Addus HomeCare Announces Fourth Quarter and Year End 2022 Financial Results

FRISCO, Texas–(BUSINESS WIRE)–Addus HomeCare Corporation (NASDAQ: ADUS), a provider of home care services, today announced its financial results for the fourth quarter and year ended December 31, 2022.

Fourth Quarter 2022 Highlights:

  • Revenues Grow 10.0% to $247.1 Million
  • Net Income of $14.8 Million, or $0.91 per Diluted Share
  • Adjusted Earnings per Diluted Share Increases to $1.11
  • Adjusted EBITDA Increases 5.4% to $28.2 Million
  • Cash flow from operations of $24.3 Million

Overview

Net service revenues were $247.1 million for the fourth quarter of 2022, a 10.0% increase compared with $224.6 million for the fourth quarter of 2021. Net income was $14.8 million for the fourth quarter of 2022, compared with $13.1 million for the fourth quarter of 2021, while net income per diluted share was $0.91 compared with $0.81 for the same period a year ago. Adjusted EBITDA increased 5.4% to $28.2 million for the fourth quarter of 2022 from $26.7 million for the fourth quarter of 2021. Adjusted net income per diluted share was $1.11 for the fourth quarter of 2022 compared with $0.97 for the fourth quarter of 2021. Adjusted net income per diluted share for the fourth quarter of 2022 excludes acquisition and de novo expenses of $0.06, restructure and other non-recurring costs of $0.01 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.)

For 2022, net service revenues increased 10.0% to $951.1 million from $864.5 million for the prior year. Net income was $46.0 million for 2022 compared with $45.1 million for 2021, and net income per diluted share was $2.84 compared with $2.81 per diluted share. Adjusted EBITDA increased 3.9% to $101.5 million for 2022 from $97.7 million for 2021. Adjusted net income for 2022 was $60.3 million compared with $58.3 million for 2021, while adjusted net income per diluted share was $3.73 compared with $3.63 for the prior year.

Commenting on the results, Dirk Allison, Chairman and Chief Executive Officer, said, “Addus finished 2022 with another quarter of strong financial and operating performance. 2022 was a year of significant challenges, beginning with the Omicron surge in the first quarter followed by staffing shortages and inflationary pressures. However, we were able to successfully manage through these headwinds and extend our record of profitable growth for the year. Consistent execution of our strategy produced favorable results, with our 10% revenue growth over the fourth quarter last year leading to record annual revenues for the year. Our personal care revenues, which represented 74.2% of our business, were up 7.9% over the fourth quarter of 2021 on a same-store basis, reflecting steady volume growth trends. Home health revenues, which included the operations of Armada Home Health and Summit Home Health acquired in 2021, and the addition of Apple Home Healthcare operations effective October 1, 2022, were up 8.3% over the comparable quarter last year on a same-store basis. While home health remains the smallest service segment for Addus, we believe there are significant opportunities to expand these operations as they complement our personal care services, especially in markets where we believe there is an opportunity to enter value-based contracting arrangements. Our hospice business accounted for 20.5% of our revenues and were up 26.0% for 2022 compared to 2021. These results primarily reflected the addition of the integrated hospice operations of JourneyCare, which we acquired on February 1, 2022. Hospice same-store revenues were down 4.9% over the same quarter last year primarily due to the resumption of Medicare sequestration and a decrease in same store average daily census of 0.9%.”

Cash and Liquidity

As of December 31, 2022, the Company had cash of $80.0 million and bank debt of $134.9 million, with capacity and availability under its revolving credit facility of $380.2 million and $237.2 million, respectively. Net cash provided by operating activities was $24.3 million for the fourth quarter of 2022 and $105.1 million for the full year 2022. Allison added, “In the face of economic disruption we continued our record of consistent cash generation, with a focused effort on debt repayment, leading to a net $90 million reduction in our revolver balance during 2022.”

Looking Ahead

Allison continued, “Our strong balance sheet and disciplined approach to financial management provides us with the capital to continue investing in our business, including new technology to support the work of our caregivers and enhance our recruiting and hiring processes to meet our growing staffing needs. We remain focused on our acquisition strategy and continue to look for opportunities that fit our overall growth strategy and meet our primary objective to expand our clinical services capabilities in markets where we already have a strong personal care presence. We were pleased to add approximately $65 million in annualized revenues through acquisitions in 2022, and we remain confident in our development team’s ability to capitalize on new acquisition targets. While external factors have affected the timing of some opportunities, we believe we will benefit from a more favorable acquisition environment in 2023.

“We are proud of our ability to deliver strong results despite some lingering headwinds related to the pandemic and the challenging labor market for health care providers. Demand for our services continues to grow, reflecting a greater societal awareness of the value of home-based care as the safest and most cost-effective option for many individuals. Addus is well-positioned to meet this demand across the care continuum, and we have a proven operating model that has delivered consistent and favorable results. Importantly, we have a dedicated team of frontline caregivers, who support our mission and continue to work tirelessly to provide quality care and support for our patients and their families. Working together, we look forward to the opportunities ahead for Addus in 2023 as we extend our market reach and deliver greater value to our shareholders.”

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, restructure and other non-recurring costs, gain or loss on the sale of assets, and retroactive rate increases from Illinois. 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, restructure and other non-recurring costs, gain or loss on the sale of assets, and retroactive rate increases from Illinois. The Company defines adjusted diluted earnings per share as earnings per share, adjusted for acquisition and de novo expenses, stock-based compensation expense, restructure and other non-recurring costs, gain or loss on the sale of assets, and retroactive rate increases from Illinois. 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, February 28, 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 March 7, 2023, by dialing (877) 344-7529 (international dial-in number is (412) 317-0088) and entering pass code 6189112.

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 25, 2022, 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 46,500 consumers through 202 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 December 31,
For the Twelve Months
Ended December 31,

 

2022

 

2021

 

2022

 

2021

 
Net service revenues

$

247,050

 

$

224,642

 

$

951,120

 

$

864,499

 

Cost of service revenues

 

168,281

 

 

151,847

 

 

651,381

 

 

594,651

 

 
Gross profit

 

78,769

 

 

72,795

 

 

299,739

 

 

269,848

 

 

31.9

%

 

32.4

%

 

31.5

%

 

31.2

%

General and administrative expenses

 

54,466

 

 

49,537

 

 

216,942

 

 

189,418

 

Depreciation and amortization

 

3,489

 

 

3,900

 

 

14,060

 

 

14,494

 

Total operating expenses

 

57,955

 

 

53,437

 

 

231,002

 

 

203,912

 

 
Operating income

 

20,814

 

 

19,358

 

 

68,737

 

 

65,936

 

 
Total interest expense, net

 

2,537

 

 

1,536

 

 

8,566

 

 

5,538

 

 
Income before income taxes

 

18,277

 

 

17,822

 

 

60,171

 

 

60,398

 

Income tax expense

 

3,515

 

 

4,764

 

 

14,146

 

 

15,272

 

 
 
Net income

$

14,762

 

$

13,058

 

$

46,025

 

$

45,126

 

 
Net income per diluted share:
Continuing Operations

$

0.91

 

$

0.81

 

$

2.84

 

$

2.81

 

 
 
Weighted average number of common shares outstanding:
Diluted

 

16,258

 

 

16,059

 

 

16,181

 

 

16,064

 

 
 
Cash Flow Information: For the Three Months
Ended December 31,
For the Twelve Months
Ended December 31,

 

2022

 

2021

 

2022

 

2021

 
Net cash provided by operating activities

$

24,292

 

$

25,201

 

$

105,110

 

$

39,488

 

Net cash used in investing activities

 

(19,236

)

 

(9,582

)

 

(106,590

)

 

(42,015

)

Net cash (used in) provided by financing activities

 

(30,739

)

 

897

 

 

(87,454

)

 

26,344

 

 
Net change in cash

 

(25,683

)

 

16,516

 

 

(88,934

)

 

23,817

 

Cash at the beginning of the period

 

105,644

 

 

152,379

 

 

168,895

 

 

145,078

 

Cash at the end of the period

$

79,961

 

$

168,895

 

$

79,961

 

$

168,895

 

Condensed Consolidated Balance Sheets
(Amounts in thousands)
(Unaudited)
 
December 31,

2022

2021

 
Assets
 
Current assets
Cash

$

79,961

$

168,895

Accounts receivable, net

 

125,501

 

136,955

Prepaid expenses and other current assets

 

17,345

 

18,491

 
Total current assets

 

222,807

 

324,341

 
Property and equipment, net

 

21,182

 

18,483

 
Other assets
Goodwill

 

582,837

 

504,392

Intangible assets, net

 

72,188

 

64,321

Operating lease assets

 

38,980

 

36,048

Total other assets

 

694,005

 

604,761

 
Total assets

$

937,994

$

947,585

 
Liabilities and stockholders’ equity
 
Current liabilities
Accounts payable

$

22,092

$

19,358

Accrued payroll

 

44,937

 

44,083

Accrued expenses

 

38,308

 

37,077

Government stimulus advance

 

12,912

 

4,173

Accrued workers compensation

 

12,897

 

12,998

Total current liabilities

 

131,146

 

117,689

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

 

131,772

 

220,912

Long-term lease liability, less current portion

 

35,479

 

32,859

Other long-term liabilities

 

6,057

 

1,781

Total long-term liabilities

 

173,308

 

255,552

 
Total liabilities

 

304,454

 

373,241

 
Total stockholders’ equity

 

633,540

 

574,344

 
Total liabilities and stockholders’ equity

$

937,994

$

947,585

 
 
ADDUS HOMECARE CORPORATION AND SUBSIDIARIES
Net Service Revenue by Segment
(Amounts in thousands)
(Unaudited)
 
For the Three Months
Ended December 31,
For the Twelve Months
Ended December 31,

 

2022

 

2021

 

2022

 

2021

Net Service Revenues by Segment
 
Personal Care

$

183,365

$

175,110

$

706,507

$

685,854

Hospice

 

50,612

 

40,155

 

201,772

 

152,253

Home Health

 

13,073

 

9,377

 

42,841

 

26,392

Total Revenue

$

247,050

$

224,642

$

951,120

$

864,499

 
ADDUS HOMECARE CORPORATION AND SUBSIDIARIES
Key Statistical and Financial Data (Unaudited)
 
For the Three Months
Ended December 31,
For the Twelve Months
Ended December 31,

 

2022

 

2021

 

2022

 

2021

 

General
 
Personal Care
 
States served at period end

 

 

 

 

 

22

 

 

22

 

Locations at period end

 

 

 

 

 

156

 

 

162

 

Average billable census total

 

38,169

 

 

37,405

 

 

37,482

 

 

38,051

 

Billable hours (in thousands)

 

7,465

 

 

7,425

 

 

29,412

 

 

30,151

 

Average billable hours per census per month

 

65.0

 

 

65.8

 

 

65.1

 

 

65.7

 

Billable hours per business day

 

114,849

 

 

112,498

 

 

113,122

 

 

115,521

 

Revenues per billable hour

$

24.48

 

$

23.28

 

$

23.91

$

22.71

 

Organic growth
– Revenue

 

7.9

 

%

 

8.0

 

%

 

4.6

 

%

 

7.3

 

%

 
Hospice
 
Locations served at period end

 

 

 

 

 

33

 

 

32

 

Admissions

 

3,393

 

 

2,381

 

 

13,171

 

 

9,592

 

Average daily census

 

3,213

 

 

2,635

 

 

3,279

 

 

2,561

 

Average discharge length of stay

 

90.2

 

 

99.3

 

 

87.7

 

 

96.5

 

Patient days

 

295,619

 

 

249,266

 

 

1,176,193

 

 

923,014

 

Revenue per patient day

$

171.21

 

$

165.64

 

$

171.55

 

$

164.95

 

Organic growth
– Revenue

 

(4.9

)

%

 

1.3

 

%

 

0.4

 

%

 

(6.2

)

%

– Average daily census

 

(0.9

)

%

 

(1.4

)

%

 

1.9

 

%

 

(11.2

)

%

 
Home Health
 
Locations served at period end

 

 

 

 

 

13

 

 

12

 

New Admissions

 

4,081

 

 

3,819

 

 

14,452

 

 

8,781

 

Recertifications

 

1,631

 

 

1,071

 

 

5,838

 

 

3,547

 

Total Volume

 

5,712

 

 

4,890

 

 

20,290

 

 

12,328

 

Visits

 

88,046

 

 

68,741

 

 

293,381

 

 

183,951

 

Organic growth
– Revenue

 

8.3

 

%

 

7.1

 

%

 

8.2

 

%

 

11.3

 

%

– New Admissions

 

(12.8

)

%

 

21.0

 

%

 

16.4

 

%

 

23.0

 

%

– Volume

 

(1.8

)

%

 

15.0

 

%

 

18.7

 

%

 

17.4

 

%

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

 

49.3

 

%

 

48.7

 

%

 

49.3

 

%

 

49.3

 

%

Managed care organizations

 

46.7

 

 

46.0

 

 

46.3

 

 

45.5

 

Private duty

 

2.5

 

 

2.9

 

 

2.6

 

 

2.9

 

Commercial

 

0.9

 

 

1.4

 

 

1.1

 

 

1.4

 

Other

 

0.6

 

%

 

1.0

 

%

 

0.7

 

%

 

0.9

 

%

 
Hospice
 
Medicare

 

91.3

 

%

 

93.1

 

%

 

90.9

 

%

 

93.3

 

%

Commercial

 

4.5

 

 

3.2

 

 

5.0

 

 

2.6

 

Managed care organizations

 

3.7

 

 

3.2

 

 

3.6

 

 

3.7

 

Other

 

0.5

 

%

 

0.5

 

%

 

0.5

 

%

 

0.4

 

%

 
Home Health
 
Medicare

 

74.9

 

%

 

75.1

 

%

 

73.5

 

%

 

78.4

 

%

Managed care organizations

 

18.9

 

 

17.0

 

 

20.3

 

 

16.9

 

Commercial

 

6.0

 

 

7.8

 

 

6.0

 

 

4.6

 

Other

 

0.2

 

%

 

0.1

 

%

 

0.2

 

%

 

0.1

 

%

 
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 December 31,
For the Twelve Months
Ended December 31,

2022

2021

2022

2021

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

$

14,762

 

$

13,058

 

$

46,025

 

$

45,126

 

 
Interest expense, net

 

2,537

 

 

1,536

 

 

8,566

 

 

5,538

 

(Gain) loss on sale of assets

 

(33

)

 

9

 

 

(60

)

 

25

 

Income tax expense

 

3,515

 

 

4,764

 

 

14,146

 

 

15,272

 

Depreciation and amortization

 

3,489

 

 

3,900

 

 

14,060

 

 

14,494

 

COVID-19 expense, net

 

 

 

 

 

 

 

(591

)

Illinois retro, net

 

 

 

(1,005

)

 

 

 

 

Acquisition and de novo expenses

 

1,155

 

 

1,923

 

 

7,657

 

 

7,306

 

Stock-based compensation expense

 

2,680

 

 

2,329

 

 

10,625

 

 

9,434

 

Restructure and other non-recurring costs

 

143

 

 

200

 

 

461

 

 

1,057

 

 
Adjusted EBITDA

$

28,248

 

$

26,714

 

$

101,480

 

$

97,661

 

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

$

14,762

 

$

13,058

 

$

46,025

 

$

45,126

 

 
Loss on sale of assets, net of tax

 

(26

)

 

7

 

 

(46

)

 

19

 

COVID-19 expense, net of tax

 

 

 

 

 

 

 

(445

)

Illinois retro, net of tax

 

 

 

(739

)

 

 

 

 

Acquisition and de novo expenses, net of tax

 

1,005

 

 

1,413

 

 

5,857

 

 

5,750

 

Stock-based compensation expense, net of tax

 

2,198

 

 

1,712

 

 

8,126

 

 

7,049

 

Restructuring and other non-recurring costs, net of tax

 

116

 

 

147

 

 

353

 

 

790

 

Adjusted Net Income

$

18,055

 

$

15,598

 

$

60,315

 

$

58,289

 

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

$

0.91

 

$

0.81

 

$

2.84

 

$

2.81

 

 
Loss on sale of assets per diluted share

 

 

 

 

 

 

 

 

COVID-19 expense per diluted share

 

 

 

 

 

 

 

(0.03

)

Illinois retro, net per diluted share

 

 

 

(0.05

)

 

 

 

 

Acquisition and de novo expenses per diluted share

 

0.06

 

 

0.09

 

 

0.36

 

 

0.36

 

Restructure and other non-recurring costs per diluted share

 

0.01

 

 

0.01

 

 

0.02

 

 

0.05

 

Stock-based compensation expense per diluted share

 

0.13

 

 

0.11

 

 

0.51

 

 

0.44

 

 
Adjusted net income per diluted share

$

1.11

 

$

0.97

 

$

3.73

 

$

3.63

 

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

$

247,050

 

$

224,642

 

$

951,120

 

$

864,499

 

 
Revenues associated with the closure of certain sites

 

 

 

(368

)

 

(761

)

 

(2,184

)

 
Adjusted net service revenues

$

247,050

 

$

224,274

 

$

950,359

 

$

862,315

 

 
Footnotes:

(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, 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.

(3) 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.
(4) 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.
(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.

Contacts

Brian W. Poff

Executive Vice President, Chief Financial Officer

Addus HomeCare Corporation

(469) 535-8200

investorrelations@addus.com

Dru Anderson

FINN Partners

(615) 324-7346

dru.anderson@finnpartners.com

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