Addus HomeCare Corp - FORM 8-K - EX-99.1 - PRESS RELEASE

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8-K - FORM 8-K - Addus HomeCare Corp	d8k.htm

Exhibit 99.1

LOGO

Investor Contact:

Amy Glynn / Nick Laudico

The Ruth Group

Phone: (646) 536-7023 / 7030

Email: aglynn@theruthgroup.com

Email: nlaudico@theruthgroup.com

Addus HomeCare Reports Second Quarter 2011 Results

Second Quarter Financial Highlights

•

Total net service revenues grew 1.6% to $68.3 million, with comparable growth rates in both the Home & Community and Home Health Divisions

•

Net income of $1.3 million, or $0.12 per diluted share

•

Accounts Receivable DSO has improved by 19 days to 65 days

Palatine, IL, August 4, 2011 - Addus HomeCare Corporation (Nasdaq: ADUS), a comprehensive provider of home-based social and medical services, announced today its financial results for the second quarter ended June 30, 2011.

Mark Heaney, President and Chief Executive Officer of Addus HomeCare, stated: “In the second quarter, we continued to integrate our new senior management team, including our new Vice President for Home Health, who joined us in July. In addition, we are initiating a search for a Chief Sales and Marketing Officer to lead our sales team. We are of course pleased that the State of Illinois made a significant payment in the quarter.”

Second Quarter Review

Total net service revenues for the second quarter of 2011 were $68.3 million, a 1.6% increase compared to the prior year quarter. The acquisition of CarePro contributed approximately $3.3 million in net service revenues in the second quarter of 2011.

Second quarter 2011 net income was $1.3 million, or $0.12 per diluted share. Net income was $1.7 million or $0.16 per diluted share in the prior year quarter.

Home & Community segment net service revenues for the second quarter of 2011 were $55.0 million, a 1.6% increase from the prior year quarter. Home & Community segment

revenues included approximately $2.4 million from CarePro operations. Excluding locations closed in late 2010 and program eliminations in select states totaling $1.8 million in revenue, same store sales increased by $0.2 million, or approximately 0.4%. Home & Community operating income, including depreciation and amortization but excluding corporate expenses, was $6.0 million, or 10.9% of revenue in the second quarter, compared to $5.5 million, or 10.1% of revenue, in the prior year quarter.

Home Health segment net service revenues for the second quarter of 2011 were $13.2 million, a 1.7% increase over the prior year quarter, despite a reduction in Medicare revenues estimated at $0.4 million as a result of the rate cut enacted in 2011. Home Health segment revenues include approximately $0.9 million from CarePro operations. Home Health operating income, including depreciation and amortization but excluding corporate expenses, was $0.8 million, or 6.3% of revenues, compared to $1.7 million, or 13.0% of revenues in the prior year quarter.

Cash flow from operations was $17.6 million for the second quarter of 2011 compared to cash used in operations of $0.8 million in the second quarter of 2010. This improvement reflects a significant payment received late in the second quarter from the State of Illinois. Subsequent to June 30, 2011, the cash generated from operations was used to reduce the outstanding balance on the Company’s line of credit and other debt.

Six Month Review

Total net service revenues for the six months ended June 30, 2011 were $135.1 million, a 2.5% increase compared to the prior year period. The acquisition of CarePro contributed approximately $6.8 million in net service revenues in the first half of 2011.

Net income for the first half of 2011 was $2.2 million, or $0.20 per diluted share. This compares to net income of $3.0 million, or $0.29 per diluted share in the same period of 2010.

Home & Community segment net service revenues for the six months ended June 30, 2011 were $109.2 million, a 2.2% increase compared to the prior year period. Home & Community segment revenues included approximately $4.9 million from CarePro operations. Excluding locations closed in late 2010 and program eliminations in select states totaling $3.8 million in revenue, same store sales increased by $1.2 million, or approximately 1.1%. Home & Community operating income, including depreciation and amortization but excluding corporate expenses, was $11.3 million, or 10.4% of revenue in the first half of 2011, compared to $11.0 million, or 10.3% of revenue, in the prior year period.

Home Health segment net service revenues for the six months ended June 30, 2011 were $25.9 million, a 4.1% increase compared to the prior year period. Home Health segment revenues include approximately $1.9 million from CarePro operations. After adjusting for the Medicare rate reduction in 2011 of approximately $0.8 million, same store sales decreased by $0.1 million, or 0.3%. Home Health operating income, including depreciation and

amortization but excluding corporate expenses, was $1.5 million, or 5.9% of revenues for the first half of 2011, compared to $2.7 million, or 10.8% of revenues in the prior year period.

Cash flow from operations was $29.1 million for the first half of 2011 compared to $0.8 million in the same period in 2010 due largely to the improved payments received from the State of Illinois, combined with an overall improvement in collections from all other payors. Subsequent to June 30, 2011, the cash from operations was used to reduce the outstanding balance on the Company’s line of credit and other debt.

Non-GAAP Financial Measures

The information provided in this release includes Adjusted EBITDA, a non-GAAP financial measure, which the Company defines as net income plus depreciation and amortization, net interest expense, income tax 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 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 2011 second quarter results after the market close on Thursday, August 4, 2011. Management will conduct a conference call to discuss its results at 5 p.m. Eastern time on August 4, 2011. The toll-free number is (866) 730-5770 (international callers should call 857-350-1594), with the passcode: 30071147. A telephonic replay of the conference call will be available through midnight on August 18, 2011 by dialing (888) 286-8010 (international callers should call 617-801-6888) and entering the passcode 89988113.

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 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’ 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.

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 acquisitions, management plans related to acquisitions, the possibility that expected benefits may not materialize as expected, the failure of a target company’s business to perform as expected, Addus HomeCare’s inability to successfully implement integration strategies, changes in reimbursement, changes in government regulations, changes in Addus HomeCare’s relationships with referral sources, increased competition for Addus HomeCare’s services, increased competition for joint venture and acquisition candidates, changes in the interpretation of government regulations, 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 28, 2010, and in Addus HomeCare’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 4, 2011, 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)

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Income and Cash Flow Information

(amounts and shares in thousands, except per share data)

(Unaudited)


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2011		2010		2011		2010
*Income Statement Information:*

Net service revenues	$	68,252	$	67,165	$	135,094	$	131,770
Cost of service revenues		48,142		47,429		95,930		93,214


Gross profit		20,110		19,736		39,164		38,556

General and administrative expenses		16,493		15,513		32,612		30,695
Depreciation and amortization		927		951		1,856		1,897

Total operating expenses		17,420		16,464		34,468		32,592


Operating income		2,690		3,272		4,696		5,964

Interest expense, net		668		750		1,381		1,468


Income from operations before taxes		2,022		2,522		3,315		4,496
Income tax expense		689		868		1,129		1,484


Net income	$	1,333	$	1,654	$	2,186	$	3,012


Income per common share:
Basic	$	0.12	$	0.16	$	0.20	$	0.29

Diluted	$	0.12	$	0.16	$	0.20	$	0.29


Weighted average number of common shares outstanding:
Basic		10,746		10,500		10,746		10,500

Diluted		10,770		10,500		10,762		10,500


	For the Six Months Ended June 30,
	2011			2010
*Cash Flow Information:*

Net cash provided by operating activities	$	29,098		$	795
Net cash used in investing activities		(632	)		(695	)
Net cash provided by (used in) financing activities		(5,177	)		317


Net change in cash		23,289			417
Cash at the beginning of the period		816			518

Cash at the end of the period	$	24,105		$	935

Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)


	June 30, 2011		December 31, 2010
Assets

Current assets
Cash	$	24,105	$	816
Accounts receivable, net		51,285		70,954
Prepaid expenses and other current assets		9,090		7,704
Deferred tax assets		6,338		6,324


Total current assets		90,818		85,798


Property and equipment, net		2,576		2,923


Other assets
Goodwill		63,851		63,930
Intangible assets, net		12,193		13,570
Other assets		612		703

Total other assets		76,656		78,203


Total assets	$	170,050	$	166,924


Liabilities and stockholders’ equity

Current liabilities
Accounts payable	$	5,246	$	3,304
Accrued expenses		31,465		26,529
Current maturities of long-term debt		6,000		5,158
Deferred revenue		2,328		2,141


Total current liabilities		45,039		37,132


Long-term debt, less current maturities		34,027		40,027
Deferred tax liabilities		562		562
Other long-term liabilities		—		1,112

Total stockholders’ equity		90,422		88,091


Total liabilities and stockholders’ equity	$	170,050	$	166,924

Segment Information (Unaudited)


	For the Three Months Ended June 30, 2011
	Home & Community			Home Health			Corporate			Total
Net service revenues	$	55,009		$	13,243		$	—		$	68,252
Cost of service revenues		41,076			7,066			—			48,142


Gross profit		13,933			6,177			—			20,110
Gross profit percentage		25.3	%		46.6	%					29.5	%

General and administrative expenses		7,304			5,208			3,981			16,493
Depreciation and amortization		609			129			189			927

Total operating expenses		7,913			5,337			4,170			17,420


Operating income	$	6,020		$	840		$	(4,170	)	$	2,690


Operating income percentage		10.9	%		6.3	%		-6.1	%		3.9	%

	For the Three Months Ended June 30, 2010
	Home & Community			Home Health			Corporate			Total
Net service revenues	$	54,144		$	13,021		$	—		$	67,165
Cost of service revenues		40,450			6,979			—			47,429


Gross profit		13,694			6,042			—			19,736
Gross profit percentage		25.3	%		46.4	%					29.4	%

General and administrative expenses		7,581			4,196			3,736			15,513
Depreciation and amortization		621			158			172			951

Total operating expenses		8,202			4,354			3,908			16,464


Operating income	$	5,492		$	1,688		$	(3,908	)	$	3,272


Operating income percentage		10.1	%		13.0	%		-5.8	%		4.9	%

	For the Six Months Ended June 30, 2011
	Home & Community			Home Health			Corporate			Total
Net service revenues	$	109,152		$	25,942		$	—		$	135,094
Cost of service revenues		81,853			14,077			—			95,930


Gross profit		27,299			11,865			—			39,164
Gross profit percentage		25.0	%		45.7	%					29.0	%

General and administrative expenses		14,735			10,070			7,807			32,612
Depreciation and amortization		1,219			257			380			1,856

Total operating expenses		15,954			10,327			8,187			34,468


Operating income	$	11,345		$	1,538		$	(8,187	)	$	4,696


Operating income percentage		10.4	%		5.9	%		-6.1	%		3.5	%

	For the Six Months Ended June 30, 2010
	Home & Community			Home Health			Corporate			Total
Net service revenues	$	106,845		$	24,925		$	—		$	131,770
Cost of service revenues		79,724			13,490			—			93,214


Gross profit		27,121			11,435			—			38,556
Gross profit percentage		25.4	%		45.9	%					29.3	%

General and administrative expenses		14,903			8,420			7,372			30,695
Depreciation and amortization		1,235			321			341			1,897

Total operating expenses		16,138			8,741			7,713			32,592


Operating income	$	10,983		$	2,694		$	(7,713	)	$	5,964


Operating income percentage		10.3	%		10.8	%		-5.9	%		4.5	%

Key Statistical and Financial Data (Unaudited) (3)


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2011			2010			2011			2010
General:

Adjusted EBITDA (in thousands) (1)	$	3,714		$	4,289		$	6,697		$	7,989
States served at period end								19			16
Locations at period end								125			122
Employees at period end								13,366			13,123

Home & Community

Average weekly census		21,036			20,648			20,948			20,421
Billable hours (in thousands)		3,229			3,252			6,414			6,424
Billable hours per business day		50,456			50,819			50,506			50,582
Revenues per billable hour	$	17.03		$	16.65		$	17.02		$	16.63

Home Health

Average weekly census:
Medicare		1,475			1,602			1,470			1,533
Non-Medicare		1,528			1,493			1,521			1,515
Medicare admissions (2)		2,274			2,179			4,547			4,315
Medicare revenues per episode completed	$	2,581		$	2,633		$	2,692		$	2,598

Percentage of Revenues by Payor:

State, local or other governmental		80	%		79	%		80	%		80	%
Medicare		13	%		13	%		13	%		12	%
Other		7	%		8	%		7	%		8	%

(1)

We define Adjusted EBITDA as earnings before interest, 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.

(3)	Key statistical and financial data for the three and six months ended June 30, 2011 includes the acquisition of Advantage Health Systems, Inc.

Adjusted EBITDA (1) (Unaudited)


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2011		2010		2011		2010
Reconciliation of Adjusted EBITDA to Net Income:

Net income	$	1,333	$	1,654	$	2,186	$	3,012
Net interest expense		668		750		1,381		1,468
Income tax expense		689		868		1,129		1,484
Depreciation and amortization		927		951		1,856		1,897
Stock-based compensation expense		97		66		145		128


Adjusted EBITDA	$	3,714	$	4,289	$	6,697	$	7,989

(1)

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