Addus HomeCare Announces First Quarter 2023 Financial Results

FRISCO, Texas--(BUSINESS WIRE)--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 [phone] (international dial-in number is [phone]) 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 [phone] (international dial-in number is [phone]) 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.