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Addus HomeCare Announces Third Quarter 2023 Financial Results

Addus HomeCare Corporation (NASDAQ: ADUS), a provider of home care services, today announced its financial results for the third quarter and nine months ended September 30, 2023.

Third Quarter 2023 Highlights:

  • Net Service Revenues Grow 12.6% to $270.7 Million
  • Net Income of $15.4 Million, or $0.95 per Diluted Share
  • Adjusted Net Income per Diluted Share Increases 22.3% year-over-year to $1.15
  • Adjusted EBITDA Increases 20.0% year-over-year to $30.9 Million
  • Cash Flow from Operations of $21.8 Million

Overview

Net service revenues were $270.7 million for the third quarter of 2023, a 12.6% increase compared with $240.5 million for the third quarter of 2022. Net income was $15.4 million for the third quarter of 2023, compared with $11.5 million for the third quarter of 2022, while net income per diluted share was $0.95 compared with $0.71 for the same period a year ago. Adjusted EBITDA increased 20.0% to $30.9 million for the third quarter of 2023 from $25.7 million for the third quarter of 2022. Adjusted net income was $18.8 million for the third quarter of 2023 compared with $15.2 million for the prior-year period, while adjusted net income per diluted share was $1.15 compared with $0.94 for the third quarter of 2022. Adjusted net income per diluted share for the third quarter of 2023 excludes acquisition expenses of $0.08 and stock-based compensation expense of $0.12 (See the end of press release for a reconciliation of all non-GAAP and GAAP financial measures.)

For the first nine months of 2023, net service revenues increased 11.1% to $782.3 million from $704.1 million for the prior-year period. Net income was $42.9 million for the first nine months of 2023 compared with $31.3 million for the same period in 2022, and net income per diluted share was $2.63 compared with $1.94 per diluted share. Adjusted EBITDA increased 16.7% to $85.4 million for the first nine months of 2023 from $73.2 million for the first nine months of 2022. Adjusted net income was $52.1 million for the first nine months of 2023 compared with $42.3 million for the first nine months of 2022, while adjusted net income per diluted share was $3.20 compared with $2.63 for the prior-year period.

Commenting on the results, Dirk Allison, Chairman and Chief Executive Officer, said, “Our third quarter results reflect the continued strong momentum in our business, highlighted by revenue and adjusted EBITDA growth of 12.6% and 20.0%, respectively, when compared with the third quarter of 2022. In addition to revenues generated by our recent acquisitions, organic growth was driven by continued demand for home-based care, especially for our personal care services, which accounted for 74.6% of our revenues. We are also pleased that the overall labor environment has continued to improve, which has enhanced our ability to support our higher patient volume.

“Our personal care segment has been the key growth driver for Addus this year, as we delivered impressive 13.9% organic growth in revenue on a same-store basis over the third quarter of 2022, the highest quarterly growth rate this year. This growth has benefited from the increased demand we are seeing in our markets along with the two statewide rate increases in our largest personal care state of Illinois.

“Our third quarter results included two months of operations of Tennessee Quality Care, a provider of home health, hospice, and private duty nursing services, which we acquired August 1, 2023. We are pleased that the integration process is going well as we expand our coverage capabilities to all three levels of home-based care in Tennessee. We remain excited about the expansion opportunities in our home health operations as it complements our personal care services, especially where we participate in value-based contracting models. For our hospice business, which accounted for 19.6% of revenue for the third quarter, we were encouraged to see more positive trends return with revenues up 3.1% over the third quarter of 2022 on a same-store basis and modest improvement in average daily census and length of stay compared with the same period last year,” said Allison.

Cash and Liquidity

As of September 30, 2023, the Company had cash of $79.8 million and bank debt of $166.4 million, with capacity and availability under its revolving credit facility of $450.0 million and $275.6 million, respectively. Net cash provided by operating activities was $21.8 million for the third quarter of 2023, inclusive of a net $2.1 million in ARPA funds utilization.

Looking Ahead

Allison continued, “While we have continued to expand our business, we also have generated very strong cash flow from operations in 2023. Our leadership team has remained focused on paying down debt and strengthening our balance sheet to ensure we are well-capitalized to make strategic investments in our business. We will continue to pursue acquisitions similar to Tennessee Quality Care and other strategic acquisitions that are accretive to our business and meet our goal of adding valuable clinical assets to our non-clinical operations. Consistent with our historical approach to M&A, we are being selective in identifying and pursuing acquisition opportunities, allowing us to gain more clarity on pending regulatory changes and other market dynamics.

“We are proud of the work we are doing to meet the expanding need for home-based care, which is one of the safest and most cost-effective care delivery models. We recognize that both our past and future success are due to our caregivers who work hard every day to provide outstanding care and support to more patients and families. I am grateful for our dedicated team of caregivers who provide this safe, high-quality care in the preferred home setting,” 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, October 31, 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 November 7, 2023, by dialing (877) 344-7529 (international dial-in number is (412) 317-0088) and entering pass code 7533538.

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 over 49,000 consumers through 220 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 September 30,

 

For the Nine Months

Ended September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 
Net service revenues

$

270,721

 

$

240,495

 

$

782,300

 

$

704,070

 

Cost of service revenues

 

183,991

 

 

165,310

 

 

534,837

 

 

483,100

 

 
Gross profit

 

86,730

 

 

75,185

 

 

247,463

 

 

220,970

 

 

32.0

%

 

31.3

%

 

31.6

%

 

31.4

%

General and administrative expenses

 

60,271

 

 

54,228

 

 

174,028

 

 

162,476

 

Depreciation and amortization

 

3,620

 

 

3,441

 

 

10,449

 

 

10,571

 

Total operating expenses

 

63,891

 

 

57,669

 

 

184,477

 

 

173,047

 

 
Operating income

 

22,839

 

 

17,516

 

 

62,986

 

 

47,923

 

 
Total interest expense, net

 

2,619

 

 

2,389

 

 

7,014

 

 

6,029

 

 
Income before income taxes

 

20,220

 

 

15,127

 

 

55,972

 

 

41,894

 

Income tax expense

 

4,809

 

 

3,584

 

 

13,034

 

 

10,631

 

 
Net income

$

15,411

 

$

11,543

 

$

42,938

 

$

31,263

 

 
Net income per diluted share:

$

0.95

 

$

0.71

 

$

2.63

 

$

1.94

 

 
 
Weighted average number of common shares outstanding:
Diluted

 

16,283

 

 

16,184

 

 

16,304

 

 

16,146

 

 
 
 
 
Cash Flow Information:

For the Three Months

Ended September 30,

 

For the Nine Months

Ended September 30,

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 
Net cash provided by operating activities

$

21,785

 

$

18,316

 

$

82,198

 

$

80,818

 

Net cash (used in) investing activities

 

(111,223

)

 

(1,326

)

 

(113,934

)

 

(87,354

)

Net cash provided by (used in) financing activities

 

85,000

 

 

(32,263

)

 

31,525

 

 

(56,715

)

 
Net change in cash

 

(4,438

)

 

(15,273

)

 

(211

)

 

(63,251

)

Cash at the beginning of the period

 

84,188

 

 

120,917

 

 

79,961

 

 

168,895

 

Cash at the end of the period

$

79,750

 

$

105,644

 

$

79,750

 

$

105,644

 

 

ADDUS HOMECARE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Amounts in thousands)

(Unaudited)

 
 
 

September 30,

 

2023

 

 

2022

 
Assets
 
Current assets
Cash

$

79,750

$

105,644

Accounts receivable, net

 

121,112

 

126,253

Prepaid expenses and other current assets

 

10,387

 

8,245

 
Total current assets

 

211,249

 

240,142

 
Property and equipment, net

 

20,516

 

17,428

 
Other assets
Goodwill

 

662,981

 

575,205

Intangible assets, net

 

93,799

 

72,655

Operating lease assets

 

47,183

 

40,503

Total other assets

 

803,963

 

688,363

 
Total assets

$

1,035,728

$

945,933

 
Liabilities and stockholders' equity
 
Current liabilities
Accounts payable

$

21,375

$

19,545

Accrued payroll

 

51,774

 

35,084

Accrued expenses

 

34,952

 

28,691

Operating lease liabilities - current portion

 

11,434

 

10,866

Government stimulus advance

 

7,836

 

21,158

Accrued workers compensation

 

12,268

 

12,844

Total current liabilities

 

139,639

 

128,188

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

 

163,917

 

163,557

Long-term lease liability, less current portion

 

41,632

 

37,168

Other long-term liabilities

 

6,206

 

2,183

Total long-term liabilities

 

211,755

 

202,908

 
Total liabilities

 

351,394

 

331,096

 
Total stockholders' equity

 

684,334

 

614,837

 
Total liabilities and stockholders' equity

$

1,035,728

$

945,933

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

For the Three Months

Ended September 30,

 

For the Nine Months

Ended September 30,

 

2023

 

 

2022

 

 

2023

 

 

2022

Net Service Revenues by Segment
 
Personal Care

$

201,882

$

179,180

$

590,227

$

523,142

Hospice

 

53,121

 

51,359

 

152,414

 

151,160

Home Health

 

15,718

 

9,956

 

39,659

 

29,768

Total Revenue

$

270,721

$

240,495

$

782,300

$

704,070

 
ADDUS HOMECARE CORPORATION AND SUBSIDIARIES
Key Statistical and Financial Data (Unaudited)
 

For the Three Months

Ended September 30,

 

For the Nine Months

Ended September 30,

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 
 
Personal Care
 
States served at period end

 

-

 

 

-

 

 

21

 

 

21

 

Locations at period end

 

-

 

 

-

 

 

156

 

 

161

 

Average billable census - same store (1)

 

38,504

 

 

37,677

 

 

38,575

 

 

37,253

 

Average billable census - acquisitions

 

86

 

 

-

 

 

93

 

 

-

 

Average billable census total

 

38,590

 

 

37,677

 

 

38,668

 

 

37,253

 

Billable hours (in thousands)

 

7,690

 

 

7,473

 

 

22,964

 

 

21,947

 

Average billable hours per census per month

 

66.3

 

 

65.9

 

 

65.8

 

 

65.2

 

Billable hours per business day

 

118,314

 

 

113,229

 

 

117,765

 

 

112,547

 

Revenues per billable hour

$

26.18

 

$

23.92

 

$

25.58

 

$

23.71

 

Organic growth
- Revenue

 

13.9

%

 

7.0

%

 

12.5

%

 

3.5

%

 
Hospice
 
Locations served at period end

 

-

 

 

-

 

 

40

 

 

33

 

Admissions

 

3,176

 

 

3,182

 

 

9,576

 

 

9,778

 

Average daily census (2)

 

3,453

 

 

3,280

 

 

3,426

 

 

3,304

 

Average discharge length of stay

 

97.5

 

 

92.7

 

 

93.2

 

 

86.8

 

Patient days

 

311,454

 

 

301,797

 

 

892,507

 

 

880,574

 

Revenue per patient day

$

175.19

 

$

170.18

 

$

175.23

 

$

171.66

 

Organic growth
- Revenue

 

3.1

%

 

0.1

%

 

1.5

%

 

1.6

%

- Average daily census

 

(0.9

)%

 

2.2

%

 

0.8

%

 

5.0

%

 
Home Health
 
Locations served at period end

 

-

 

 

-

 

 

24

 

 

12

 

New Admissions

 

4,265

 

 

3,684

 

 

11,597

 

 

10,371

 

Recertifications

 

2,672

 

 

1,482

 

 

5,816

 

 

42,007

 

Total Volume

 

6,937

 

 

5,166

 

 

17,413

 

 

14,578

 

Visits

 

94,637

 

 

71,670

 

 

240,758

 

 

205,335

 

Organic growth
- Revenue

 

(8.8

)%

 

0.2

%

 

(2.5

)%

 

(1.2

)%

- New admissions

 

(18.9

)%

 

18.6

%

 

(13.5

)%

 

15.7

%

- Volume

 

(14.3

)%

 

15.1

%

 

(9.3

)%

 

16.0

%

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

 

50.4

%

 

49.4

%

 

50.4

%

 

49.4

%

Managed care organizations

 

46.4

 

 

46.4

 

 

46.2

 

 

46.1

 

Private duty

 

2.0

 

 

2.6

 

 

2.1

 

 

2.6

 

Commercial

 

0.8

 

 

1.0

 

 

0.8

 

 

1.1

 

Other

 

0.4

%

 

0.6

%

 

0.5

%

 

0.8

%

 
Hospice
 
Medicare

 

89.1

%

 

90.6

%

 

90.2

%

 

90.8

%

Commercial

 

6.8

 

 

5.4

 

 

5.8

 

 

5.1

 

Managed care organizations

 

3.4

 

 

3.5

 

 

3.3

 

 

3.6

 

Other

 

0.7

%

 

0.5

%

 

0.7

%

 

0.5

%

 
Home Health
 
Medicare

 

72.1

%

 

73.5

%

 

73.9

%

 

73.0

%

Managed care organizations

 

21.9

 

 

20.1

 

 

20.8

 

 

20.7

 

Commercial

 

4.2

 

 

6.2

 

 

4.3

 

 

6.1

 

Other

 

1.8

%

 

0.2

%

 

1.0

%

 

0.2

%

 
(1) Exited sites would have reduced same store census for the three and nine months ended September 30, 2022, by 40 and 43, respectively.
(2) Exited sites would have reduced average daily census for the three and nine months ended September 30, 2022, by 11 and 34, respectively.
 

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 September 30,

 

For the Nine Months

Ended September 30,

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

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

$

15,411

 

$

11,543

 

$

42,938

 

$

31,263

 

 
Interest expense, net

 

2,619

 

 

2,389

 

 

7,014

 

 

6,029

 

(Gain) Loss on sale of assets

 

(1

)

 

(25

)

 

(5

)

 

(27

)

Income tax expense

 

4,809

 

 

3,584

 

 

13,034

 

 

10,631

 

Depreciation and amortization

 

3,620

 

 

3,441

 

 

10,449

 

 

10,571

 

Impact of retroactive New York rate increase

 

-

 

 

-

 

 

(868

)

 

-

 

Acquisition expenses

 

1,763

 

 

1,878

 

 

4,792

 

 

6,502

 

Stock-based compensation expense

 

2,572

 

 

2,780

 

 

7,831

 

 

7,945

 

Restructure and other non-recurring costs

 

72

 

 

132

 

 

242

 

 

318

 

Adjusted EBITDA

$

30,865

 

$

25,722

 

$

85,427

 

$

73,232

 

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

$

15,411

 

$

11,543

 

$

42,938

 

$

31,263

 

 
(Gain) Loss on sale of assets, net of tax

 

(1

)

 

(18

)

 

(4

)

 

(20

)

Impact of retroactive New York rate increase, net of tax

 

-

 

 

-

 

 

(666

)

 

-

 

Acquisition expenses, net of tax

 

1,344

 

 

1,444

 

 

3,676

 

 

4,852

 

Stock-based compensation expense, net of tax

 

1,960

 

 

2,124

 

 

6,007

 

 

5,928

 

Restructure and other non-recurring costs, net of tax

 

55

 

 

101

 

 

186

 

 

237

 

 
Adjusted Net Income

$

18,769

 

$

15,194

 

$

52,137

 

$

42,260

 

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

$

0.95

 

$

0.71

 

$

2.63

 

$

1.94

 

 
Impact of retroactive New York rate increase per diluted share

 

-

 

 

-

 

 

(0.04

)

 

-

 

Acquisition expenses per diluted share

 

0.08

 

 

0.08

 

 

0.23

 

 

0.30

 

Restructure and other non-recurring costs per diluted share

 

-

 

 

0.01

 

 

0.01

 

 

0.01

 

Stock-based compensation expense per diluted share

 

0.12

 

 

0.14

 

 

0.37

 

 

0.38

 

 
Adjusted net income per diluted share

$

1.15

 

$

0.94

 

$

3.20

 

$

2.63

 

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

$

270,721

 

$

240,495

 

$

782,300

 

$

704,070

 

 
Revenues associated with the closure of certain sites

 

(325

)

 

(666

)

 

(1,563

)

 

(3,134

)

 
Adjusted net service revenues

$

270,396

 

$

239,829

 

$

780,737

 

$

700,936

 

 
Footnotes:
(1) We define Adjusted EBITDA as earnings before interest expense, other non-operating income, taxes, depreciation, amortization, acquisition 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 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 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.

 

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