Business Wire | Nov 1, 2021 04:05PM EDT

Addus HomeCare Announces Third-Quarter 2021 Financial Results

Nov. 01, 2021

FRISCO, Texas--(BUSINESS WIRE)--Nov. 01, 2021--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, 2021.

Net service revenues increased 11.7% for the third quarter to $216.7 million from $194.0 million for the third quarter of 2020. Net income increased 27.0% to $11.6 million for the third quarter of 2021 from $9.1 million for the third quarter last year, while net income per diluted share was $0.72 compared with $0.57 for the same period a year ago. Adjusted net income per diluted share was $0.91 for the third quarter of 2021 compared with $0.76 for the third quarter of 2020.

Adjusted net income for the third quarter of 2021 excludes acquisition and de novo expenses of $0.08 and stock-based compensation expense of $0.11. Adjusted EBITDA increased 27.4% to $24.9 million for the third quarter of 2021 from $19.5 million for the third quarter of 2020. (See page 8 for a reconciliation of all non-GAAP and GAAP financial measures in this news release.)

For the first nine months of 2021, net service revenues increased 12.5% to $639.9 million from $568.8 million for the first nine months of 2020. Net income increased 29.9% to $32.1 million for the first nine months of 2021 from $24.7 million for the first nine months of last year, while net income per diluted share increased to $2.00 from $1.55. Adjusted net income per diluted share grew 15.9% to $2.62 for the first nine months of 2021 from $2.26 for the same period in 2020. Adjusted EBITDA increased 25.0% to $69.9 million for the first nine months of 2021 from $56.0 million for the first nine months of 2020.

Commenting on the results, Dirk Allison, Chairman and Chief Executive Officer, said, "We had record results in the third quarter with overall revenue growth of 11.7% over the prior-year period and improved profitability. Our personal care service line, which accounted for 78.3% of total revenue, was up 4.0% on a same store basis, which is within our target range of 3-5% organic revenue growth, and we anticipate potential improvement enhanced by upcoming scheduled rate increases. Home health had another strong quarter, up 24.8% over the third quarter last year, reflecting significantly higher volumes. As expected, we are seeing continued improvement in our hospice business with sequential growth in admissions, average daily census, and median length of stay. Overall operating trends were positive, despite pressures related to the surge in the Delta variant of COVID-19 as well as a tightening labor market, which had some effect on our growth in certain markets."

As of September 30, 2021, the Company had cash of $152.4 million and bank debt of $224.9 million, with capacity and availability under its revolving credit facility of $367.0 million and $123.8 million, respectively. Net cash provided by operating activities was $17.6 million for the third quarter of 2021.

On October 1, 2021, the Company completed its acquisition of Summit Home Health, LLC, ("Summit") based in the Chicago metro area, the Company's largest market for personal care services. Allison noted, "This acquisition is based on our strategy to add clinical services in geographic markets where we have a strong personal care presence and opportunities in value-based care. With the addition of Summit's $7.0 million in annualized revenues, we have added $30 million in annualized revenues through acquisitions to date in 2021. We remain focused on pursuing acquisitions that are accretive to our business and complement our organic growth opportunities. Our pipeline remains solid and we have the financial flexibility to pursue additional strategic acquisitions and further strengthen our competitive position."

Allison continued, "We are pleased with our results to date in 2021 and continue to benefit from a favorable environment for home-based care with strong demand trends and increased government recognition and support through state and federal funding. The pandemic has demonstrated the critical need for safe, quality, patient-centered care in the home, and Addus is well positioned to meet this demand across our operating segments. We have a proven operating model and a dedicated team of frontline caregivers and support staff who share our mission to provide essential home care services to the patients who count on Addus for safe and cost-effective care."

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. 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. 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. 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, November 2, 2021, at 9:00 a.m. Eastern time. The toll-free dial-in number is (877) 930-8289 (international dial-in number is (253) 336-8714), passcode 6998238. A telephonic replay of the conference call will be available through midnight on November 9, 2021, by dialing (855) 859?2056 (international dial-in number is (404) 537?3406) and entering pass code 6998238.

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 March 1, 2021, 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 SUBSIDIARIESCondensed Consolidated Statements of Income(amounts and shares in thousands, except per share data)(Unaudited) Income Statement For the Three Months For the Nine MonthsInformation: Ended September 30, Ended September 30, 2021 2020 2021 2020

Net service revenues $ 216,662 $ 193,987 $ 639,857 $ 568,779

Cost of service revenues 149,616 137,686 442,804 401,646

Gross profit 67,046 56,301 197,053 167,133

30.9 % 29.0 % 30.8 % 29.4 %

General and administrative 46,280 40,806 139,865 125,189 expenses(Gain) loss on sale of - (73 ) 16 281 assetsDepreciation and 3,406 3,045 10,594 8,872 amortizationTotal operating expenses 49,686 43,778 150,475 134,342

Operating income 17,360 12,523 46,578 32,791

Total interest expense, net 1,577 593 4,002 1,733

Income before income taxes 15,783 11,930 42,576 31,058

Income tax expense 4,206 2,811 10,508 6,374

Net income $ 11,577 $ 9,119 $ 32,068 $ 24,684

Net income (loss) per $ 0.72 $ 0.57 $ 2.00 $ 1.55 diluted share Weighted average number ofcommon shares outstanding:Diluted 16,030 15,957 16,060 15,934

Cash Flow Information: For the Three Months For the Nine Months Ended September 30, Ended September 30, 2021 2020 2021 2020

Net cash provided by $ 17,608 $ 22,412 $ 14,287 $ 73,299 operating activitiesNet cash (used in) investing (30,505 ) (12,542 ) (32,433 ) (17,507 )activitiesNet cash provided by 25,876 1,912 25,447 2,825 financing activities Net change in cash 12,979 11,782 7,301 58,617

Cash at the beginning of the 139,400 158,549 145,078 111,714 periodCash at the end of the $ 152,379 $ 170,331 $ 152,379 $ 170,331 period ADDUS HOMECARE CORPORATION AND SUBSIDIARIESCondensed Consolidated Balance Sheets(Amounts in thousands)(Unaudited)September 30,2021

2020

AssetsCurrent assetsCash$

152,379

$

170,331

Accounts receivable, net133,814

118,623

Prepaid expenses and other current assets13,514

10,426

Total current assets299,707

299,380

Property and equipment, net18,614

19,305

Other assetsGoodwill497,919

286,552

Intangible assets, net66,332

52,873

Deferred tax assets, net5,919

1,479

Operating lease assets36,424

35,842

Total other assets606,594

376,746

Total assets$

924,915

$

695,431

Liabilities and stockholders' equityCurrent liabilitiesAccounts payable$

23,167

$

17,270

Accrued payroll31,626

26,315

Accrued expenses35,780

26,254

Government stimulus advance7,674

7,141

Accrued workers compensation14,286

14,668

Current portion of long-term debt, net of debt issuance costs-

2,095

Total current liabilities112,533

93,743

Long-term debt, less current portion, net of debt issuance costs220,707

59,561

Long-term lease liability, less current portion33,509

33,977

Other long-term liabilities115

550

Total long-term liabilities254,331

94,088

Total liabilities366,864

187,831

Total stockholders' equity558,051

507,600

Total liabilities and stockholders' equity$

924,915

$

695,431

ADDUS HOMECARE CORPORATION AND SUBSIDIARIESCondensed Consolidated Balance Sheets(Amounts in thousands)(Unaudited) September 30, 2021 2020

Assets Current assetsCash $ 152,379 $ 170,331

Accounts receivable, net 133,814 118,623

Prepaid expenses and other current assets 13,514 10,426

Total current assets 299,707 299,380

Property and equipment, net 18,614 19,305

Other assetsGoodwill 497,919 286,552

Intangible assets, net 66,332 52,873

Deferred tax assets, net 5,919 1,479

Operating lease assets 36,424 35,842

Total other assets 606,594 376,746

Total assets $ 924,915 $ 695,431

Liabilities and stockholders' equity Current liabilitiesAccounts payable $ 23,167 $ 17,270

Accrued payroll 31,626 26,315

Accrued expenses 35,780 26,254

Government stimulus advance 7,674 7,141

Accrued workers compensation 14,286 14,668

Current portion of long-term debt, net of debt issuance - 2,095costsTotal current liabilities 112,533 93,743

Long-term debt, less current portion, net of debt issuance 220,707 59,561costsLong-term lease liability, less current portion 33,509 33,977

Other long-term liabilities 115 550

Total long-term liabilities 254,331 94,088

Total liabilities 366,864 187,831

Total stockholders' equity 558,051 507,600

Total liabilities and stockholders' equity $ 924,915 $ 695,431

ADDUS HOMECARE CORPORATION AND SUBSIDIARIESNet Service Revenues by Segment(Amounts in thousands)(Unaudited)For the Three MonthsEnded September 30,For the Nine MonthsEnded September 30,2021

2020

2021

2020

Net Service Revenues by SegmentPersonal Care$

169,609

$

165,916

$

510,744

$

482,849

Hospice39,095

23,986

112,098

73,723

Home Health7,958

4,085

17,015

12,207

Total Revenue$

216,662

$

193,987

$

639,857

$

568,779

ADDUS HOMECARE CORPORATION AND SUBSIDIARIESNet Service Revenues by Segment(Amounts in thousands)(Unaudited) For the Three Months For the Nine Months Ended September 30, Ended September 30, 2021 2020 2021 2020

Net Service Revenues by Segment Personal Care $ 169,609 $ 165,916 $ 510,744 $ 482,849

Hospice 39,095 23,986 112,098 73,723

Home Health 7,958 4,085 17,015 12,207

Total Revenue $ 216,662 $ 193,987 $ 639,857 $ 568,779

ADDUS HOMECARE CORPORATION AND SUBSIDIARIESKey Statistical and Financial Data (Unaudited)For the Three MonthsEnded September 30,For the Nine MonthsEnded September 30,2021

2020

2021

2020

GeneralPersonal CareStates served at period end-

-

22

24

Locations at period end-

-

162

153

Average billable census - same store37,270

38,589

37,534

38,443

Average billable census - acquisitions (1)709

-

732

-

Average billable census total (2)37,979

38,589

38,266

38,443

Billable hours (in thousands)7,537

7,778

22,712

22,825

Average billable hours per census per month65.8

66.9

65.7

65.6

Billable hours per business day114,195

117,841

116,472

116,454

Revenues per billable hour$

22.47

$

21.29

$

22.45

$

21.11

Organic growth- Revenue (3)4.0

%

4.8

%

6.6

%

8.8

%

HospiceLocations served at period end-

-

34

30

Admissions2,565

1,399

7,211

4,393

Average daily census2,629

1,681

2,523

1,762

Average discharge length of stay95.2

108.6

95.4

103.4

Patient days240,692

154,609

680,600

482,765

Revenue per patient day$

162.43

$

155.14

$

164.71

$

152.71

Organic growth- Revenue(4.8

)%

(5.6

)%

(7.2

)%

0.0

%

- Average daily census(7.6

)%

(6.2

)%

(24.6

)%

3.9

%

Home HealthLocations served at period end-

-

11

10

New Admissions2,608

1,096

4,962

3,186

Recertifications1,081

607

2,476

2,006

Total Volume3,689

1,703

7,438

5,192

Visits55,963

28,073

115,210

91,580

Organic growth- Revenue24.8

%

(8.9

)%

15.9

%

(0.6

)%

- New Admissions27.9

%

42.6

%

23.8

%

23.0

%

Percentage of Revenues by Payor:Personal CareState, local and other governmental programs49.5

%

51.5

%

49.5

%

50.3

%

Managed care organizations45.3

43.2

45.3

44.1

Private duty2.9

3.1

2.9

3.2

Commercial1.4

1.5

1.5

1.5

Other0.9

%

0.7

%

0.8

%

0.9

%

HospiceMedicare92.8

%

93.4

%

93.4

%

92.8

%

Managed care organizations3.9

4.7

3.9

5.0

Other3.3

%

1.9

%

2.7

%

2.2

%

Home HealthMedicare80.1

%

78.0

%

80.5

%

79.2

%

Managed care organizations15.3

20.3

16.7

19.0

Other4.6

%

1.7

%

2.8

%

1.8

%

(1) The average billable census in acquisitions of 811 and 893 for the three and nine months ended September 30, 2020 was reclassified to average billable census - same stores for comparability purposes. The average billable census for the three and nine months ended September 30, 2021 was prorated for the date of the acquisition.(2) Exited sites would have reduced same store census for the three and nine months ended September 30, 2020 by 768 and 766, respectively.(3) Management has suspended materially all of its new patient admissions under the New York consumer self-directed program based on program uncertainty and therefore excludes associated revenues from the calculation.ADDUS HOMECARE CORPORATION AND SUBSIDIARIESKey Statistical and Financial Data (Unaudited) For the Three Months For the Nine Months Ended September 30, Ended September 30, 2021 2020 2021 2020

General Personal CareStates served at period end - - 22 24

Locations at period end - - 162 153

Average billable census - same 37,270 38,589 37,534 38,443 storeAverage billable census - 709 - 732 - acquisitions (1)Average billable census total 37,979 38,589 38,266 38,443 (2)Billable hours (in thousands) 7,537 7,778 22,712 22,825

Average billable hours per 65.8 66.9 65.7 65.6 census per monthBillable hours per business 114,195 117,841 116,472 116,454 dayRevenues per billable hour $ 22.47 $ 21.29 $ 22.45 $ 21.11

Organic growth- Revenue (3) 4.0 % 4.8 % 6.6 % 8.8 %

HospiceLocations served at period end - - 34 30

Admissions 2,565 1,399 7,211 4,393

Average daily census 2,629 1,681 2,523 1,762

Average discharge length of 95.2 108.6 95.4 103.4 stayPatient days 240,692 154,609 680,600 482,765

Revenue per patient day $ 162.43 $ 155.14 $ 164.71 $ 152.71

Organic growth (4.8 ) (5.6 ) (7.2 ) 0.0 %- Revenue % % %

(7.6 ) (6.2 ) (24.6 ) 3.9 %- Average daily census % % %

Home HealthLocations served at period end - - 11 10

New Admissions 2,608 1,096 4,962 3,186

Recertifications 1,081 607 2,476 2,006

Total Volume 3,689 1,703 7,438 5,192

Visits 55,963 28,073 115,210 91,580

Organic growth 24.8 % (8.9 ) 15.9 % (0.6 )- Revenue % %

- New Admissions 27.9 % 42.6 % 23.8 % 23.0 %

Percentage of Revenues byPayor: Personal CareState, local and other 49.5 % 51.5 % 49.5 % 50.3 %governmental programsManaged care organizations 45.3 43.2 45.3 44.1

Private duty 2.9 3.1 2.9 3.2

Commercial 1.4 1.5 1.5 1.5

Other 0.9 % 0.7 % 0.8 % 0.9 %

HospiceMedicare 92.8 % 93.4 % 93.4 % 92.8 %

Managed care organizations 3.9 4.7 3.9 5.0

Other 3.3 % 1.9 % 2.7 % 2.2 %

Home HealthMedicare 80.1 % 78.0 % 80.5 % 79.2 %

Managed care organizations 15.3 20.3 16.7 19.0

Other 4.6 % 1.7 % 2.8 % 1.8 %

(1) The average billable census in acquisitions of 811 and 893 for the threeand nine months ended September 30, 2020 was reclassified to average billablecensus - same stores for comparability purposes. The average billable censusfor the three and nine months ended September 30, 2021 was prorated for thedate of the acquisition.(2) Exited sites would have reduced same store census for the three and ninemonths ended September 30, 2020 by 768 and 766, respectively.(3) Management has suspended materially all of its new patient admissions underthe New York consumer self-directed program based on program uncertainty andtherefore excludes associated revenues from the calculation.ADDUS HOMECARE CORPORATION AND SUBSIDIARIESReconciliation of Non-GAAP Financial Measures(Amounts in thousands, except per share data)(Unaudited) (1)For the Three MonthsEnded September 30,For the Nine MonthsEnded September 30,2021

2020

2021

2020

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

11,577

$

9,119

$

32,068

$

24,684

Interest expense, net1,577

593

4,002

1,733

(Gain) loss on sale of assets-

(73

)

16

281

Income tax expense4,206

2,811

10,508

6,374

Depreciation and amortization3,406

3,045

10,594

8,872

COVID-19 expense, net-

702

(591

)

1,228

Acquisition and de novo expenses1,663

338

5,383

3,883

Stock-based compensation expense2,341

1,462

7,105

3,987

Restructure expenses and other costs103

1,529

857

4,921

Adjusted EBITDA$

24,873

$

19,526

$

69,942

$

55,963

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

11,577

$

9,119

$

32,068

$

24,684

(Gain) loss on sale of assets, net of tax-

(56

)

12

223

COVID-19 expense, net of tax-

537

(479

)

976

Acquisition and de novo expenses, net of tax1,220

258

4,361

3,047

Stock-based compensation expense, net of tax1,716

1,119

5,370

3,153

Restructuring expenses and other costs, net of tax76

1,169

647

3,897

Adjusted Net Income$

14,589

$

12,146

$

41,979

$

35,980

Reconciliation of Net Income per Diluted Share to Adjusted Net Income per Diluted Share: (4)Net income per diluted share$

0.72

$

0.57

$

2.00

$

1.55

Loss on sale of assets per diluted share-

-

-

0.01

COVID-19 expense per diluted share-

0.02

(0.02

)

0.06

Acquisition and de novo expenses per diluted share0.08

0.02

0.27

0.19

Restructure expenses and other costs per diluted share-

0.08

0.04

0.25

Stock-based compensation expense per diluted share0.11

0.07

0.33

0.20

Adjusted net income per diluted share$

0.91

$

0.76

$

2.62

$

2.26

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

216,662

$

193,987

$

639,857

$

568,779

Revenues associated with the closure of certain sites-

(2,369

)

2

(7,133

)

Adjusted net service revenues$

216,662

$

191,618

$

639,859

$

561,646

(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, interest income from the state of Illinois, other non-operating income, taxes, depreciation, amortization, acquisition and de novo expenses, stock-based compensation expense, restructure expenses and other costs and loss on the sale of assets associated with Hospice Partners of Kansas. 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 interest income from the state of Illinois, acquisition and de novo expenses, stock-based compensation expense, restructure expenses and other costs and loss on the sale of assets associated with Hospice Partners of Kansas. 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 interest income from the state of Illinois, acquisition and de novo expenses, stock-based compensation expense and restructure expense, and other costs and loss on the sale of assets associated with Hospice Partners of Kansas. 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20211101005921/en/

CONTACT: Brian W. Poff Executive Vice President, Chief Financial Officer Addus HomeCare Corporation (469) 535-8200 investorrelations@addus.com

CONTACT: Dru Anderson CCI FINN Partners (615) 324-7346 dru.anderson@finnpartners.com