Addus HomeCare Corporation (NASDAQ: ADUS), a provider of home
care services, today announced its financial results for the third
quarter and nine months ended September 30, 2023.
Third Quarter 2023 Highlights:
- Net Service Revenues Grow 12.6% to $270.7 Million
- Net Income of $15.4 Million, or $0.95 per Diluted Share
- Adjusted Net Income per Diluted Share Increases 22.3%
year-over-year to $1.15
- Adjusted EBITDA Increases 20.0% year-over-year to $30.9
Million
- Cash Flow from Operations of $21.8 Million
Overview
Net service revenues were $270.7 million for the third quarter
of 2023, a 12.6% increase compared with $240.5 million for the
third quarter of 2022. Net income was $15.4 million for the third
quarter of 2023, compared with $11.5 million for the third quarter
of 2022, while net income per diluted share was $0.95 compared with
$0.71 for the same period a year ago. Adjusted EBITDA increased
20.0% to $30.9 million for the third quarter of 2023 from $25.7
million for the third quarter of 2022. Adjusted net income was
$18.8 million for the third quarter of 2023 compared with $15.2
million for the prior-year period, while adjusted net income per
diluted share was $1.15 compared with $0.94 for the third quarter
of 2022. Adjusted net income per diluted share for the third
quarter of 2023 excludes acquisition expenses of $0.08 and
stock-based compensation expense of $0.12 (See the end of press
release for a reconciliation of all non-GAAP and GAAP financial
measures.)
For the first nine months of 2023, net service revenues
increased 11.1% to $782.3 million from $704.1 million for the
prior-year period. Net income was $42.9 million for the first nine
months of 2023 compared with $31.3 million for the same period in
2022, and net income per diluted share was $2.63 compared with
$1.94 per diluted share. Adjusted EBITDA increased 16.7% to $85.4
million for the first nine months of 2023 from $73.2 million for
the first nine months of 2022. Adjusted net income was $52.1
million for the first nine months of 2023 compared with $42.3
million for the first nine months of 2022, while adjusted net
income per diluted share was $3.20 compared with $2.63 for the
prior-year period.
Commenting on the results, Dirk Allison, Chairman and Chief
Executive Officer, said, “Our third quarter results reflect the
continued strong momentum in our business, highlighted by revenue
and adjusted EBITDA growth of 12.6% and 20.0%, respectively, when
compared with the third quarter of 2022. In addition to revenues
generated by our recent acquisitions, organic growth was driven by
continued demand for home-based care, especially for our personal
care services, which accounted for 74.6% of our revenues. We are
also pleased that the overall labor environment has continued to
improve, which has enhanced our ability to support our higher
patient volume.
“Our personal care segment has been the key growth driver for
Addus this year, as we delivered impressive 13.9% organic growth in
revenue on a same-store basis over the third quarter of 2022, the
highest quarterly growth rate this year. This growth has benefited
from the increased demand we are seeing in our markets along with
the two statewide rate increases in our largest personal care state
of Illinois.
“Our third quarter results included two months of operations of
Tennessee Quality Care, a provider of home health, hospice, and
private duty nursing services, which we acquired August 1, 2023. We
are pleased that the integration process is going well as we expand
our coverage capabilities to all three levels of home-based care in
Tennessee. We remain excited about the expansion opportunities in
our home health operations as it complements our personal care
services, especially where we participate in value-based
contracting models. For our hospice business, which accounted for
19.6% of revenue for the third quarter, we were encouraged to see
more positive trends return with revenues up 3.1% over the third
quarter of 2022 on a same-store basis and modest improvement in
average daily census and length of stay compared with the same
period last year,” said Allison.
Cash and Liquidity
As of September 30, 2023, the Company had cash of $79.8 million
and bank debt of $166.4 million, with capacity and availability
under its revolving credit facility of $450.0 million and $275.6
million, respectively. Net cash provided by operating activities
was $21.8 million for the third quarter of 2023, inclusive of a net
$2.1 million in ARPA funds utilization.
Looking Ahead
Allison continued, “While we have continued to expand our
business, we also have generated very strong cash flow from
operations in 2023. Our leadership team has remained focused on
paying down debt and strengthening our balance sheet to ensure we
are well-capitalized to make strategic investments in our business.
We will continue to pursue acquisitions similar to Tennessee
Quality Care and other strategic acquisitions that are accretive to
our business and meet our goal of adding valuable clinical assets
to our non-clinical operations. Consistent with our historical
approach to M&A, we are being selective in identifying and
pursuing acquisition opportunities, allowing us to gain more
clarity on pending regulatory changes and other market
dynamics.
“We are proud of the work we are doing to meet the expanding
need for home-based care, which is one of the safest and most
cost-effective care delivery models. We recognize that both our
past and future success are due to our caregivers who work hard
every day to provide outstanding care and support to more patients
and families. I am grateful for our dedicated team of caregivers
who provide this safe, high-quality care in the preferred home
setting,” added Allison.
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 expenses, stock-based
compensation expenses, and restructure and other non-recurring
costs. The Company defines adjusted EBITDA as earnings before
interest expense, other non-operating income, taxes, depreciation,
amortization, acquisition expense, stock-based compensation
expense, and restructure and other non-recurring costs. The Company
defines adjusted net income per diluted share as net income per
share, adjusted for acquisition expenses, stock-based compensation
expense, and restructure and other non-recurring costs. 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 net income per share to net income 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 net income 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, October 31, 2023,
at 9:00 a.m. Eastern time. To access the live call, dial (833)
629-0620 (international dial-in number is (412) 317-1805) and ask
to join the Addus HomeCare earnings call. A telephonic replay of
the conference call will be available through midnight on November
7, 2023, by dialing (877) 344-7529 (international dial-in number is
(412) 317-0088) and entering pass code 7533538.
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,
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 security breaches, cyber-attacks, loss of
data or cybersecurity threats or incidents, 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
February 28, 2023, 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 over 49,000 consumers
through 220 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)
Income Statement
Information:
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2023
2022
2023
2022
Net service revenues
$
270,721
$
240,495
$
782,300
$
704,070
Cost of service revenues
183,991
165,310
534,837
483,100
Gross profit
86,730
75,185
247,463
220,970
32.0
%
31.3
%
31.6
%
31.4
%
General and administrative expenses
60,271
54,228
174,028
162,476
Depreciation and amortization
3,620
3,441
10,449
10,571
Total operating expenses
63,891
57,669
184,477
173,047
Operating income
22,839
17,516
62,986
47,923
Total interest expense, net
2,619
2,389
7,014
6,029
Income before income taxes
20,220
15,127
55,972
41,894
Income tax expense
4,809
3,584
13,034
10,631
Net income
$
15,411
$
11,543
$
42,938
$
31,263
Net income per diluted share:
$
0.95
$
0.71
$
2.63
$
1.94
Weighted average number of common shares outstanding:
Diluted
16,283
16,184
16,304
16,146
Cash Flow Information:
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2023
2022
2023
2022
Net cash provided by operating activities
$
21,785
$
18,316
$
82,198
$
80,818
Net cash (used in) investing activities
(111,223
)
(1,326
)
(113,934
)
(87,354
)
Net cash provided by (used in) financing activities
85,000
(32,263
)
31,525
(56,715
)
Net change in cash
(4,438
)
(15,273
)
(211
)
(63,251
)
Cash at the beginning of the period
84,188
120,917
79,961
168,895
Cash at the end of the period
$
79,750
$
105,644
$
79,750
$
105,644
ADDUS HOMECARE CORPORATION AND
SUBSIDIARIES
Condensed Consolidated Balance
Sheets
(Amounts in thousands)
(Unaudited)
September 30,
2023
2022
Assets Current assets
Cash
$
79,750
$
105,644
Accounts receivable, net
121,112
126,253
Prepaid expenses and other current assets
10,387
8,245
Total current assets
211,249
240,142
Property and equipment, net
20,516
17,428
Other assets Goodwill
662,981
575,205
Intangible assets, net
93,799
72,655
Operating lease assets
47,183
40,503
Total other assets
803,963
688,363
Total assets
$
1,035,728
$
945,933
Liabilities and stockholders'
equity Current liabilities Accounts payable
$
21,375
$
19,545
Accrued payroll
51,774
35,084
Accrued expenses
34,952
28,691
Operating lease liabilities - current portion
11,434
10,866
Government stimulus advance
7,836
21,158
Accrued workers compensation
12,268
12,844
Total current liabilities
139,639
128,188
Long-term debt, less current portion, net of debt issuance
costs
163,917
163,557
Long-term lease liability, less current portion
41,632
37,168
Other long-term liabilities
6,206
2,183
Total long-term liabilities
211,755
202,908
Total liabilities
351,394
331,096
Total stockholders' equity
684,334
614,837
Total liabilities and stockholders' equity
$
1,035,728
$
945,933
ADDUS HOMECARE CORPORATION AND SUBSIDIARIES Net
Service Revenue by Segment (Amounts in thousands)
(Unaudited)
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2023
2022
2023
2022
Net Service Revenues by Segment Personal Care
$
201,882
$
179,180
$
590,227
$
523,142
Hospice
53,121
51,359
152,414
151,160
Home Health
15,718
9,956
39,659
29,768
Total Revenue
$
270,721
$
240,495
$
782,300
$
704,070
ADDUS HOMECARE CORPORATION AND SUBSIDIARIES Key
Statistical and Financial Data (Unaudited)
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2023
2022
2023
2022
Personal Care States served at period
end
-
-
21
21
Locations at period end
-
-
156
161
Average billable census - same store (1)
38,504
37,677
38,575
37,253
Average billable census - acquisitions
86
-
93
-
Average billable census total
38,590
37,677
38,668
37,253
Billable hours (in thousands)
7,690
7,473
22,964
21,947
Average billable hours per census per month
66.3
65.9
65.8
65.2
Billable hours per business day
118,314
113,229
117,765
112,547
Revenues per billable hour
$
26.18
$
23.92
$
25.58
$
23.71
Organic growth - Revenue
13.9
%
7.0
%
12.5
%
3.5
%
Hospice Locations served at period end
-
-
40
33
Admissions
3,176
3,182
9,576
9,778
Average daily census (2)
3,453
3,280
3,426
3,304
Average discharge length of stay
97.5
92.7
93.2
86.8
Patient days
311,454
301,797
892,507
880,574
Revenue per patient day
$
175.19
$
170.18
$
175.23
$
171.66
Organic growth - Revenue
3.1
%
0.1
%
1.5
%
1.6
%
- Average daily census
(0.9
)%
2.2
%
0.8
%
5.0
%
Home Health Locations served at period end
-
-
24
12
New Admissions
4,265
3,684
11,597
10,371
Recertifications
2,672
1,482
5,816
42,007
Total Volume
6,937
5,166
17,413
14,578
Visits
94,637
71,670
240,758
205,335
Organic growth - Revenue
(8.8
)%
0.2
%
(2.5
)%
(1.2
)%
- New admissions
(18.9
)%
18.6
%
(13.5
)%
15.7
%
- Volume
(14.3
)%
15.1
%
(9.3
)%
16.0
%
Percentage of Revenues by Payor: Personal
Care State, local and other governmental programs
50.4
%
49.4
%
50.4
%
49.4
%
Managed care organizations
46.4
46.4
46.2
46.1
Private duty
2.0
2.6
2.1
2.6
Commercial
0.8
1.0
0.8
1.1
Other
0.4
%
0.6
%
0.5
%
0.8
%
Hospice Medicare
89.1
%
90.6
%
90.2
%
90.8
%
Commercial
6.8
5.4
5.8
5.1
Managed care organizations
3.4
3.5
3.3
3.6
Other
0.7
%
0.5
%
0.7
%
0.5
%
Home Health Medicare
72.1
%
73.5
%
73.9
%
73.0
%
Managed care organizations
21.9
20.1
20.8
20.7
Commercial
4.2
6.2
4.3
6.1
Other
1.8
%
0.2
%
1.0
%
0.2
%
(1) Exited sites would have reduced same store census for
the three and nine months ended September 30, 2022, by 40 and 43,
respectively. (2) Exited sites would have reduced average daily
census for the three and nine months ended September 30, 2022, by
11 and 34, respectively.
ADDUS HOMECARE CORPORATION AND
SUBSIDIARIES
Reconciliation of Non-GAAP
Financial Measures
(Amounts in thousands, except
per share data)
(Unaudited) (1)
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2023
2022
2023
2022
Reconciliation of Adjusted EBITDA to Net Income: (1)
Net income
$
15,411
$
11,543
$
42,938
$
31,263
Interest expense, net
2,619
2,389
7,014
6,029
(Gain) Loss on sale of assets
(1
)
(25
)
(5
)
(27
)
Income tax expense
4,809
3,584
13,034
10,631
Depreciation and amortization
3,620
3,441
10,449
10,571
Impact of retroactive New York rate increase
-
-
(868
)
-
Acquisition expenses
1,763
1,878
4,792
6,502
Stock-based compensation expense
2,572
2,780
7,831
7,945
Restructure and other non-recurring costs
72
132
242
318
Adjusted EBITDA
$
30,865
$
25,722
$
85,427
$
73,232
Reconciliation of Adjusted Net Income to Net
Income: (2) Net income
$
15,411
$
11,543
$
42,938
$
31,263
(Gain) Loss on sale of assets, net of tax
(1
)
(18
)
(4
)
(20
)
Impact of retroactive New York rate increase, net of tax
-
-
(666
)
-
Acquisition expenses, net of tax
1,344
1,444
3,676
4,852
Stock-based compensation expense, net of tax
1,960
2,124
6,007
5,928
Restructure and other non-recurring costs, net of tax
55
101
186
237
Adjusted Net Income
$
18,769
$
15,194
$
52,137
$
42,260
Reconciliation of Net Income per Diluted Share to
Adjusted Net Income per Diluted Share: (3) Net income
per diluted share
$
0.95
$
0.71
$
2.63
$
1.94
Impact of retroactive New York rate increase per diluted
share
-
-
(0.04
)
-
Acquisition expenses per diluted share
0.08
0.08
0.23
0.30
Restructure and other non-recurring costs per diluted share
-
0.01
0.01
0.01
Stock-based compensation expense per diluted share
0.12
0.14
0.37
0.38
Adjusted net income per diluted share
$
1.15
$
0.94
$
3.20
$
2.63
Reconciliation of Net Service Revenues to Adjusted Net
Service Revenues: (4) Net service revenues
$
270,721
$
240,495
$
782,300
$
704,070
Revenues associated with the closure of certain sites
(325
)
(666
)
(1,563
)
(3,134
)
Adjusted net service revenues
$
270,396
$
239,829
$
780,737
$
700,936
Footnotes: (1) We define Adjusted EBITDA as earnings
before interest expense, other non-operating income, taxes,
depreciation, amortization, acquisition expenses, stock-based
compensation expense, restructure expenses and other non-recurring
costs and loss on the sale of assets and retroactive rate increases
from Illinois. 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 as net income before acquisition expenses,
stock-based compensation expense, restructure and other
non-recurring costs and gain or loss on the sale of assets and
retroactive rate increases from New York. 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. (3) We define Adjusted diluted earnings per share as earnings
per share, adjusted for acquisition expenses, stock-based
compensation expense and restructure and other non-recurring costs
and loss on the sale of asset and retroactive rate increases from
New York. 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. (4) 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231030933199/en/
Brian W. Poff Executive Vice President, Chief Financial Officer
Addus HomeCare Corporation (469) 535-8200
investorrelations@addus.com
Dru Anderson FINN Partners (615) 324-7346
dru.anderson@finnpartners.com
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