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Addus HomeCare Reports Third Quarter 2013 Results and Two Definitive Acquisition Agreements



     Addus HomeCare Reports Third Quarter 2013 Results and Two Definitive
                            Acquisition Agreements

Third Quarter Financial Highlights

- Total net service revenues were $67.3 million

- Net income from continuing operations of $2.8 million, or $0.25 per diluted
share

PR Newswire

PALATINE, Ill., Nov. 7, 2013

PALATINE, Ill., Nov. 7, 2013 /PRNewswire/ -- Addus HomeCare Corporation
(Nasdaq: ADUS), a comprehensive provider of home and community based services,
primarily social in nature and provided in the home, and focused on the dual
eligible population, announced today its financial results for the third
quarter ended September 30, 2013 and the signing of two definitive acquisition
agreements.

Mark Heaney, President and Chief Executive Officer of Addus HomeCare, stated:
"We are pleased by the continued steady performance of our business including
our growth in organic sales for which I especially want to acknowledge our
Agency Directors who drive top line growth.  In addition, we are excited to
announce that we have entered into two definitive acquisition agreements which
further position Addus to capitalize on the opportunities presented by managed
care and the dual eligible demonstration projects."

"The two acquisition agreements announced today will further expand our
footprint in existing states and provide opportunities for us to grow in two
new states.  Our purchase of the Medi Home Private Care Division from Medical
Services of America further solidifies our presence in South Carolina and adds
an initial presence in two very important managed care states, Tennessee and
Ohio.  The purchase of the assets of Coordinated Home Health Care in New
Mexico will increase Addus' presence in that state, which is well along in its
transition to managed care.  We are looking forward to employees of Medical
Services of America and Coordinated Home Health Care joining the Addus team,"
continued Heaney.

Third Quarter Review

Total net service revenues for the third quarter of 2013 were $67.3 million, a
10.0% increase compared to $61.2 million in the prior year quarter
attributable to a 12.1% increase in average census in the quarter and a slight
decline in average billable hours per client. Net income from continuing
operations for the third quarter was $2.8 million, or $0.25 per diluted share,
a 25.7% increase when compared to $2.2 million, or $0.20 per diluted share, in
the prior year quarter. Net income, including a loss from discontinued
operations, was $2.6 million, or $0.23 per diluted share.

Gross profit increased to $17.2 million or 9.8% year over year. Gross profit
margin was stable at 25.6% of revenues. Operating income from continuing
operations increased 10.2% to $4.3 million, or 6.3% of revenue, compared to
$3.9 million, or 6.3% of revenue, in the prior year quarter. General and
administrative expenses increased $1.2 million over 2012 levels, reflecting
increased costs related to the deployment of telephony throughout Illinois in
response to the July 1st mandate from the State, Sarbanes-Oxley Act Section
404 compliance efforts and legal and consulting expenses related to our M & A
activities. We anticipate our general and administrative expenses will remain
at these higher levels for the foreseeable future as we continue with the
implementation of our new care system across our company, expand our Section
404 compliance activities and continue considering attractive acquisition
targets.

The Company received approximately $183,000 in prompt payment interest in the
quarter from the State of Illinois for late payments received in the State's
fiscal year ended June 30, 2013.  This income is recorded as a reduction to
our interest expense. Income taxes were positively affected in the quarter by
an increase in our ability to capture Work Opportunity Tax Credits, reducing
our effective tax rate by 1.0% when compared to the prior year quarter.

Cash flow for the quarter was a negative $9.3 million, primarily the result of
lower collections from the State of Illinois after having received a $21
million one-time payment from the State at the end of June.

Nine Month Review

Total net service revenues for the nine months ended September 30, 2013 were
$196.1 million, an 8.6% increase compared to $180.5 million for the same prior
year period. Net income from continuing operations for the nine months ended
September 30, 2013 increased 39.0% to $8.0 million, or $0.73 per diluted
share, compared to $5.8 million, or $0.54 per diluted share, in the prior year
period. Net income, including the loss from discontinued operations and the
gain from the sale of the home health business was $18.3 million, or $1.66 per
diluted share.

Operating income, including depreciation and amortization, but excluding
interest and income tax expenses, increased 21.0% to $12.0 million, or 6.1% of
revenue, for the nine months ended September 30, 2013.  This compares to $9.9
million or 5.5% of revenue in 2012, after adjusting operating income for the
benefit of a $0.5 million gain on a sale of an agency.

Two Definitive Acquisition Agreements

The Company entered into an asset purchase agreement to acquire all of the
Private Duty operations of the Medi Home Private Care Division of Medical
Services of America, Inc. on October 17, 2013.  The acquisition includes two
agencies located in South Carolina; four agencies located in Tennessee; and
two agencies located in Ohio. The South Carolina business will be incorporated
into the Company's existing operations in that state. The operations in Ohio
and Tennessee represent the Company's initial entry into these two targeted
states, as these states transition their long term care programs to managed
care and their dual eligible demonstration pilots.

The asset purchase agreement provides for separate closings with respect to
the operations in each state.  The closing related to the agencies in South
Carolina took place effective November 1, 2013.

The Company also entered into an asset purchase agreement to acquire assets
from Coordinated Home Health Care, LLC related to its personal care business
in New Mexico on November 7, 2013.  This acquisition includes sixteen offices
located in Southern New Mexico and further expands the Company's presence in
that State. New Mexico has led other States in the transition of its long term
care services to managed care.

The two acquisitions represent approximately $20 to $22 million in aggregate
projected annual revenues for the twelve month period ending December 31,
2013.  These transactions are expected to close in the fourth quarter and are
subject to customary closing conditions.  There can be no assurance that
either or both of these transactions will be completed.  

Shelf Registration

The Company filed a universal shelf registration statement on Form S-3 with
the Securities and Exchange Commission on November 7, 2013.  Upon being
declared effective, the shelf registration statement will provide the Company
with the flexibility to offer and sell up to $150 million of common stock,
preferred stock, warrants and units in one or more offerings and in any
combination.  In addition, the shelf registration statement covers up to
4,951,773 shares of the Company's common stock held by certain existing
stockholders in accordance with the requirements of contractual agreements
previously entered into with these stockholders.  The Company will not receive
any proceeds from potential sales of the common stock by these stockholders. 

The Company currently has no specific plans to issue securities under the new
shelf registration statement.  Any offer of securities covered by the shelf
registration statement may be made solely by means of the prospectus included
in the shelf registration statement and a related prospectus supplement
containing specific information about the terms of any such offering.

This press release is neither an offer to sell nor a solicitation of any offer
to buy, nor shall there be any sale of these securities in any state or
jurisdiction in which such an offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any such
state or jurisdiction.

Non-GAAP Financial Measures

The information provided in this release includes Adjusted EBITDA, a non-GAAP
financial measure, which the Company defines as earnings before discontinued
operations, interest expense, taxes, depreciation, amortization, 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 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 report its 2013 third quarter financial results after the market
close on Thursday, November 7, 2013. Management will conduct a conference call
to discuss its results at 5 p.m. Eastern time on November 7, 2013. The
toll-free dial-in number is (877) 474-9502 (international dial-in number is
857-244-7555), with the passcode: 84764667. A telephonic replay of the
conference call will be available through midnight on November 14, 2013, by
dialing (888) 286-8010 (international dial-in number is 617-801-6888) and
entering the passcode 42698671.

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 home and community based services,
primarily social in nature and provided in the home, and focused on the dual
eligible population. Addus' services include personal care and assistance with
activities of daily living, and adult day care. Addus' consumers are
individuals 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.  For more information, please visit www.addus.com.

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, the
anticipated financial impact of possible transactions, 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 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, 2013 and in Addus HomeCare's
Quarterly Reports on Form 10-Q, filed with the Securities and Exchange
Commission on May 2, 2013 and August 1, 2013, 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).

Investor Contact:
Dennis Meulemans
Chief Financial Officer
Phone: (847) 303-5300
Email: DMeulemans@addus.com

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income and Cash Flow Information
(amounts and shares in thousands, except per share data)
(Unaudited)
Income Statement         For the Three Months Ended  For the Nine Months Ended
Information:             September 30,               September 30,
                         2013           2012         2013          2012
Net service revenues     $  67,306      $  61,211    $  196,059    $  180,540
Cost of service revenues 50,080         45,528       146,422       134,026
Gross profit             17,226         15,683       49,637        46,514
                         25.6%          25.6%        25.3%         25.8%
General and              12,424         11,181       36,026        34,710
administrative expenses
Gain on sale of agency   -              -            -             (495)
Depreciation and         539            635          1,626         1,897
amortization
Total operating expenses 12,963         11,816       37,652        36,112
Operating income from    4,263          3,867        11,985        10,402
continuing operations
Total interest expense   (24)           407          326           1,237
(income), net
Income from continuing   4,287          3,460        11,659        9,165
operations before taxes
Income tax expense       1,517          1,256        3,620         3,380
Net income from          2,770          2,204        8,039         5,785
continuing operations
Discontinued operations:
    Loss from home
health business, net of  (203)          (407)        (890)         (1,895)
tax
    Gain on sale of 
home health business,    -              -            11,111        -
net of tax
Earnings (losses) from   (203)          (407)        10,221        (1,895)
discontinued operations
Net income               $   2,567      $   1,797    $   18,260    $     3,890
Net income (loss) per
share:
    Basic
         Continuing      $     0.26     $     0.20   $             $      
operations                                           0.75          0.54
         Discontinued    (0.02)         (0.04)       0.95          (0.18)
operations
    Basic income per     $     0.24     $     0.16   $             $      
share                                                1.70          0.36
    Diluted
         Continuing      $     0.25     $     0.20   $             $      
operations                                           0.73          0.54
         Discontinued    (0.02)         (0.04)       0.93          (0.18)
operations
    Diluted income per   $     0.23     $     0.16   $             $      
share                                                1.66          0.36
Weighted average number
of common shares
outstanding:
     Basic               10,787         10,761       10,783        10,761
     Diluted             11,071         10,773       11,006        10,764
Cash Flow Information:   For the Three Months Ended  For the Nine Months Ended
                         September 30,               September 30,
                         2013           2012         2013          2012
Net cash provided by
(used in) operating      $  (9,143)     $   3,604    $   25,103    $     9,336
activities
Net cash provided by
(used in) investing      (170)          (259)        19,082        (518)
activities
Net cash used in         -              (3,125)      (16,458)      (9,125)
financing activities
Net change in cash       (9,313)        220          27,727        (307)
Cash at the beginning of 38,777         1,493        1,737         2,020
the period
Cash at the end of the   $  29,464      $   1,713    $   29,464    $     1,713
period

 

Condensed Consolidated Balance Sheets
(Amounts in thousands)
                                September 30, 2013         December 31, 2012
                                (Unaudited)
Assets
Current assets
Cash                            $                  29,464  $                  
                                                           1,737
Accounts receivable, net        54,516                     71,303
Prepaid expenses and other      6,167                      7,293
current assets
Assets held for sale            -                          245
Deferred tax assets             7,258                      7,258
Total current assets            97,405                     87,836
Property and equipment, net     2,471                      2,489
Other assets
Goodwill                        50,416                     50,536
Intangible assets, net          5,352                      6,370
Deferred tax assets             -                          2,328
Investment in joint venture     900                        -
Other assets                    173                        298
Total other assets              56,841                     59,532
Total assets                    $                156,717   $              
                                                           149,857
Liabilities and stockholders'
equity
Current liabilities
Accounts payable                $                          $                  
                                 4,379                     4,117
Accrued expenses                36,401                     32,717
Current maturities of long-term -                          208
debt
Deferred revenue                19                         2,148
Total current liabilities       40,799                     39,190
Long-term debt, less current    -                          16,250
maturities
Deferred tax liability          3,097                      -
Total stockholders' equity      112,821                    94,417
Total liabilities and           $                156,717   $              
stockholders' equity                                       149,857

 

Key Statistical and Financial Data (Unaudited)
                     For the Three Months  Ended   For the Nine Months Ended
                     September 30,                 September 30,
                     2013             2012         2013           2012
General:
Adjusted EBITDA (in  $4,951           $4,554       $13,977        $12,465
thousands) (1)
States served at                                   21             19
period end
Locations at period                                94             96
end
Employees at period                                13,660         14,528
end
Home & Community
Average billable     27,058           24,138       26,411         23,677
census
Billable hours (in   3,941            3,521        11,517         10,377
thousands)
Average billable
hours per census per 49               49           48             49
month
Billable hours per   59,735           54,169       59,107         54,298
business day
Revenues per         $17.08           $16.93       $  17.02       $  16.88
billable hour
Percentage of
Revenues by Payor:
State, local and
other govermental    94         %     95         % 94         %   95         %
programs
Commercial           2                1            2              1
Private duty         4          %     4          % 4          %   4          %

(1) We define Adjusted EBITDA as earnings before discontinued operations,
interest expense, 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. 

 

Adjusted EBITDA (1)      For the Three Months Ended  For the Nine Months Ended
(Unaudited)              September 30,               September 30,
                         2013            2012        2013            2012
Reconciliation of
Adjusted EBITDA to Net
Income:
Net income               $2,567          $1,797      $18,260         $ 3,890
Less: (Earnings) loss
from discontinued        203             407         (10,221)        1,895
operations, net of tax
Net income from          2,770           2,204       8,039           5,785
continuing operations
Interest expense         (24)            407         326             1,237
(income), net
Income tax expense from  1,517           1,256       3,620           3,380
continuing operations
Depreciation and         540             635         1,627           1,897
amortization
Stock-based compensation 148             52          365             166
expense
Adjusted EBITDA          $4,951          $4,554      $13,977         $12,465

(1) We define Adjusted EBITDA as earnings before discontinued operations,
interest expense, 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.

 

SOURCE Addus HomeCare Corporation

Website: http://www.addus.com
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