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PALATINE, IL, Nov. 4, 2010 /PRNewswire-FirstCall/ --
Third Quarter Financial Highlights
Addus HomeCare Corporation (Nasdaq: ADUS), a comprehensive provider of home-based social and medical services, announced today its financial results for the three and nine months ended September 30, 2010.
Mark Heaney, President and Chief Executive Officer of Addus HomeCare, stated, “We are disappointed with our performance in the third quarter. While our largest division, Home & Community, performed well, our Home Health business was well below our expectations. However, we expect that Home Health will become a growing contributor due to the investments we’ve made.
“We remain focused on the Company’s accounts receivable collections and continue to make progress. In addition, the CarePro acquisition is proceeding smoothly and the business is performing in line with our expectations,” Heaney added.
Third Quarter Review
Total net service revenues for the quarter ended September 30, 2010 were $69.8 million, a 4.5% increase compared to $66.8 million in the prior year quarter. The acquisition of Advantage Health Systems, which we refer to as CarePro, contributed approximately $2.5 million in revenues in the third quarter.
Third quarter 2010 net income of $1.5 million, or $0.14 per diluted share, including $0.01 per share in acquisition related expenses, was based on 10.7 million diluted shares outstanding. This compares to net income after preferred stock dividends of $0.9 million, or $0.40 per diluted share based on 5.2 million diluted shares outstanding, in the prior year period. Net income in the third quarter of 2009 before preferred stock dividends was $2.1 million.
Adjusted earnings before interest, taxes, depreciation, amortization, and stock-based compensation (“Adjusted EBITDA”) for the third quarter of 2010 was $3.9 million, compared to $5.4 million in the prior year quarter. Contributing to the decrease in adjusted EBITDA in the current quarter was a decrease of $1.0 million in the Home Health segment due principally to lower starts of care in Integrated Services, $0.4 million in pre-tax separation costs related to the resignation of the Company’s CFO and executive recruitment costs, and $0.2 million in pre-tax class action litigation costs. Additionally, the Company recorded a pre-tax reduction in management bonuses of approximately $1.0 million in the third quarter of 2010.
Home & Community segment net service revenues for the third quarter of 2010 were $57.3 million, a 6.4% increase compared to $53.9 million in the prior year quarter. The total segment revenue growth of $3.4 million came from a 2.5% organic growth rate plus $2.0 million from CarePro operations. Organic revenue growth was driven by the Illinois rate increase and ongoing sales efforts.
Home & Community gross profit margin increased to 25.3% in the third quarter of 2010, compared to 24.9% in the third quarter of 2009. Home & Community operating income, including depreciation and amortization but excluding corporate expenses, was $5.9 million, or 10.3% of revenue, compared to $5.4 million, or 10.1% of revenue, in the prior year quarter.
Home Health segment net service revenues for the third quarter of 2010 were $12.5 million, a 3.0% decrease compared to $12.9 million in the prior year quarter. Home Health segment revenues include approximately $0.5 million from CarePro operations. The decrease in revenues was largely the result of lower starts of care in Integrated Services.
Home Health gross profit margin was 45.0% in the third quarter of 2010, compared to 48.2% in the prior year period. Home Health operating income, including depreciation and amortization but excluding corporate expenses, was $1.1 million, or 8.5% of revenues, compared to $2.1 million, or 15.9% of revenues, in the prior year quarter. The decline in Home Health operating income was primarily due to lower starts of care in the Integrated Services program, a slight increase in visits per episode and investments related to the expansion of the sales force.
Nine Month Review
Total net service revenues for the nine months ended September 30, 2010 were $201.6 million, a 4.1% increase compared to $193.6 million in the prior year period. The acquisition of CarePro contributed approximately $2.5 million in revenues.
Net income for the nine months ended September 30, 2010 of $4.5 million, or $0.43 per diluted share, including $0.02 per share in acquisition related expenses, was based on 10.6 million diluted shares outstanding. This compares to net income after preferred stock dividends of $1.9 million, or $1.04 per diluted share based on 5.2 million diluted shares outstanding, for the nine months ended September 30, 2009. Net income for the first nine months of 2009 before preferred stock dividends was $5.4 million.
Adjusted EBITDA for the nine months ended September 30, 2010 was $11.9 million, compared to $14.9 million in the prior year period.
Home & Community segment net service revenues for the first nine months of 2010 were $164.2 million, a 5.0% increase compared to $156.4 million in the prior year period. The total segment revenue growth of $7.8 million was attributable to a 3.7% organic growth rate plus $2.0 million in revenue from CarePro operations.
Home & Community operating income, including depreciation and amortization but excluding corporate expenses, was $16.9 million, compared to $15.8 million in the prior year period.
Home Health segment net service revenues for the nine months ended September 30, 2010 were $37.5 million, a 0.6% increase compared to $37.2 million in the prior year period. Home Health segment revenues include approximately $0.5 million attributable to CarePro operations.
Home Health operating income, including depreciation and amortization but excluding corporate expenses, was $3.8 million, compared to $5.6 million in the prior year period.
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 2010 third quarter and nine months financial results after the market close on Thursday, November 4, 2010. Management will conduct a conference call to discuss its results at 5 p.m. Eastern time on November 4, 2010. The toll-free number is (866) 314-9013 (international callers should call 617-213-8053), with the passcode: 15474536. A telephonic replay of the conference call will be available through midnight on November 11, 2010, by dialing (888) 286-8010 (international callers should call 617-801-6888) and entering the passcode 70303689.
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 AddusAddus 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, the Veterans Health Administration, commercial insurers and private individuals.
Forward-Looking StatementsCertain 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 Prospectus, filed with the Securities and Exchange Commission on October 29, 2009, in Addus HomeCare’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 29, 2010, and in Addus HomeCare’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 10, 2010, 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 SUBSIDIARIESCondensed Consolidated Statements of Income(amounts and shares in thousands, except per share data)(Unaudited)For the Three Months Ended September 30,For the Nine Months Ended September 30,2010200920102009Net service revenues
$ 69,842$ 66,803$ 201,612$ 193,608Cost of service revenues
49,71047,148142,924136,588Gross profit
20,13219,65558,68857,020General and administrative expenses
16,27714,37546,97242,358Depreciation and amortization
1,0581,2342,9553,678Total operating expenses
17,33515,60949,92746,036Operating income
2,7974,0468,76110,984Interest expense, net
8551,0212,3233,189Income from operations before taxes
1,9423,0256,4387,795Income tax expense
4639351,9472,409Net income
1,4792,0904,4915,386Less: Preferred stock dividends
-(1,157)-(3,441)Net income attributable to common shareholders
$ 1,479$
933$
4,491$
,945Income per common share:Basic
$
.14$
.92$
.43$
.91Diluted
$
.14$
.40$
.43$
.04Weighted average number of common shares outstanding:Basic
10,6811,01910,5611,019Diluted
10,6815,16210,5615,167Condensed Consolidated Balance Sheets(Amounts in thousands)(Unaudited)September 30, 2010December 31, 2009AssetsCurrent assetsCash
$
2$
518Accounts receivable, net
75,71270,491Prepaid expenses and other current assets
8,7196,937Deferred tax assets
6,4595,700Income taxes receivable
93732Total current assets
91,59584,378Property and equipment, net
3,1513,133Other assetsGoodwill
63,70259,482Intangible assets, net
14,42313,082Deferred tax assets
64509Other assets
764731Total other assets
78,95373,804Total assets
$
73,699$
,315Liabilities and stockholders' equityCurrent liabilitiesAccounts payable
$
4,600$
3,763Accrued expenses
28,87125,557Current maturities of long-term debt
6,3697,388Deferred revenue
2,1082,189Total current liabilities
41,94838,897Long-term debt, less current maturities
44,15241,851Other long-term liabilities
1,103-Total stockholders' equity
86,49680,567Total liabilities and stockholders' equity
$
73,699$
,315ADDUS HOMECARE CORPORATION AND SUBSIDIARIESCondensed Consolidated Statements of Cash Flows(Amounts in thousands) (Unaudited)For the Nine Months EndedSeptember 30, 2010September 30, 2009Net Income
$
4,491$
5,386Adjustments to reconcile net income to net cash provided by operating activitiesDepreciation and amortization
2,9553,678Deferred income taxes
-(249)Change in fair value of financial instrument
(191)(395)Stock-based compensation
197212Amortization of debt issuance costs
118530Provision for doubtful accounts
3,1582,097Changes in operating assets and liabilities:Accounts receivable
(8,379)(15,366)Prepaid expenses and other assets
(1,782)(1,830)Accounts payable
837862Accrued expenses
3,4267,038Deferred revenue
(81)(304)Income taxes
32593Net cash provided by operating activities
5,0741,752Acquisitions of businesses, net of acquired cash
(5,587)(1,717)Purchases of property and equipment
(524)(356)Net cash used in investing activities
(6,111)(2,073)Payments on term-loan
-(4,987)Net borrowings (repayments) on revolving credit loan
-306Net borrowings (repayments) on new term loan
5,000Net borrowings (repayments) on new credit facility
(2,500)-Payments on dividend notes
(750)-Net borrowings (repayments) on other notes
(468)1,509Debt issuance costs
(151)-Net cash provided by (used in) financing activities
1,131(3,172)Net change in cash
94(3,493)Cash at the beginning of period
5186,113Cash at the end of the period
$
2$
2,620Segment Information (Unaudited)For the Three Months Ended September 30, 2010Home & CommunityHome HealthCorporateTotalNet service revenues
$
57,311$
2,531$
-$ 69,842Cost of service revenues
42,8126,898-49,710Gross profit
14,4995,633-20,132General and administrative expenses
7,8714,4153,99116,277Depreciation and amortization
7121581881,058Total operating expenses
8,5834,5734,17917,335Operating income
$
5,916$
,060$
(4,179)$
2,797For the Three Months Ended September 30, 2009Home & CommunityHome HealthCorporateTotalNet service revenues
$
53,886$
2,917$
-$ 66,803Cost of service revenues
40,4596,689-47,148Gross profit
13,4276,228-19,655General and administrative expenses
7,1493,9903,23614,375Depreciation and amortization
8441882021,234Total operating expenses
7,9934,1783,43815,609Operating income
$
5,434$
2,050$
(3,438)$
4,046For the Nine Months Ended September 30, 2010Home & CommunityHome HealthCorporateTotalNet service revenues
$
4,156$
37,456$
-$ 201,612Cost of service revenues
122,53620,388-142,924Gross profit
41,62017,068-58,688General and administrative expenses
22,77412,83511,36346,972Depreciation and amortization
1,9474795292,955Total operating expenses
24,72113,31411,89249,927Operating income
$
,899$
3,754$ (11,892)$
8,761For the Nine Months Ended September 30, 2009Home & CommunityHome HealthCorporateTotalNet service revenues
$
56,387$
37,221$
-$ 193,608Cost of service revenues
117,07919,509-136,588Gross profit
39,30817,712-57,020General and administrative expenses
21,02211,5389,79842,358Depreciation and amortization
2,5115815863,678Total operating expenses
23,53312,11910,38446,036Operating income
$
5,775$
5,593$ (10,384)$ 10,984Key Statistical and Financial Data (Unaudited)For the Three Months
Ended September 30,For the Nine Months
Ended September 30,2010200920102009General:Adjusted EBITDA (in thousands) (1)
$ 3,924$ 5,350$ 11,913$ 14,874States served at period end1916Locations at period end134120Employees at period end13,86112,567Home & CommunityAverage weekly census
21,33520,23620,72520,176Billable hours (in thousands)
3,3713,2489,7959,600Billable hours per business day
51,86750,75051,01750,262Revenues per billable hour
$ 17.00$ 16.59$ 16.76$ 16.29Home HealthAverage weekly census:Medicare
1,4341,4511,4851,439Non-Medicare
1,5041,5791,5231,550Medicare admissions (2)
1,9601,9956,1905,797Medicare revenues per episode completed
$ 2,646$ 2,514$ 2,587$ 2,517Percentage of Revenues by Payor:State, local or other governmental
81%81%80%82%Medicare
11%12%12%12%Other
8%7%8%6%(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. Adjusted EBITDA (1) (Unaudited)
For the Three Months
Ended September 30,For the Nine Months
Ended September 30,2010200920102009Reconciliation of Adjusted EBITDA to Net Income:Net income
$ 1,479$ 2,090$ 4,491$ 5,386Net interest expense
8551,0212,3233,189Income tax expense
4639351,9472,409Depreciation and amortization
1,0581,2342,9553,678Stock-based compensation expense
6970197212Adjusted EBITDA
$ 3,924$ 5,350$ 11,913$ 14,874(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.
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