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Addus HomeCare Announces First Quarter 2023 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, 2023.

First Quarter 2023 Highlights:

  • Revenues Grow 11.0% to $251.6 Million
  • Net Income of $12.7 Million, or $0.78 per Diluted Share
  • Adjusted Net Income per Diluted Share Increases to $0.97
  • Adjusted EBITDA Increases 16.2% to $26.0 Million
  • Cash Flow from Operations of $18.8 Million

Overview

Net service revenues were $251.6 million for the first quarter of 2023, an 11.0% increase compared with $226.6 million for the first quarter of 2022. Net income was $12.7 million for the first quarter of 2023, compared with $8.5 million for the first quarter of 2022, while net income per diluted share was $0.78 compared with $0.53 for the same period a year ago. Adjusted EBITDA increased 16.2% to $26.0 million for the first quarter of 2023 from $22.4 million for the first quarter of 2022. Adjusted net income per diluted share was $0.97 for the first quarter of 2023 compared with $0.77 for the first quarter of 2022. Adjusted net income per diluted share for the first quarter of 2023 excludes acquisition and de novo expenses of $0.06 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.)

Commenting on the results, Dirk Allison, Chairman and Chief Executive Officer, said, “We are pleased to report a great start to 2023 operating results for Addus. With solid execution, we delivered strong financial results and operating metrics for the first quarter of this year, including impressive top-line growth with overall revenues up 11.0% and adjusted EBITDA up 16.2% compared with the first quarter of 2022. We have continued to see growing awareness of the value and safety of home-based care. As an example of this recognition, our largest personal care market of Illinois recently received CMS approval for its most recent rate increase to be effective on April 1, 2023. This rate increase is in addition to the previously announced rate increase in Illinois that was effective January 1, 2023. There is sustained demand for our services, and Addus remains well-positioned to help serve this demand with a proven operating model across the continuum of home care.

“Our personal care segment delivered an 11.4% revenue increase over the first quarter last year on a same-store basis. We experienced improved volume trends compared with the prior-year quarter, which was affected by challenges related to the Omicron surge in early 2022. These results also reflect the statewide rate increase in our largest market of Illinois, which went into effect on January 1, 2023. We are very pleased with the momentum in our personal care business and our increased ability to meet the demand for our services. Our home health revenues were up 13.8% on a same-store basis over the first quarter last year, enhanced by the acquisition of Apple Home Healthcare, which we completed on October 1, 2022. We are excited about the opportunities to expand our home health operation as it complements our personal care services, particularly in select markets where we participate in value-based contracting models. As expected, we saw a modest recovery in our hospice business, which accounted for 19.5% of our revenues. On a same-store basis, hospice revenues improved 2.6%, including the impact of the October 1, 2022, annual hospice rate adjustment, but offset by the resumption of Medicare sequestration. We expect to see gradual improvement in our hospice care business, especially as we move into the second half of 2023.”

Cash and Liquidity

As of March 31, 2023, the Company had cash of $73.5 million and bank debt of $111.4 million, with capacity and availability under its revolving credit facility of $395.1 million and $275.7 million, respectively. Net cash provided by operating activities was $18.8 million for the first quarter of 2023, inclusive of a net $2.3 million in ARPA funds utilization.

Looking Ahead

Allison continued, “We have continued to strengthen our balance sheet and use our strong cash flow to repay debt. At the same time, we are focused on making the necessary investments in our business to support continued growth, including technology investments that will help drive greater efficiency in the delivery of care. We have also implemented new systems to help achieve our hiring and retention goals to support current and expected demand.

“In addition to organic growth, we will continue to assess acquisition opportunities in 2023 that align with our overall growth strategy. Importantly, we are well-capitalized to continue delivering value to our shareholders. We are pleased with the operating trends in our business and remain optimistic about our prospects for continued growth in the year ahead. We appreciate the hard work of the dedicated caregivers who represent Addus and continue to provide outstanding care to more patients and families. We look forward to the opportunities ahead for Addus in 2023 as we extend our market reach and deliver greater value for 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 and de novo 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 and de novo 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 and de novo 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, May 2, 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 May 9, 2023, by dialing (877) 344-7529 (international dial-in number is (412) 317-0088) and entering pass code 1731197.

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 203 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,

 

2023

 

 

2022

 

 
Net service revenues

$

251,599

 

$

226,634

 

Cost of service revenues

 

173,184

 

 

156,448

 

 
Gross profit

 

78,415

 

 

70,186

 

 

31.2

%

 

31.0

%

General and administrative expenses

 

56,360

 

 

53,152

 

Depreciation and amortization

 

3,447

 

 

3,521

 

Total operating expenses

 

59,807

 

 

56,673

 

 
Operating income from continuing operations

 

18,608

 

 

13,513

 

 
Total interest expense, net

 

2,355

 

 

1,762

 

 
Income before income taxes

 

16,253

 

 

11,751

 

Income tax expense

 

3,578

 

 

3,281

 

 
Net income

$

12,675

 

$

8,470

 

 
Net income per diluted share:

$

0.78

 

$

0.53

 

 
 
Weighted average number of common shares outstanding:
Diluted

 

16,297

 

 

16,079

 

 
 
Cash Flow Information:

For the Three Months Ended March 31,

 

2023

 

 

 

2022

 

 
Net cash provided by operating activities

$

18,799

 

$

5,983

 

Net cash used in investing activities

 

(1,742

)

 

(85,594

)

Net cash (used in) provided by financing activities

 

(23,475

)

 

35,479

 

 
Net change in cash

 

(6,418

)

 

(44,132

)

Cash at the beginning of the period

 

79,961

 

 

168,895

 

Cash at the end of the period

$

73,543

 

$

124,763

 

Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)

 

 

 

 

 

March 31,

 

 

2023

 

 

2022

 
Assets
 
Current assets
Cash

$

73,543

$

124,763

Accounts receivable, net

 

125,441

 

136,808

Prepaid expenses and other current assets

 

10,226

 

14,658

Total current assets

 

209,210

 

276,229

 
Property and equipment, net

 

20,248

 

19,073

 
Other assets
Goodwill

 

583,972

 

574,086

Intangible assets, net

 

70,604

 

76,300

Operating lease assets

 

47,049

 

41,523

Total other assets

 

701,625

 

691,909

 
Total assets

$

931,083

$

987,211

 
Liabilities and stockholders' equity
 
Current liabilities
Accounts payable

$

21,758

$

21,004

Accrued payroll

 

34,105

 

27,720

Accrued expenses

 

34,018

 

28,054

Operating lease liabilities, current portion

 

11,099

 

10,766

Government stimulus advance

 

10,996

 

4,173

Accrued workers compensation

 

12,683

 

12,640

Total current liabilities

 

124,659

 

104,357

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

 

108,487

 

256,127

Long-term operating lease liabilities, less current portion

 

42,994

 

39,049

Other long-term liabilities

 

6,057

 

1,900

Total long-term liabilities

 

157,538

 

297,076

 
Total liabilities

 

282,197

 

401,433

 
Total stockholders' equity

 

648,886

 

585,778

 
Total liabilities and stockholders' equity

$

931,083

$

987,211

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Net Service Revenue by Segment

(Amounts in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

For the Three Months

Ended March 31,

 

 

2023

 

 

2022

Net Service Revenues by Segment
 
Personal Care

$

190,032

$

169,632

Hospice

 

49,082

 

47,727

Home Health

 

12,485

 

9,275

Total Revenue

$

251,599

$

226,634

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Key Statistical and Financial Data (Unaudited)

 

 

 

 

 

 

For the Three Months

Ended March 31,

 

 

 

2023

 

 

 

2022

 

 

Personal Care
 
States served at period end

 

21

 

 

21

 

Locations served at period end

 

157

 

 

162

 

Average billable census - same store

 

38,218

 

 

36,582

 

Average billable census - acquisitions

 

145

 

 

-

 

Average billable census total

 

38,363

 

 

36,582

 

Billable hours (in thousands)

 

7,592

 

 

7,101

 

Average billable hours per census per month

 

65.8

 

 

64.4

 

Billable hours per business day

 

116,805

 

 

110,951

 

Revenues per billable hour

$

24.98

 

$

23.64

 

Organic growth
- Revenue (1)

 

11.4

 

%

 

0.9

 

%

 
Hospice
 
Locations served at period end

 

33

 

 

33

 

Admissions

 

3,324

 

 

3,315

 

Average daily census

 

3,195

 

 

3,320

 

Average discharge length of stay

 

87.7

 

 

84.1

 

Patient days

 

287,551

 

 

275,488

 

Revenue per patient day

$

176.22

 

$

173.24

 

Organic growth
- Revenue

 

2.6

 

%

 

4.4

 

%

- Average daily census

 

1.5

 

%

 

7.0

 

%

 
Home Health
 
Locations served at period end

 

13

 

 

12

 

New Admissions

 

3,893

 

 

3,336

 

Recertifications

 

1,549

 

 

1,316

 

Total Volume

 

5,442

 

 

4,652

 

Visits

 

77,828

 

 

65,213

 

Organic growth
- Revenue

 

13.8

 

%

 

(0.5

)

%

- New Admissions

 

(3.6

)

%

 

2.4

 

%

- Volume

 

(1.2

)

%

 

12.2

 

%

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

 

50.1

 

%

 

49.5

 

%

Managed care organizations

 

46.3

 

 

45.6

 

Private duty

 

2.2

 

 

2.7

 

Commercial

 

0.9

 

 

1.2

 

Other

 

0.5

 

%

 

1.0

 

%

 
Hospice
 
Medicare

 

90.8

 

%

 

91.1

 

%

Commercial

 

5.2

 

 

4.7

 

Managed care organizations

 

3.4

 

 

3.6

 

Other

 

0.6

 

%

 

0.6

 

%

 
Home Health
 
Medicare

 

74.3

 

%

 

73.4

 

%

Managed care organizations

 

20.3

 

 

20.5

 

Commercial

 

5.2

 

 

5.9

 

Other

 

0.2

 

%

 

0.1

 

%

(1) 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. America 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,

 

 

2023

 

 

2022

 

Reconciliation of Adjusted EBITDA to Net Income: (1)
 
Net income

$

12,675

$

8,470

 

 
Interest expense, net

 

2,355

 

1,762

 

Income tax expense

 

3,578

 

3,281

 

Depreciation and amortization

 

3,447

 

3,521

 

Acquisition and de novo expenses

 

1,247

 

2,793

 

Stock-based compensation expense

 

2,646

 

2,485

 

Restructuring and other non-recurring costs

 

95

 

97

 

 
Adjusted EBITDA

$

26,043

$

22,409

 

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

$

12,675

$

8,470

 

 
Acquisition and de novo expenses, net of tax

 

972

 

2,013

 

Stock-based compensation expense, net of tax

 

2,064

 

1,791

 

Restructuring and other non-recurring costs, net of tax

 

74

 

70

 

 
Adjusted Net Income

$

15,785

$

12,344

 

 
 
Reconciliation of Diluted Net Income per Share to Adjusted Diluted Net Income per Share: (3)
 
Diluted net income per share

$

0.78

$

0.53

 

 
Acquisition and de novo expenses, per diluted share

 

0.06

 

0.13

 

Restructuring and other non-recurring costs per diluted share

 

-

 

-

 

Stock-based compensation expense per diluted share

 

0.13

 

0.11

 

 
Adjusted net income per diluted share

$

0.97

$

0.77

 

 
Reconciliation of Net Service Revenues to Adjusted Net Service Revenues: (4)
 
Net service revenues

$

251,599

$

226,634

 

 
Revenue associated with the closure of certain sites

 

-

 

(453

)

 
Adjusted net service revenues

$

251,599

$

226,181

 

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 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.
(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 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.
(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.

 

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