6.8 million, or 12.1% of revenue, in the prior year quarter.  This improvement was primarily due to an increase in average census and related billable hours, lower bad debt expense as well as a continued focus on cost control.

Home Health segment net service revenues for the third quarter of 2012 were $11.4 million, a 13.6% decrease over the prior year quarter. Home Health had operating income of $0.2 million, or 1.8% of revenues, before considering $0.3 million in severance related costs recorded in the third quarter and including depreciation and amortization but excluding corporate expenses, compared to operating income of $0.2 million, or 1.4% of revenues, in the prior year quarter.

Nine Month Review

Total net service revenues for the nine months ended September 30, 2012 were $209.2 million, a 2.3% increase compared to $204.5 million in the same prior year period.  Net income, before considering the effect of $0.3 million, or $0.02 per diluted share, in severance related costs for the Home Health division was $4.1 million, or $0.38 per diluted share. Net income for the nine months ended September 30, 2011, before considering the $16.0 million goodwill and intangible asset impairment charge was $4.0 million, or $0.37 per diluted share.

Home & Community segment net service revenues for the nine months ended September 30, 2012 were $175.2 million, a 6.0% increase from the same prior year period. Home & Community operating income, including depreciation and amortization but excluding corporate expenses, increased 15.9% to $21.0 million, or 12.0% of revenue for the nine months ended September 30, 2012, compared to $18.1 million, or 11.0% of revenue, in the same prior year period. This improvement was primarily due to an increase in average census and related billable hours, lower bad debt expense as well as a continued focus on cost control.

Home Health segment net service revenues for the nine months ended September 30, 2012 were $34.1 million, a 13.1% decrease over the same prior year period.  Home Health had an operating loss, including depreciation and amortization but excluding corporate expenses, of $1.3 million, or (3.9)% of revenues, compared to operating income of $1.7 million, or 4.4% of revenues, in the same prior year period. Home Health segment net service revenues for the nine months ended September 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

Exploration of Strategic Alternatives

The Company has decided to explore strategic alternatives relative to its home health services business and has retained The Braff Group to assist in the process.  There can be no assurance that this review process will result in a transaction or strategic alternative of any kind or of the potential timing or terms of any such transaction or strategic alternative.  The Company does not intend to disclose developments or provide updates on the progress or status of this process unless it deems further disclosure is appropriate or required.

Chief Operating Officer to Leave

The Company announced today that Daniel Schwartz, Chief Operating Officer has accepted a senior position at another business not in competition with Addus and thus, has submitted his resignation effective November 16, 2012. 

Mr. Heaney stated, "We appreciate Daniel's contributions to Addus, especially with respect to his driving key operational and financial metrics.  Daniel's leadership has been valuable in positioning the Company for the future, and we wish Daniel the best in his future endeavors."

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 third quarter financial results after the market close on Thursday, November 1, 2012.  Management will conduct a conference call to discuss its results at 5 p.m. Eastern time on November 1, 2012. The toll-free dial-in number is (866) 383-7989 (international dial-in number is 617-597-5328), with the passcode: 63834295. A telephonic replay of the conference call will be available through midnight on November 9, 2012, by dialing (888) 286-8010 (international dial-in number is 617-801-6888) and entering the passcode 92502227.

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 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 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 Reports on Form 10-Q, filed with the Securities and Exchange Commission on May 10, 2012 and August 9, 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:  DMeulemans@addus.com

(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 September 30,


For the Nine Months Ended September 30,


2012


2011


2012


2011









Net service revenues

$ 71,006


$ 69,384


$ 209,211


$ 204,478

Cost of service revenues

50,687


48,373


149,832


144,303









Gross profit

20,319


21,011


59,379


60,175









General and administrative expenses

16,486


16,955


50,697


49,567

Goodwill and intangible asset impairment charge

-


15,989


-


15,989

Gain on sale of agency

-


-


(495)


-

Depreciation and amortization

639


927


1,908


2,783

Total operating expenses

17,125


33,871


52,110


68,339









Operating income (loss)

3,194


(12,860)


7,269


(8,164)









Interest income

-


-


(128)


-

Interest expense

407


548


1,365


1,929

Total interest expense, net

407


548


1,237


1,929









Income (loss) from operations before taxes

2,787


(13,408)


6,032


(10,093)

Income tax expense (benefit)

990


(6,745)


2,142


(5,616)









Net income (loss)

$ 1,797


$ (6,663)


$ 3,890


$ (4,477)









Income (loss) per common share:








Basic and diluted

$ 0.17


$ (0.62)


$ 0.36


$ (0.42)









Weighted average number of common shares outstanding:








Basic

10,761


10,746


10,761


10,746

Diluted

10,773


10,746


10,764


10,746









































Cash Flow Information:

For the Nine Months Ended September 30,






2012


2011













Net cash provided by operating activities

$ 9,336


$ 11,815





Net cash used in investing activities

(518)


(777)





Net cash used in financing activities

(9,125)


(10,557)













Net change in cash

(307)


481





Cash at the beginning of the period

2,020


816





Cash at the end of the period

$ 1,713


$ 1,297





 

Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)














September 30, 2012


December 31, 2011

Assets








Current assets




Cash

$ 1,713


$ 2,020

Accounts receivable, net

71,400


72,368

Prepaid expenses and other current assets

8,602


8,137

Deferred tax assets

6,336


6,336





Total current assets

88,051


88,861





Property and equipment, net

2,852


2,490





Other assets




Goodwill

50,576


50,695

Intangible assets, net

6,787


8,044

Deferred tax assets

4,089


4,089

Other assets

347


513

Total other assets

61,799


63,341





Total assets

$ 152,702


$ 154,692





Liabilities and stockholders' equity








Current liabilities




Accounts payable

$ 4,589


$ 5,266

Accrued expenses

33,081


29,313

Current maturities of long-term debt

1,902


6,569

Deferred revenue

2,020


2,145





Total current liabilities

41,592


43,293





Long-term debt, less current maturities

20,500


24,958





Total stockholders' equity

90,610


86,441





Total liabilities and stockholders' equity

$ 152,702


$ 154,692

 

Segment Information (Unaudited)


For the Three Months Ended September 30, 2012


Home & Community


Home Health


Corporate


Total









Net service revenues

$ 59,581


$ 11,425


$ -


$ 71,006

Cost of service revenues

44,520


6,167


-


50,687









Gross profit

15,061


5,258


-


20,319

Gross profit percentage

25.3%


46.0%




28.6%









General and administrative expenses

7,079


5,364


4,043


16,486

Depreciation and amortization

458


4


177


639

Total operating expenses

7,537


5,368


4,220


17,125









Operating income (loss)

$ 7,524


$ (110)


$ (4,220)


$ 3,194









Operating income percentage

12.6%


-1.0%


-5.9%


4.5%










For the Three Months Ended September 30, 2011


Home & Community


Home Health


Corporate


Total









Net service revenues

$ 56,157


$ 13,227


$ -


$ 69,384

Cost of service revenues

41,368


7,005


-


48,373









Gross profit

14,789


6,222


-


21,011

Gross profit percentage

26.3%


47.0%




30.3%









General and administrative expenses

7,382


5,914


3,659


16,955

Goodwill and intangible asset impairment charge

-


15,989


-


15,989

Depreciation and amortization

609


128


190


927

Total operating expenses

7,991


22,031


3,849


33,871









Operating income (loss)

$ 6,798


$ (15,809)


$ (3,849)


$ (12,860)









Operating income, excluding impairment charge

$ 6,798


$ 180


$ (3,849)


$ 3,129









Operating income percentage,excluding impairment charge

12.1%


1.4%


-5.5%


4.5%


















For the Nine Months Ended September 30, 2012


Home & Community


Home Health


Corporate


Total









Net service revenues

$ 175,160


$ 34,051


$ -


$209,211

Cost of service revenues

130,681


19,151


-


149,832









Gross profit

44,479


14,900


-


59,379

Gross profit percentage

25.4%


43.8%




28.4%









General and administrative expenses

22,072


16,209


12,416


50,697

Gain on sale of agency

-


-


(495)


(495)

Depreciation and amortization

1,385


11


512


1,908

Total operating expenses

23,457


16,220


12,433


52,110









Operating income (loss)

$ 21,022


$ (1,320)


$ (12,433)


$ 7,269









Operating income percentage

12.0%


-3.9%


-5.9%


3.5%










For the Nine Months Ended September 30, 2011


Home & Community


Home Health


Corporate


Total









Net service revenues

$ 165,309


$ 39,169


$ -


$204,478

Cost of service revenues

123,221


21,082


-


144,303









Gross profit

42,088


18,087


-


60,175

Gross profit percentage

25.5%


46.2%




29.4%









General and administrative expenses

22,117


15,984


11,466


49,567

Goodwill and intangible asset impairment charge

-


15,989


-


15,989

Depreciation and amortization

1,828


385


570


2,783

Total operating expenses

23,945


32,358


12,036


68,339









Operating income (loss)

$ 18,143


$ (14,271)


$ (12,036)


$ (8,164)









Operating income, excluding impairment charge

$ 18,143


$ 1,718


$ (12,036)


$ 7,825









Operating income percentage,excluding impairment charge

11.0%


4.4%


-5.9%


3.8%

 

Key Statistical and Financial Data (Unaudited)










For the Three Months Ended September 30,


For the Nine Months Ended September 30,


2012


2011


2012


2011

General:
















Adjusted EBITDA (in thousands) (1)

$3,972


$4,152


$9,456


$10,849

States served at period end





19


19

Locations at period end





117


120

Employees at period end





14,222


13,601









Home & Community
















Average census

24,138


23,026


23,677


22,761

Billable hours (in thousands)

3,521


3,323


10,377


9,736

Billable hours per business day

54,169


51,127


54,298


50,716

Revenues per billable hour

$16.93


$16.90


$16.88


$ 16.98









Home Health
















Medicare admissions (2)

2,008


2,233


6,168


6,826

Non-Medicare admissions

1,213


1,558


3,777


4,909

Medicare revenues per episode completed

$2,571


$2,426


$2,571


$ 2,494









Percentage of Revenues by Payor:
















State, local or other governmental

82%


80%


83%


80%

Medicare

11%


12%


11%


13%

Other

7%


8%


6%


7%

 

(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 September 30,


For the Nine Months Ended September 30,


2012


2011


2012


2011

Reconciliation of Adjusted EBITDA to Net Income:
















Net income (loss)

$1,797


$(6,663)


$3,890


$ (4,477)

Goodwill and intangible asset impairment charge

-


15,989


-


15,989

Net interest expense

407


548


1,237


1,929

Income tax expense (benefit)

990


(6,745)


2,142


(5,616)

Depreciation and amortization

639


927


1,908


2,783

Stock-based compensation expense

139


96


279


241









Adjusted EBITDA

$3,972


$ 4,152


$9,456


$10,849









 

(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

Related Stocks:
Stock Market XML and JSON Data API provided by FinancialContent Services, Inc.
Nasdaq quotes delayed at least 15 minutes, all others at least 20 minutes.
Markets are closed on certain holidays. Stock Market Holiday List
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
Press Release Service provided by PRConnect.
Stock quotes supplied by Six Financial
Postage Rates Bots go here