Addus HomeCare Announces Second-Quarter 2021 Financial Results

FRISCO, Texas–()–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, 2021.

Net service revenues were $217.9 million for the second quarter of 2021, up 18.1% from $184.6 million for the second quarter of 2020. Net income was $11.6 million, up 67.9% compared with $6.9 million for the second quarter of 2020, while net income per diluted share was $0.72 compared with $0.43 per diluted share for the prior-year period. Adjusted net income per diluted share increased 23.3% to $0.90 for the second quarter of 2021 from $0.73 for the second quarter of 2020.

Adjusted net income per diluted share for the second quarter of 2021 excludes the impact of a retroactive Illinois rate increase of $0.07, acquisition and de novo expenses of $0.11, restructure and other costs of $0.02 and stock-based compensation expense of $0.12. (See page 9 for a reconciliation of all non-GAAP and GAAP financial measures in this news release.) Adjusted EBITDA increased 30.1% to $24.3 million for the second quarter of 2021 from $18.7 million for the second quarter of 2020.

For the first six months of 2021, net service revenues increased 12.9% to $423.2 million from $374.8 million for the prior-year period. Net income increased 31.6% to $20.5 million for the first six months of 2021 compared with $15.6 million for the same period in 2020, and net income per diluted share was $1.28 compared with $0.98 per diluted share. Adjusted net income increased 14.2% to $27.4 million for the first six months of 2021 compared with $24.0 million for the prior-year period, while adjusted net income per diluted share grew 12.5% to $1.71 from $1.52. Adjusted EBITDA increased 23.7% to $45.1 million for the first six months of 2021 from $36.4 million for the first six months of 2020.

At June 30, 2021, the Company had cash of $139.4 million and bank debt of $196.1 million, while availability under its revolving credit facility was $112.8 million. Net cash provided in operating activities was $15.0 million for the second quarter of 2021.

Dirk Allison, President and Chief Executive Officer, commented, “We are pleased with the trends in our business for the second quarter of 2021, as Addus delivered solid financial and operating results. We experienced higher demand in the second quarter, leading to 7.4% organic growth for our personal care services, which accounted for 80.9% of our total revenue. Over the last twelve months, this organic growth has averaged approximately 5%, at the high end of our target range of 3-5%. Additionally, our home health business had a strong quarter, up 24.7% over the same period last year. While admissions were up in our hospice business, which includes the Queen City acquisition, we continued to experience a shorter median length of stay than we have seen historically, which affected census growth. Our median length of stay and average daily census increased sequentially, and we expect that volume trends in hospice will continue to improve.”

Mr. Allison continued, “Addus plays a critical and growing role in today’s healthcare continuum with our ability to safely serve the needs of more patients in their homes. We believe that federal policymakers and our states and payors increasingly recognize this value, particularly following the pandemic of the last fifteen months. We appreciate this recognition and support. As an example of this recognition, Illinois recently announced a significant investment in home care providers with a retroactive rate increase related to the first quarter of this year to match the previously announced increase that was effective April 1, 2021.”

Amended and Restated Credit Facility

The Company also announced that it has executed on a new senior secured credit facility effective July 30, 2021, that expands its revolving credit to $600 million from $300 million. The agreement has an accordion feature that enables the credit facility to be expanded by an incremental $125 million for funding acquisitions. The maturity of the new facility has also been extended from May 2023 to July 2026. Capital One, National Association, acted as lead agent for the bank lending group.

Mr. Allison commented, “We are excited to complete this significant expansion of our credit facility to support our ability to grow, both organically and through acquisitions. We appreciate the confidence in our business demonstrated by the significant financial institutions participating in the bank lending group.”

Acquisitions

Addus also closed its previously announced acquisition of Armada Home Health and Hospice on August 1, 2021. Allison added, “We completed the acquisition of Armada to increase our clinical depth and operational strength in New Mexico and enhance our ability to provide all three levels of home care in this important market for Addus. We are pleased to welcome Armada’s experienced management team and clinical staff to the Addus family. Our acquisition pipeline continues to be strong, and we remain focused on identifying opportunities to add clinical services to our existing personal care markets with the goal of having all three levels of home care in additional markets. With our new credit facility, we continue to have the financial capacity to build on our track record of completing strategic acquisitions to extend our market reach.”

Non-GAAP Financial Measures

The information provided in this release includes adjusted net income, adjusted EBITDA and adjusted net income per diluted share, which are non-GAAP financial measures. The Company defines adjusted net income as net income before acquisition and de novo expenses, stock-based compensation expense, restructure expenses, and other costs. The Company defines adjusted EBITDA as earnings before interest expense, taxes, depreciation, amortization, acquisition and de novo expenses, stock-based compensation expense, restructure expenses, and other costs. The Company defines adjusted diluted earnings per share as earnings per share, adjusted for acquisition and de novo expenses, stock compensation expense, restructure expenses, and other costs. The Company defined adjusted net income, adjusted EBITDA, adjusted diluted earnings per share to exclude net COVID expenses arising from the pandemic from the second quarter of 2020 to the first quarter of 2021. The Company defines adjusted net service revenues 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 net income to net income, a reconciliation of adjusted EBITDA to net income, a reconciliation of adjusted diluted earnings per share to earnings per share, 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, adjusted EBITDA, adjusted diluted earnings per share, 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, August 3, 2021, 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), passcode 4489483. A telephonic replay of the conference call will be available through midnight on August 10, 2021, by dialing (855) 859-2056 (international dial-in number is (404) 537-3406) and entering pass code 4489483.

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 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, any future impact to our business operations, reimbursements and patient population due to the recent COVID-19 global pandemic, 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 1, 2021, which is 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 HomeCare

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 44,000 consumers through 210 locations across 22 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)

 

 

 

 

For the Three Months

For the Six Months

Income Statement Information:

Ended June 30,

Ended June 30,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net service revenues

$

217,893

 

$

184,576

 

$

423,195

 

$

374,792

 

Cost of service revenues

 

149,083

 

 

129,579

 

 

293,188

 

 

263,960

 

Gross profit

 

68,810

 

 

54,997

 

 

130,007

 

 

110,832

 

 

 

31.6

%

 

29.8

%

 

30.7

%

 

29.6

%

General and administrative expenses

 

48,175

 

 

42,450

 

 

93,601

 

 

84,737

 

Depreciation and amortization

 

3,587

 

 

2,940

 

 

7,188

 

 

5,827

 

Total operating expenses

 

51,762

 

 

45,390

 

 

100,789

 

 

90,564

 

Operating income from continuing operations

 

17,048

 

 

9,607

 

 

29,218

 

 

20,268

 

Total interest expense, net

 

1,231

 

 

566

 

 

2,425

 

 

1,140

 

Income before income taxes

 

15,817

 

 

9,041

 

 

26,793

 

 

19,128

 

Income tax expense

 

4,220

 

 

2,134

 

 

6,302

 

 

3,563

 

Net income

$

11,597

 

$

6,907

 

$

20,491

 

$

15,565

 

Net income per diluted share:

$

0.72

 

$

0.43

 

$

1.28

 

$

0.98

 

Weighted average number of common shares outstanding:

 

 

 

 

Diluted

 

16,043

 

 

15,916

 

 

16,063

 

 

15,917

 

 
 

 

For the Three Months

For the Six Months

Cash Flow Information:

Ended June 30,

Ended June 30,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net cash (used in) provided by operating activities

$

15,045

 

$

30,445

 

$

(3,321

)

$

50,887

 

Net cash (used in) investing activities

 

(907

)

 

(2,131

)

 

(1,928

)

 

(4,965

)

Net cash (used in) provided by financing activities

 

(285

)

 

(228

)

 

(429

)

 

913

 

Net change in cash

 

13,853

 

 

28,086

 

 

(5,678

)

 

46,835

 

Cash at the beginning of the period

 

125,547

 

 

130,463

 

 

145,078

 

 

111,714

 

Cash at the end of the period

$

139,400

$

158,549

 

$

139,400

 

$

158,549

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)

 

 

Assets

June 30,

2021

2020

 

 

Current assets

Cash

$

139,400

$

158,549

Accounts receivable, net

 

138,270

 

126,389

Prepaid expenses and other current assets

 

12,740

 

11,398

Total current assets

 

290,410

 

296,336

Property and equipment, net

 

18,708

 

14,707

Other assets

 

 

Goodwill

 

469,476

 

275,433

Intangible assets, net

 

67,247

 

53,073

Deferred tax assets, net

 

6,128

 

1,547

Operating lease assets

 

37,191

 

19,825

Total other assets

 

580,042

 

349,878

Total assets

$

889,160

$

660,921

 
 

Liabilities and stockholders’ equity

 

 

Current liabilities

 

 

Accounts payable

$

23,942

$

17,201

Accrued payroll

 

33,836

 

28,787

Accrued expenses

 

35,717

 

32,674

Government stimulus advance

 

8,094

 

Accrued workers compensation

 

14,382

 

14,075

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

 

973

 

948

Total current liabilities

 

116,944

 

93,685

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

 

193,714

 

59,048

Long-term lease liability, less current portion

 

34,339

 

12,672

Other long-term liabilities

 

108

 

655

Total long-term liabilities

 

228,161

 

72,375

Total liabilities

 

345,105

 

166,060

Total stockholders’ equity

 

544,055

 

494,861

Total liabilities and stockholders’ equity

$

889,160

$

660,921

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,

2021

2020

2021

2020

Net Service Revenues by Segment

 

 

 

 

Personal Care

$

176,267

$

156,268

$

341,135

$

316,933

Hospice

 

36,909

 

24,525

 

73,003

 

49,737

Home Health

 

4,717

 

3,783

 

9,057

 

8,122

Total Revenue

$

217,893

$

184,576

$

423,195

$

374,792

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Key Statistical and Financial Data (Unaudited)

   

General

 

Personal Care

For the Three Months

Ended June 30,

 

For the Six Months

Ended June 30,

2021

2020

 

2021

2020

 

 

 

 

 

States served at period end

 

 

 

 

 

 

22

 

 

24

 

Locations at period end

 

 

 

 

 

 

164

 

 

150

 

Average billable census – same store

 

36,952

 

 

36,197

 

 

 

36,870

 

 

37,560

 

Average billable census – acquisitions (1)

 

1,541

 

 

 

 

 

1,540

 

 

 

Average billable census total (2)

 

38,493

 

 

36,197

 

 

 

38,410

 

 

37,560

 

Billable hours (in thousands)

 

7,650

 

 

7,374

 

 

 

15,187

 

 

15,048

 

Average billable hours per census per month

 

65.9

 

 

67.5

 

 

 

65.6

 

 

66.3

 

Billable hours per business day

 

117,688

 

 

113,447

 

 

 

117,729

 

 

115,750

 

Revenues per billable hour

$

22.60

 

$

21.14

 

 

$

22.42

 

$

21.01

 

Organic growth

 

– Revenue

 

7.4

%

 

9.7

%

 

 

5.9

%

 

11.8

%

 

Hospice

 

 

 

 

 

Locations served at period end

 

 

 

 

 

 

33

 

 

30

 

Admissions

 

2,252

 

 

1,339

 

 

 

4,646

 

 

2,994

 

Average daily census

 

2,460

 

 

1,743

 

 

 

2,430

 

 

1,803

 

Average discharge length of stay

 

89.3

 

 

103.1

 

 

 

95.6

 

 

101.0

 

Patient days

 

223,901

 

 

158,644

 

 

 

439,908

 

 

328,156

 

Revenue per patient day

$

164.85

 

$

154.59

 

 

$

165.95

 

$

151.57

 

Organic growth

 

 

 

 

 

– Revenue

 

(8.4

)%

 

2.7

%

 

 

(8.4

)%

 

2.7

%

– Average daily census

 

(14.3

)%

 

3.6

%

 

 

(27.2

)%

 

8.7

%

 

Home Health

 

 

 

 

 

Locations served at period end

 

 

 

 

 

 

10

 

 

10

 

New Admissions

 

1,186

 

 

1,068

 

 

 

2,354

 

 

2,090

 

Recertifications

 

738

 

 

689

 

 

 

1,395

 

 

1,399

 

Total Volume

 

1,924

 

 

1,757

 

 

 

3,749

 

 

3,489

 

Visits

 

31,582

 

 

29,797

 

 

 

59,247

 

 

63,507

 

Organic growth

 

 

 

 

 

– Revenue

 

24.7

%

 

(4.3

)%

 

 

11.5

%

 

4.1

%

– New admissions

 

29.5

%

 

15.4

%

 

 

21.5

%

 

13.1

%

 

Percentage of Revenues by Payor:

 

 

 

 

 

 

Personal Care

 

 

 

 

 

State, local and other governmental programs

 

50.2

%

 

50.0

%

 

 

49.6

%

 

49.7

%

Managed care organizations

 

44.7

 

 

44.3

 

 

 

45.2

 

 

44.6

 

Private duty

 

2.9

 

 

3.2

 

 

 

2.9

 

 

3.2

 

Commercial

 

1.5

 

 

1.5

 

 

 

1.5

 

 

1.6

 

Other

 

0.7

%

 

1.0

%

 

 

0.8

%

 

0.9

%

 

Hospice

 

 

 

 

 

Medicare

 

93.3

%

 

92.8

%

 

 

93.8

%

 

92.4

%

Managed care organizations

 

3.8

 

 

4.9

 

 

 

3.9

 

 

5.2

 

Other

 

2.9

%

 

2.3

%

 

 

2.3

%

 

2.4

%

 

Home Health

 

 

 

 

 

Medicare

 

81.1

%

 

79.6

%

 

 

80.9

%

 

79.8

%

Managed care organizations

 

17.4

 

 

18.2

 

 

 

17.9

 

 

18.4

 

Other

 

1.5

%

 

2.2

%

 

 

1.2

%

 

1.8

%

(1) The average billable census in acquisitions of 717 and 855 for the three and six months ended June 30, 2020 was reclassified to average billable census – same stores for comparability purposes. The average billable census for the three and six months ended June 30, 2021 was prorated for the date of the acquisition.

(2) Exited sites would have reduced same store census for the three and six months ended June 30, 2020 by 727 and 765, respectively.

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures

(Amounts in thousands, except per share data)

(Unaudited) (1)

 

Reconciliation of Adjusted EBITDA to Net Income: (2)

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

2021

2020

2021

2020

 

 

 

 

Net income

$

11,597

 

$

6,907

 

$

20,491

 

$

15,565

 

Interest expense, net

 

1,231

 

 

566

 

 

2,425

 

 

1,140

 

Loss on sale of assets

 

16

 

 

353

 

 

16

 

 

353

 

Income tax expense

 

4,220

 

 

2,134

 

 

6,302

 

 

3,563

 

Depreciation and amortization

 

3,587

 

 

2,940

 

 

7,188

 

 

5,827

 

Impact of retroactive Illinois rate increase, net

 

(1,438

)

 

 

 

 

 

 

COVID-19 expense, net

 

 

 

263

 

 

(591

)

 

526

 

Acquisition and de novo expenses

 

2,245

 

 

1,911

 

 

3,720

 

 

3,544

 

Stock-based compensation expense

 

2,525

 

 

1,118

 

 

4,764

 

 

2,525

 

Restructure and other costs

 

352

 

 

2,519

 

 

754

 

 

3,392

 

Adjusted EBITDA

$

24,335

 

$

18,711

 

$

45,069

 

$

36,435

 

 

Reconciliation of Adjusted Net Income to Net Income: (3)

 

 

 

 

Net income

$

11,597

 

$

6,907

 

$

20,491

 

$

15,565

 

Loss on sale of assets, net of tax

 

12

 

 

288

 

 

12

 

 

288

 

Impact of retroactive Illinois rate increase, net of tax

 

(1,054

)

 

 

 

 

 

 

COVID-19 expense, net of tax

 

 

 

206

 

 

(479

)

 

428

 

Acquisition and de novo expenses, net of tax

 

1,790

 

 

1,494

 

 

3,142

 

 

2,898

 

Stock-based compensation expense, net of tax

 

1,851

 

 

874

 

 

3,666

 

 

2,063

 

Restructuring and other costs, net of tax

 

258

 

 

1,965

 

 

584

 

 

2,772

 

Adjusted Net Income

$

14,454

 

$

11,734

 

$

27,416

 

$

24,014

 

 

Reconciliation of Net Income per Diluted Share to Adjusted Net Income per Diluted Share: (4)

 

 

Net income per diluted share

$

0.72

 

$

0.43

 

$

1.28

 

$

0.98

 

Impact of retroactive Illinois rate increase per diluted share

 

(0.07

)

 

 

 

 

 

 

Loss on sale of assets per diluted share

 

 

 

0.02

 

 

 

 

0.02

 

COVID-19 expense, net per diluted share

 

 

 

0.01

 

 

(0.03

)

 

0.03

 

Acquisition and de novo expenses per diluted share

 

0.11

 

 

0.09

 

 

0.20

 

 

0.18

 

Restructure and other costs per diluted share

 

0.02

 

 

0.12

 

 

0.04

 

 

0.18

 

Stock-based compensation expense per diluted share

 

0.12

 

 

0.06

 

 

0.22

 

 

0.13

 

Adjusted net income per diluted share

$

0.90

 

$

0.73

 

$

1.71

 

$

1.52

 

 

Reconciliation of Net Service Revenues to Adjusted Net Service Revenues: (5)

 

 

Net service revenues

$

217,893

 

$

184,576

 

$

423,195

 

$

374,792

 

Revenues associated with the closure of certain sites

 

0

 

 

(2,374

)

 

2

 

 

(4,764

)

Adjusted net service revenues

$

217,893

 

$

182,202

 

$

423,197

 

$

370,028

 

(1) The Company defined adjusted net income, adjusted EBITDA, and adjusted diluted earnings per share to exclude net COVID expenses arising from the pandemic from the second quarter of 2020 to the first quarter of 2021.

(2) We define Adjusted EBITDA as earnings before interest expense, interest income from the state of Illinois, other non-operating income, taxes, depreciation, amortization, 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.

(3) We define Adjusted Net Income as net income before interest income from the state of Illinois, 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.

(4) We define Adjusted diluted earnings per share as earnings per share, adjusted for interest income from the State of Illinois, 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.

(5) 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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