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Addus HomeCare Announces First Quarter 2022 Financial Results

Addus HomeCare Corporation (NASDAQ: ADUS), a provider of home care services, today announced its financial results for the first quarter ended March 31, 2022.

First Quarter 2022 Highlights:

  • Revenues Grow 10.4% to $226.6 Million
  • Net Income of $8.5 Million, or $0.53 per Diluted Share
  • Adjusted Earnings per Diluted Share Increases to $0.77
  • Adjusted EBITDA Increases 16.1% to $22.4 Million
  • Hospice Same Store Revenue Increases 4.4%

Overview

Net service revenues were $226.6 million for the first quarter of 2022, a 10.4% increase compared with $205.3 million for the first quarter of 2021. Net income was $8.5 million for the first quarter of 2022, compared with $8.9 million for the first quarter of 2021, while net income per diluted share was $0.53 compared with $0.55 for the same period a year ago. Adjusted EBITDA increased 16.1% to $22.4 million for the first quarter of 2022 from $19.3 million for the first quarter of 2021. Adjusted net income per diluted share was $0.77 for the first quarter of 2022 compared with $0.74 for the first quarter of 2021. Adjusted net income per diluted share for the first quarter of 2022 excludes acquisition and de novo expenses of $0.13 and stock-based compensation expense of $0.11. (See the end of press release for a reconciliation of all non-GAAP and GAAP financial measures.)

Commenting on the results, Dirk Allison, Chairman and Chief Executive Officer, said, “Addus delivered a strong financial and operating performance for the first quarter of 2022, despite some early challenges related to the surge of the Omicron variant of COVID-19. We had a significant number of caregivers in quarantine in January, which primarily affected our personal care volumes and revenues, which are reimbursed on an hourly rate basis. We were pleased, however, to see a marked decline in caregiver quarantine rates starting in February and continuing through March, resulting in personal care volumes returning to pre-Omicron levels. We are fortunate to have a team of dedicated caregivers who continue to provide outstanding care and support to our patients and their families in a safe and preferred home environment. Like most health care providers, we are facing a tight labor market, and we continue to focus on implementing effective hiring and retention strategies to attract and retain caregivers.

“Despite these challenges, we had positive trends across each of our operating segments, reflecting favorable demand for home-based care. Addus is well positioned to meet this demand, having made the critical investments necessary to provide safe and cost-effective care in the home. For the first quarter, revenues for our personal care segment, which accounted for 74.8% of total revenue, were up 0.9% on a same-store basis. This trend primarily reflects recent rate increases in Illinois that were effective November 1, 2021, offset by the Omicron-related impact on volumes in January and February. Without the impact of Omicron on volumes, our personal care segment would have been within our target range of 3-5% organic revenue growth. Our home health segment revenue more than doubled over the first quarter last year, reflecting the addition of the acquired operations of Armada Home Health and Summit Home Health that were both completed in 2021. We continued to see improvement in our hospice segment, with same store revenues up 4.4% over the prior year and sequential growth in admissions. The results for our hospice business included two months’ of contribution from the acquired operations of JourneyCare, which closed on February 1, 2022.”

Cash and Liquidity

As of March 31, 2022, the Company had cash of $124.8 million and bank debt of $259.9 million, with capacity and availability under its revolving credit facility of $377.6 million and $109.6 million, respectively. Net cash provided by operating activities was $6.0 million for the first quarter of 2022.

Looking Ahead

Allison added, “We are excited about the opportunities ahead for Addus in 2022. We have a proven operating model across the care continuum and are encouraged by the favorable demand trends for our services. Without question, the pandemic has demonstrated the value and safety of home-based care. As such, we believe we have significant prospects for continued organic growth in our current markets as well as by entering new markets through selective acquisitions. We will continue to look at opportunities in each of our operating segments with a focus on acquiring clinical services capabilities in markets where we already have strong personal care coverage, advancing our strategy to expand to more states with coverage of all three levels of home care. Under the leadership of Cliff Blessing, our new Executive Vice President and Chief Development Officer, we plan to use our financial strength to pursue our pipeline of potential acquisitions in support of our ongoing growth strategy.”

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, gain or loss on the sale of assets, and retroactive rate increases from Illinois. 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, loss on the sale of assets, and retroactive rate increases from Illinois. 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, gain or loss on the sale of assets, and retroactive rate increases from Illinois. 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, May 3, 2022, at 9:00 a.m. Eastern time. To access the live call, dial (877) 270-2148 (international dial-in number is (412) 902-6510) and ask to join the Addus HomeCare earnings call. A telephonic replay of the conference call will be available through midnight on May 10, 2022, by dialing 1-877-344-7529 (international dial-in number is (412) 317-0088) and entering pass code 4847379.

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 February 25, 2022, 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 44,500 consumers through 207 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 March 31,
   

2022

 

2021

         
Net service revenues   

 $

                226,634

 

 

 $

                205,302

 

Cost of service revenues  

 

                   156,448

 

 

 

                   144,105

 

         
Gross profit  

 

                    70,186

 

 

 

                    61,197

 

   

 

31.0

%

 

 

29.8

%

General and administrative expenses  

 

                    53,152

 

 

 

                    45,426

 

Depreciation and amortization  

 

                      3,521

 

 

 

                      3,601

 

Total operating expenses  

 

                    56,673

 

 

 

                    49,027

 

         
Operating income  

 

                    13,513

 

 

 

                    12,170

 

         
Total interest expense, net  

 

                      1,762

 

 

 

                      1,194

 

         
Income before income taxes  

 

                    11,751

 

 

 

                    10,976

 

Income tax expense   

 

                      3,281

 

 

 

                      2,082

 

         
Net income   

 $

                   8,470

 

 

 $

                   8,894

 

         
Net income per diluted share:  

 $

                     0.53

 

 

 $

                     0.55

 

         
         
Weighted average number of common shares outstanding:        
     Diluted  

 

                    16,079

 

 

 

                    16,069

 

         
         
         
         
Cash Flow Information:   For the Three Months Ended March 31,
   

2022

 

2021

         
Net cash provided by (used in) operating activities  

 $

                   5,983

 

 

 $

                 (18,366

)

Net cash (used in) investing activities  

 

                   (85,594

)

 

 

                     (1,021

)

Net cash provided by (used in) financing activities  

 

                    35,479

 

 

 

                        (144

)

         
Net change in cash  

 

                   (44,132

)

 

 

                   (19,531

)

Cash at the beginning of the period  

 

                   168,895

 

 

 

                   145,078

 

Cash at the end of the period  

 $

                124,763

 

 

 $

                125,547

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Amounts in thousands)
(Unaudited)
         
         
         
   

March 31,

   

2022

 

2021

     
Assets        
         
Current assets        
Cash  

 $

            124,763

 

 $

            125,547

Accounts receivable, net   

 

               136,808

 

 

               138,806

Prepaid expenses and other current assets  

 

                 14,658

 

 

                 10,787

Total current assets  

 

               276,229

 

 

               275,140

         
Property and equipment, net  

 

                 19,073

 

 

                 19,322

         
Other assets        
Goodwill  

 

               574,086

 

 

               469,036

Intangible assets, net   

 

                 76,300

 

 

                 69,395

Deferred tax assets, net  

 

                        -  

 

 

                   6,359

Operating lease assets  

 

                 41,523

 

 

                 38,325

Total other assets  

 

               691,909

 

 

               583,115

         
Total assets  

 $

            987,211

 

 $

            877,577

         
Liabilities and stockholders' equity        
         
Current liabilities        
Accounts payable  

 $

              21,004

 

 $

              23,459

Accrued payroll  

 

                 27,720

 

 

                 20,255

Accrued expenses  

 

                 38,820

 

 

                 38,654

Government stimulus advance  

 

                   4,173

 

 

                 20,368

Accrued workers compensation  

 

                 12,640

 

 

                 14,380

Current portion of long-term debt  

 

                        -  

 

 

                     972

Total current liabilities  

 

               104,357

 

 

               118,088

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

 

               256,127

 

 

               193,839

Long-term operating lease liabilities, less current portion  

 

                 39,049

 

 

                 35,623

Other long-term liabilities  

 

                   1,900

 

 

                     117

Total long-term  liabilities  

 

               297,076

 

 

               229,579

         
Total liabilities  

 

               401,433

 

 

               347,667

         
Total stockholders' equity  

 

               585,778

 

 

               529,910

         
Total liabilities and stockholders' equity  

 $

            987,211

 

 $

            877,577

         
ADDUS HOMECARE CORPORATION AND SUBSIDIARIES
Net Service Revenue by Segment
(Amounts in thousands)
(Unaudited)
         
         
    For the Three Months

Ended March 31,
   

2022

 

2021

Net Service Revenues by Segment        
         
Personal Care  

 $

    169,632

 

 $

  164,868

Hospice  

 

        47,727

 

 

       36,094

Home Health  

 

          9,275

 

 

        4,340

Total Revenue  

 $

    226,634

 

 $

  205,302

         
ADDUS HOMECARE CORPORATION AND SUBSIDIARIES
Key Statistical and Financial Data  (Unautited)
             
    For the Three Months

Ended March 31,
 
   

2022

   

2021

 
Personal Care            
             
States served at period end  

 

                21

 

   

 

             21

 

 
Locations served at period end  

 

              162

 

   

 

           164

 

 
Average billable census total (1)  

 

          36,582

 

 

 

       38,327

 

Billable hours (in thousands)  

 

            7,101

 

 

 

        7,567

 

Average billable hours per census per month  

 

             64.4

 

 

 

          65.2

 

Billable hours per business day  

 

        110,951

 

 

 

     118,237

 

Revenues per billable hour  

 $

         23.64

 

 

 $

      21.75

 

Organic growth    
  - Revenue (2)  

 

               0.9

 

 

 

            2.4

 

     
Hospice    
     
Locations served at period end  

 

                33

 

 

 

             34

 

 
Admissions  

 

            3,315

 

 

 

        2,394

 

Average daily census  

 

            3,320

 

 

 

        2,400

 

Average discharge length of stay  

 

             84.1

 

 

 

        101.3

 

Patient days  

 

        275,488

 

 

 

     216,007

 

Revenue per patient day  

 $

       173.24

 

 

 $

    167.09

 

Organic growth    
  - Revenue  

 

               4.4

 

 

 

           (8.4

)

  - Average daily census  

 

               7.0

 

 

 

         (20.2

)

     
Home Health    
     
Locations served at period end  

 

                12

 

 

 

             10

 

New Admissions  

 

            3,336

 

 

 

        1,168

 

Recertifications  

 

            1,316

 

 

 

           657

 

Total Volume  

 

            4,652

 

 

 

        1,825

 

Visits  

 

          65,213

 

 

 

       27,665

 

Organic growth    
  - Revenue  

 

(0.5

)

 

 

 0.0

 

  - Total admissions  

 

               2.4

 

 

 

          14.3

 

     
Percentage of Revenues by Payor:            
             
Personal Care            
             
State, local and other governmental programs  

 

             49.5

 

%

 

 

          49.0

 

%

Managed care organizations  

 

             45.6

 

 

 

          45.8

 

Private duty  

 

               2.7

 

 

 

            3.0

 

Commercial  

 

               1.2

 

 

 

            1.4

 

Other  

 

               1.0

 

%

 

 

            0.8

 

%

     
Hospice    
     
Medicare  

 

91.1

 

%

 

 

94.2

 

%

Commercial  

 

4.7

 

 

 

1.5

 

Managed care organizations  

 

3.6

 

 

 

            4.1

 

Other  

 

0.6

 

%

 

 

            0.2

 

%

     
Home Health    
     
Medicare  

 

73.4

 

%

 

 

80.7

 

%

Managed care organizations  

 

20.5

 

 

 

18.4

 

Other  

 

6.1

 

%

 

 

0.9

 

%

(1) The average billable census in acquisitions of 1,593 for the three ended March 31, 2021, was reclassified to average billable census - same stores for comparability purposes. Exited sites would have reduced same store census for the three months ended March 31, 2021 by 43.
 
(2) Management has suspended materially all of its new patient admissions under the New York consumer self-directed program and therefore excludes associated revenues from the calculation. American Rescue Plan Act of 2021 ("ARPA") funds received have also been excluded from the calculation.

 

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 March 31,
   

2022

 

2021

Reconciliation of Adjusted EBITDA to Net Income: (2)      
       
Net income  

 $

         8,470

 

 

$

         8,894

 

       
Interest expense, net  

 

           1,762

 

 

 

1,194

 

Income tax expense  

 

           3,281

 

 

 

2,082

 

Depreciation and amortization  

 

           3,521

 

 

 

3,601

 

COVID-19 expense, net  

 

                -

 

 

 

(591

)

Acquisition and de novo expenses  

 

           2,793

 

 

 

1,475

 

Stock-based compensation expense  

 

           2,485

 

 

 

2,239

 

Restructuring and other non-recurring costs  

 

                97

 

 

 

402

 

       
Adjusted EBITDA  

 $

       22,409

 

 

$

       19,296

 

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

 $

         8,470

 

 

$

         8,894

 

       
COVID-19 expense, net of tax  

 

                -

 

 

 

(479

)

Acquisition and de novo expenses, net of tax  

 

           2,013

 

 

 

1,352

 

Stock-based compensation expense, net of tax  

 

           1,791

 

 

 

1,814

 

Restructuring and other non-recurring costs, net of tax  

 

                70

 

 

 

326

 

       
Adjusted Net Income  

 

          12,344

 

 

 

11,907

 

       
       
Reconciliation of Diluted Earnings per Share to Adjusted Diluted Earnings per Share: (4)
       
Diluted earnings per share  

 $

          0.53

 

 

$

           0.55

 

     
COVID-19 expense, net per diluted share  

 

                -

 

 

 

(0.03

)

Acquisition and de novo expenses, per diluted share  

 

             0.13

 

 

 

0.08

 

Stock-based compensation expense per diluted share  

 

             0.11

 

 

 

0.12

 

Restructuring and other non-recurring costs per diluted share  

 

                -

 

 

 

0.02

 

       
Adjusted net income per diluted share   

 $

          0.77

 

 

$

           0.74

 

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

 $

     226,634

 

$

     205,302

 

 
Revenue associated with the closure of certain sites  

 

                 (0

)

 

(668

)

 
Adjusted net service revenues  

 $

     226,634

 

$

     204,634

 

       
(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, other non-operating income, taxes, depreciation, amortization, acquisition and de novo expenses, stock-based compensation expense, restructure expenses and other costs, gain or 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.
 
(3) We define Adjusted Net Income as net income before acquisition and de novo expenses, stock-based compensation expense, restructure expenses and other costs, gain or loss on the sale of assets, and retroactive rate increases from Illinois. 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 acquisition and de novo expenses, stock-based compensation expense, restructure expense and other costs, loss on the sale of assets, and retroactive rate increases from Illinois.  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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