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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