Addus HomeCare Corporation (NASDAQ: ADUS), a provider of home
care services, today announced its financial results for the second
quarter ended June 30, 2023.
Second Quarter 2023 Highlights:
- Net Service Revenues Grow 9.7% to $260.0 Million
- Net Income of $14.9 Million, or $0.91 per Diluted Share
- Adjusted Net Income per Diluted Share Increases 17.6%
year-over-year to $1.07
- Adjusted EBITDA Increases year-over-year 12.7% to $28.3
Million
- Cash Flow from Operations of $41.6 Million
- Announced a definitive agreement to acquire the home health,
hospice and private duty nursing operations of Tennessee Quality
Care, which services patients in over 50 counties in
Tennessee.
Overview
Net service revenues were $260.0 million for the second quarter
of 2023, a 9.7% increase compared with $236.9 million for the
second quarter of 2022. Net income was $14.9 million for the second
quarter of 2023, compared with $11.3 million for the second quarter
of 2022, while net income per diluted share was $0.91 compared with
$0.70 for the same period a year ago. Adjusted EBITDA increased
12.7% to $28.3 million for the second quarter of 2023 from $25.1
million for the second quarter of 2022. Adjusted net income was
$17.4 million for the second quarter of 2023 compared with $14.7
million for the prior-year period, while adjusted net income per
diluted share was $1.07 compared with $0.91 for the second quarter
of 2022. Adjusted net income per diluted share for the second
quarter of 2023 excludes the impact of retroactive New York rate
increase of $(0.05), acquisition expenses of $0.08 and stock-based
compensation expense of $0.13 (See the end of press release for a
reconciliation of all non-GAAP and GAAP financial measures.)
For the first six months of 2023, net service revenues increased
10.4% to $511.6 million from $463.6 million for the prior-year
period. Net income was $27.5 million for the first six months of
2023 compared with $19.7 million for the same period in 2022, and
net income per diluted share was $1.69 compared with $1.22 per
diluted share. Adjusted EBITDA increased 14.8% to $54.6 million for
the first six months of 2023 from $47.5 million for the first six
months of 2022. Adjusted net income was $33.4 million for the first
six months of 2023 compared with $27.1 million for the first six
months of 2022, while adjusted net income per diluted share was
$2.05 compared with $1.68 for the prior-year period.
Commenting on the results, Dirk Allison, Chairman and Chief
Executive Officer, said, “Addus delivered a very strong financial
and operating performance for the second quarter of 2023,
highlighted by 9.7% top line growth in overall revenues and 12.7%
growth in Adjusted EBITDA compared to the second quarter of 2022.
Our strong volume trends in personal care, our largest segment,
were a significant driver of our growth for the quarter. Demand for
our personal care services continues to grow, reflecting a greater
awareness of the value of home-based care as the preferred and most
cost-effective option for many individuals. Our team has done an
outstanding job in meeting this demand as we continue to provide
safe, high-quality care for our patients in the home, while
delivering consistent financial results. We expect to see gradual
improvement and expansion opportunities in our home health and
hospice operations in the second half of 2023 as the clinical
staffing environment continues to improve and as a result of the
expiration of the public health emergency. With our balance sheet
and strong cash flow, we are well positioned to leverage our scale
and expertise and extend our market coverage in all three levels of
care.
“For our personal care segment, we achieved an impressive 12.6%
organic growth in revenue on a same-store basis over the second
quarter of 2022. These results reflect both sequential and year-
over-year improvement in volume trends, which have continued to
gain momentum in 2023 from our ongoing efforts in caregiver hiring
and retention strategies begun last year. We also benefitted from
two statewide rate increases in our largest state market of
Illinois, which went into effect on January 1, 2023, and April 1,
2023, respectively. For the second quarter of 2023, our home health
revenues declined 10.9% on a same-store basis over the prior-year
period as we continue to limit admissions from payers which have
lower paying contracts, improving the overall profitability of our
home health segment. While this segment is still a very small part
of our overall business, we believe there are opportunities to
continue to expand these operations both organically, by
acquisition and by strategic partnerships. For our hospice
business, which accounted for 19.3% of revenue, we continued to see
modest sequential improvement in average daily census and median
length of stay, which was 29 days in the second quarter, the
highest it has been since before the pandemic. For the second
quarter of 2023, hospice revenues were lower by 1.1% on a
same-store basis compared with the same period last year, however,
exclusive of the impact of sequestration our revenues would be
essentially flat as compared to the prior year period,” said
Allison.
Cash and Liquidity
As of June 30, 2023, the Company had cash of $84.2 million and
bank debt of $81.4 million, with capacity and availability under
its revolving credit facility of $409.3 million and $319.9 million,
respectively. Net cash provided by operating activities was $41.6
million for the second quarter of 2023, inclusive of a net $1.0
million in ARPA funds utilization.
Looking Ahead
Allison continued, “We have generated very strong cash flow from
operations in 2023, which has allowed us to repay debt and
strengthen our balance sheet. As such, we are well positioned to
continue making strategic investments in our business that will
expand our operations and enhance our services across the continuum
of care. In addition to organic growth opportunities, we remain
focused on pursuing acquisitions that meet our desired operational
and geographic profile and are accretive to our business. At the
end of the second quarter, we announced a definitive agreement to
acquire the entities comprising Tennessee Quality Care, a provider
of home health, hospice, and private duty nursing services.
Tennessee Quality Care serves an average daily census of
approximately 1,800 patients through 17 locations covering a
service area of over 50 counties in Tennessee, a certificate of
need state for both home health and hospice services. This
transaction is based on our acquisition strategy to leverage our
strong personal care presence and add clinical services in select
markets, especially where we have the opportunity to enter into
value-based contracting models.
“We are very pleased with the trends in our business though the
first half of the year and our ability to meet our key performance
objectives. As always, we acknowledge the dedicated efforts of our
caregivers who work hard every day to provide outstanding care for
more patients and families. We are excited about the opportunities
ahead for Addus in 2023, and we will continue to pursue a strategic
direction that supports the patients in our care and delivers
greater value to our shareholders,” 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, August 1, 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 August 8,
2023, by dialing (877) 344-7529 (international dial-in number is
(412) 317-0088) and entering pass code 2623612.
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 approximately 47,500
consumers through 204 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
June 30,
For the Six Months Ended June
30,
2023
2022
2023
2022
Net service revenues
$
259,980
$
236,940
$
511,579
$
463,574
Cost of service revenues
177,662
161,342
350,846
317,790
Gross profit
82,318
75,598
160,733
145,784
31.7
%
31.9
%
31.4
%
31.4
%
General and administrative expenses
57,397
55,095
113,757
108,247
Depreciation and amortization
3,382
3,609
6,829
7,130
Total operating expenses
60,779
58,704
120,586
115,377
Operating income
21,539
16,894
40,147
30,407
Total interest expense, net
2,040
1,878
4,395
3,640
Income before income taxes
19,499
15,016
35,752
26,767
Income tax expense
4,647
3,766
8,225
7,047
Net income
$
14,852
$
11,250
$
27,527
$
19,720
Net income per diluted share:
$
0.91
$
0.70
$
1.69
$
1.22
Weighted average number of common shares outstanding:
Diluted
16,283
16,131
16,304
16,113
Cash Flow Information:
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
2023
2022
2023
2022
Net cash provided by (used in) operating activities
$
41,614
$
56,519
$
60,413
$
62,502
Net cash (used in) investing activities
(969
)
(434
)
(2,711
)
(86,028
)
Net cash (used in) financing activities
(30,000
)
(59,931
)
(53,475
)
(24,452
)
Net change in cash
10,645
(3,846
)
4,227
(47,978
)
Cash at the beginning of the period
73,543
124,763
79,961
168,895
Cash at the end of the period
$
84,188
$
120,917
$
84,188
$
120,917
Condensed Consolidated Balance Sheets (Amounts in
thousands) (Unaudited) June
30,
2023
2022
Assets Current assets
Cash
$
84,188
$
120,917
Accounts receivable, net
104,252
124,554
Prepaid expenses and other current assets
19,350
10,901
Total current assets
207,790
256,372
Property and equipment, net
19,607
17,733
Other assets Goodwill
583,656
574,752
Intangible assets, net
68,859
74,464
Operating lease assets
48,472
41,207
Total other assets
700,987
690,423
Total assets
$
928,384
$
964,528
Liabilities and stockholders'
equity Current liabilities Accounts payable
$
20,699
$
21,346
Accrued payroll
47,795
39,432
Accrued expenses
31,966
27,352
Operating lease liabilities - current portion
11,334
10,702
Government stimulus advance
9,959
16,735
Accrued workers compensation
12,149
12,437
Total current liabilities
133,902
128,004
Long-term debt, less current portion, net of debt issuance
costs
78,702
196,342
Long-term lease liability, less current portion
43,214
38,343
Other long-term liabilities
6,215
2,062
Total long-term liabilities
128,131
236,747
Total liabilities
262,033
364,751
Total stockholders' equity
666,351
599,777
Total liabilities and stockholders' equity
$
928,384
$
964,528
ADDUS HOMECARE CORPORATION AND SUBSIDIARIES Net Service
Revenue by Segment (Amounts in thousands)
(Unaudited)
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
2023
2022
2023
2022
Net Service Revenues by Segment Personal Care
$
198,314
$
174,330
$
388,346
$
343,962
Hospice
50,210
52,074
99,292
99,801
Home Health
11,456
10,536
23,941
19,811
Total Revenue
$
259,980
$
236,940
$
511,579
$
463,574
ADDUS HOMECARE CORPORATION AND SUBSIDIARIES
Key Statistical and Financial Data (Unaudited)
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
2023
2022
2023
2022
Personal Care
States served at period end
-
-
21
21
Locations at period end
-
-
157
161
Average billable census - same store
39,003
37,501
38,611
37,041
Average billable census - acquisitions
96
-
96
-
Average billable census total
39,099
37,501
38,707
37,041
Billable hours (in thousands)
7,682
7,373
15,274
14,474
Average billable hours per census per month
65.3
65.2
65.6
64.8
Billable hours per business day
118,177
113,426
117,491
112,198
Revenues per billable hour
$
25.57
$
23.58
$
25.27
$
23.61
Organic growth - Revenue
12.6
%
2.5
%
11.7
%
1.7
%
Hospice
Locations served at period end
-
-
34
33
Admissions
3,076
3,281
6,400
6,596
Average daily census
3,225
3,333
3,210
3,323
Average discharge length of stay
94.4
83.8
90.9
84.0
Patient days
293,502
303,289
581,053
578,777
Revenue per patient day
$
174.32
$
171.70
$
175.26
$
172.43
Organic growth - Revenue
(1.1
)
%
2.5
%
0.5
%
3.4
%
- Average daily census
(3.2
)
%
6.1
%
1.4
%
6.6
%
Home Health
Locations served at period end
-
-
13
12
New Admissions
3,439
3,351
7,332
6,687
Recertifications
1,595
1,409
3,144
2,725
Total Volume
5,034
4,760
10,476
9,412
Visits
68,293
68,452
146,121
133,665
Organic growth - Revenue
(10.9
)
%
24.6
%
0.7
%
12.6
%
- New admissions
(17.5
)
%
25.2
%
(10.5
)
%
13.9
%
- Volume
(11.8
)
%
20.6
%
(10.9
)
%
16.5
%
Percentage of Revenues by Payor:
Personal Care
State, local and other governmental programs
50.6
%
49.0
%
50.4
%
49.2
%
Managed care organizations
46.0
46.2
46.1
45.9
Private duty
2.2
2.7
2.2
2.7
Commercial
0.8
1.2
0.9
1.2
Other
0.4
%
0.9
%
0.4
%
1.0
%
Hospice
Medicare
90.7
%
90.5
%
90.8
%
90.8
%
Commercial
5.4
5.2
5.3
5.0
Managed care organizations
3.1
3.8
3.2
3.7
Other
0.8
%
0.5
%
0.7
%
0.5
%
Home Health
Medicare
76.1
%
72.1
%
75.1
%
72.7
%
Managed care organizations
19.6
21.5
20.0
21.0
Commercial
3.8
6.2
4.5
6.1
Other
0.5
%
0.2
%
0.4
%
0.2
%
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
June 30,
For the Six Months Ended June
30,
2023
2022
2023
2022
Reconciliation of Adjusted EBITDA to Net Income: (1)
Net income
$
14,852
$
11,250
$
27,527
$
19,720
Interest expense, net
2,040
1,878
4,395
3,640
(Gain) Loss on sale of assets
(3
)
(2
)
(3
)
(2
)
Income tax expense
4,647
3,766
8,225
7,047
Depreciation and amortization
3,382
3,609
6,829
7,130
Impact of retroactive New York rate increase
(1,090
)
-
(868
)
-
Acquisition expenses
1,782
1,831
3,029
4,624
Stock-based compensation expense
2,613
2,680
5,259
5,165
Restructure and other non-recurring costs
75
89
170
186
Adjusted EBITDA
$
28,298
$
25,101
$
54,563
$
47,510
Reconciliation of Adjusted Net Income to Net
Income: (2) Net income
$
14,852
$
11,250
$
27,527
$
19,720
(Gain) Loss on sale of assets, net of tax
(2
)
(1
)
(2
)
(1
)
Impact of retroactive New York rate increase, net of tax
(830
)
-
(668
)
-
Acquisition expenses, net of tax
1,357
1,394
2,332
3,407
Stock-based compensation expense, net of tax
1,976
2,013
4,048
3,804
Restructure and other non-recurring costs, net of tax
57
66
131
137
Adjusted Net Income
$
17,410
$
14,722
$
33,368
$
27,067
Reconciliation of Net Income per Diluted Share to
Adjusted Net Income per Diluted Share: (3) Net income
per diluted share
$
0.91
$
0.70
$
1.69
$
1.22
Impact of retroactive New York rate increase per diluted
share
(0.05
)
-
(0.04
)
-
Acquisition expenses per diluted share
0.08
0.08
0.14
0.21
Restructure and other non-recurring costs per diluted share
-
-
0.01
0.01
Stock-based compensation expense per diluted share
0.13
0.13
0.25
0.24
Adjusted net income per diluted share
$
1.07
$
0.91
$
2.05
$
1.68
Reconciliation of Net Service Revenues to Adjusted Net
Service Revenues: (4) Net service revenues
$
259,980
$
236,940
$
511,579
$
463,574
Revenues associated with the closure of certain sites
-
(390
)
-
(843
)
Adjusted net service revenues
$
259,980
$
236,550
$
511,579
$
462,731
Footnotes: (1) We define Adjusted EBITDA as earnings before
interest expense, other non-operating income, taxes, depreciation,
amortization, acquisition and de novo 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 and de novo
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 and de novo 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/20230731354877/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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