Addus HomeCare Announces Third Quarter 2024 Financial Results

About this update from Addus Homecare Corporation

FRISCO, Texas --(BUSINESS WIRE)-- 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, 2024 . Third Quarter 2024 Highlights : Net Service Revenues Increase 7.0% to $289.8 Million Net Income of $20.2 Million , or $1.10 per Diluted Share Adjusted Net Income per Diluted Share Increases 13.0% to $1.30 Adjusted EBITDA Increases 11.1% to $34.3 Million Cash Flow from Operations of $48.5 Million Overview Net service revenues were $289.8 million for the third quarter of 2024, a 7.0% increase compared with $270.7 million for the third quarter of 2023. Net income was $20.2 million for the third quarter of 2024, compared with $15.4 million for the third quarter of 2023, while net income per diluted share was $1.10 compared with $0.95 for the same period a year ago. Adjusted EBITDA increased 11.1% to $34.3 million for the third quarter of 2024 from $30.9 million for the third quarter of 2023. Adjusted net income was $23.8 million for the third quarter of 2024 compared with $18.8 million for the prior-year period, while adjusted net income per diluted share was $1.30 compared with $1.15 for the third quarter of 2023. Adjusted net income per diluted share for the third quarter of 2024 excludes acquisition expenses of $0.08 and stock-based compensation expense of $0.12 . The weighted average number of shares outstanding increased to approximately 18.3 million from approximately 16.5 million in the second quarter primarily as a result of the completed public offering of 1,725,000 shares on June 28, 2024 (See the end of press release for a reconciliation of all non-GAAP and GAAP financial measures.) For the first nine months of 2024, net service revenues increased 9.6% to $857.5 million from $782.3 million for the prior-year period. Net income was $54.1 million for the first nine months of 2024 compared with $42.9 million for the same period in 2023, and net income per diluted share was $3.17 compared with $2.63 per diluted share. Adjusted EBITDA increased 19.4% to $102.0 million for the first nine months of 2024 from $85.4 million for the first nine months of 2023. Adjusted net income was $65.9 million for the first nine months of 2024 compared with $52.1 million for the first nine months of 2023, while adjusted net income per diluted share was $3.86 compared with $3.20 for the prior-year period. Commenting on the results, Dirk Allison , Chairman and Chief Executive Officer, said, “Addus delivered another strong financial and operating performance for the third quarter of 2024, highlighted by 7.0% top line growth and 11.1% growth in Adjusted EBITDA compared to the third quarter of 2023. These results reflect the consistent favorable growth trends we have delivered to date in 2024, driven by solid organic growth and the contribution from recent acquisitions. Demand for our services continues to fuel our growth, reflecting a greater awareness of the value of home-based care as the preferred and most cost-effective option for many individuals. With our expanding scale and market coverage, Addus is well positioned to meet this demand with our ability to offer home-based services across the care continuum. “Our personal care business continued to perform well, accounting for 74.3% of our overall revenues for the third quarter of 2024, with higher patient volumes supported by favorable hiring trends. Personal care has been the key growth driver for Addus this year with consistent year-over-year improvement. For the third quarter of 2024, we delivered 6.8% organic growth in revenue on a same-store basis over the corresponding period last year, reflecting robust demand and favorable reimbursement support across the markets where we operate. “On the clinical side, our results included the operations of Tennessee Quality Care, a provider of home health, hospice, and private duty nursing services, acquired by Addus on August 1, 2023 . We continued to see steady improvement in our hospice business with revenues up 3.5% on a same-store basis and a modest increase in average daily census compared with the third quarter last year. Our home health business, which is our smallest segment, accounted for 5.9% of total revenue for the third quarter of 2024,” said Allison. Cash and Liquidity As of September 30, 2024 , the Company had cash of $222.9 million with capacity and availability under its revolving credit facility of $511.5 million and $503.5 million , respectively. Net cash provided by operating activities was $48.5 million for the third quarter of 2024, inclusive of a one-time working capital benefit of $9.7 million expected to revert in the fourth quarter. As previously disclosed, subsequent to the end of the quarter, Addus entered into an Amended and Restated Credit Agreement to increase the Company’s revolving credit facility from $600 million to $650 million and extend the maturity date through July 2028 . Looking Ahead Allison added, “We will continue to maintain a conservative balance sheet and pursue a capital allocation strategy that brings additional value to our shareholders. Acquisitions represent a significant use of capital for Addus, and we will continue to target operations that are aligned with our overall growth strategy to add clinical services where we have a strong personal care presence. We will also seek opportunities to add operations in select personal care markets where we can enter at scale. In line with this strategy, during the second quarter, we announced a definitive agreement to acquire the personal care operations of Gentiva. These operations deliver personal care services to over 16,000 patients per day in a seven-state service area, including Texas and Missouri , which are new states for Addus. We are excited about the opportunity to expand our market reach, especially in Texas where we will become the largest provider of personal care services. Having broader market coverage supports our ability to hire and retain caregivers and also provides Addus with an advantage in developing value-based contract arrangements. We expect to close the Gentiva acquisition in the fourth quarter of 2024, and our team has been diligently working on transition planning to integrate these operations. “As we continue to expand our operations, we are proud of the leadership role we are playing in meeting the critical need for home-based care. We commend the work of our dedicated caregivers across our operations who make this possible for more patients and their families. We are excited about the opportunities ahead to build on our momentum, and we look forward to another successful year for Addus in 2024,” 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 gain or loss on sale of assets, impact of retroactive New York rate increases, acquisition expenses, stock-based compensation expenses, and restructure and other non-recurring costs. The Company defines adjusted EBITDA as earnings before interest expense, gain or loss on sale of assets, taxes, depreciation, amortization, impact of retroactive New York rate increases, acquisition expense, stock-based compensation expense, and restructure and other non-recurring costs. The Company defines adjusted net income per diluted share as net income per share, adjusted for the impact of retroactive New York rate increases, acquisition expenses, stock-based compensation expense, and restructure and other non-recurring costs. The Company defines adjusted net service revenues as revenue adjusted for the closure of certain sites. The Company has provided, in the financial statement tables included in this press release, a reconciliation of adjusted net income to net income, a reconciliation of adjusted EBITDA to net income, a reconciliation of adjusted diluted net income per share to net income per share, and a reconciliation of adjusted net service revenues to net service revenues, in each case, the most directly comparable GAAP measure. Management believes that adjusted net income, adjusted EBITDA, adjusted diluted net income per share, and adjusted net service revenues are useful to investors, management and others in evaluating the Company’s operating performance, to provide investors with insight and consistency in the Company’s financial reporting and to present a basis for comparison of the Company’s business operations among periods, and to facilitate comparison with the results of the Company’s peers. Conference Call Addus will host a conference call on Tuesday, November 5, 2024 , at 9:00 a.m. Eastern time . To access the live call, dial (833) 629-0620 (international dial-in number is (412) 317-1805) and ask to join the Addus HomeCare earnings call. A telephonic replay of the conference call will be available through midnight on November 12, 2024 , by dialing (877) 344-7529 (international dial-in number is (412) 317-0088) and entering pass code 4366280. 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 27, 2024 , which is available at www.sec.gov . The financial information described herein and the periods to which they relate are preliminary estimates that are subject to change and finalization. There is no assurance that the final amounts and adjustments will not differ materially from the amounts described above, or that additional adjustments will not be identified, the impact of which may be material. Addus HomeCare undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, these forward-looking statements necessarily depend upon assumptions, estimates and dates that may be incorrect or imprecise and involve known and unknown risks, uncertainties, and other factors. Accordingly, any forward-looking statements included in this press release do not purport to be predictions of future events or circumstances and may not be realized. (Unaudited tables and notes follow). About Addus HomeCare Addus HomeCare is a provider of home care services that primarily include personal care services that assist with activities of daily living, as well as hospice and home health services. Addus HomeCare’s consumers are primarily persons who, without these services, are at risk of hospitalization or institutionalization, such as the elderly, chronically ill and disabled. Addus HomeCare’s payor clients include federal, state, and local governmental agencies, managed care organizations, commercial insurers, and private individuals. Addus HomeCare currently provides home care services to over 48,500 consumers through 214 locations across 22 states. For more information, please visit www.addus.com . ADDUS HOMECARE CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Income (amounts and shares in thousands, except per share data) (Unaudited) Income Statement Information: For the Three Months Ended September 30 , For the Nine Months Ended September 30 , 2024 2023 2024 2023 Net service revenues $ 289,787 $ 270,721 $ 857,455 $ 782,300 Cost of service revenues 197,583 183,991 583,916 534,837 Gross profit 92,204 86,730 273,539 247,463 31.8 % 32.0 % 31.9 % 31.6 % General and administrative expenses 62,805 60,271 187,444 174,028 Depreciation and amortization 3,446 3,620 10,316 10,449 Total operating expenses 66,251 63,891 197,760 184,477 Operating income 25,953 22,839 75,779 62,986 Total interest expense, net (1,335 ) 2,619 2,640 7,014 Income before income taxes 27,288 20,220 73,139 55,972 Income tax expense 7,125 4,809 19,067 13,034 Net income $ 20,163 $ 15,411 $ 54,072 $ 42,938 Net income per diluted share: $ 1.10 $ 0.95 $ 3.17 $ 2.63 Weighted average number of common shares outstanding: Diluted 18,255 16,286 17,065 16,307 Cash Flow Information: For the Three Months Ended September 30 , For the Nine Months Ended September 30 , 2024 2023 2024 2023 Net cash provided by operating activities $ 48,525 $ 21,785 $ 106,016 $ 82,198 Net cash (used in) investing activities (1,922 ) (111,223 ) (124 ) (113,934 ) Net cash provided by financing activities 2,944 85,000 52,169 31,525 Net change in cash 49,547 (4,438 ) 158,061 (211 ) Cash at the beginning of the period 173,305 84,188 64,791 79,961 Cash at the end of the period $ 222,852 $ 79,750 $ 222,852 $ 79,750 ADDUS HOMECARE CORPORATION AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Amounts in thousands) (Unaudited) September 30 , 2024 2023 Assets Current assets Cash $ 222,852 $ 79,750 Accounts receivable, net 96,600 121,112 Prepaid expenses and other current assets 13,362 10,387 Total current assets 332,814 211,249 Property and equipment, net 23,716 20,516 Other assets Goodwill 663,614 662,981 Intangible assets, net 86,606 93,799 Operating lease assets 44,535 47,183 Other long-term assets 1,616 - Total other assets 796,371 803,963 Total assets $ 1,152,901 $ 1,035,728 Liabilities and stockholders' equity Current liabilities Accounts payable $ 27,726 $ 21,375 Accrued payroll 57,982 51,774 Accrued expenses 34,257 34,952 Operating lease liabilities - current portion 11,155 11,434 Government stimulus advance 13,655 7,836 Accrued workers compensation 13,043 12,268 Total current liabilities 157,818 139,639 Long-term debt, less current portion, net of debt issuance costs - 163,917 Long-term lease liability, less current portion 38,608 41,632 Other long-term liabilities 8,841 6,206 Total long-term liabilities 47,449 211,755 Total liabilities 205,267 351,394 Total stockholders' equity 947,634 684,334 Total liabilities and stockholders' equity $ 1,152,901 $ 1,035,728 ADDUS HOMECARE CORPORATION AND SUBSIDIARIES Net Service Revenue by Segment (Amounts in thousands) (Unaudited) For the Three Months Ended September 30 , For the Nine Months Ended September 30 , 2024 2023 2024 2023 Net Service Revenues by Segment Personal Care $ 215,433 $ 201,882 $ 636,253 $ 590,227 Hospice 57,309 53,121 169,202 152,414 Home Health 17,045 15,718 52,000 39,659 Total Revenue $ 289,787 $ 270,721 $ 857,455 $ 782,300 ADDUS HOMECARE CORPORATION AND SUBSIDIARIES Key Statistical and Financial Data (Unaudited) For the Three Months Ended September 30 , For the Nine Months Ended September 30 , 2024 2023 2024 2023 Personal Care States served at period end - - 21 21 Locations at period end - - 153 156 Average billable census total 37,701 38,590 37,803 38,668 Billable hours (in thousands) 7,776 7,690 23,098 22,964 Average billable hours per census per month 68.7 66.3 67.8 65.8 Billable hours per business day 117,822 118,314 117,849 117,765 Revenues per billable hour $ 27.66 $ 26.18 $ 27.49 $ 25.58 Organic growth - Revenue 6.8 % 13.9 % 8.4 % 12.5 Hospice Locations served at period end - - 38 40 Admissions 3,105 3,176 9,771 9,576 Average daily census 3,534 3,453 3,457 3,426 Average discharge length of stay 96.3 97.5 92.8 93.2 Patient days 325,160 311,454 947,241 892,507 Revenue per patient day $ 176.25 $ 175.19 $ 179.43 $ 175.23 Organic growth - Revenue 3.5 % 3.1 % 5.2 % 1.5 - Average daily census 2.1 % (0.9 )% 0.8 % 0.8 Home Health Locations served at period end - - 23 24 New Admissions 4,437 4,265 14,257 11,597 Recertifications 3,353 2,672 9,798 5,816 Total Volume 7,790 6,937 24,055 17,413 Visits 104,730 94,637 322,713 240,758 Organic growth - Revenue (1.7 )% (8.8 )% (5.4 )% (2.5 ) - New admissions (5.7 )% (18.9 )% (0.3 )% (13.5 ) - Volume (3.7 )% (14.3 )% (0.4 )% (9.3 ) Percentage of Revenues by Payor: Personal Care State, local and other governmental programs 54.2 % 50.4 % 53.0 % 50.4 Managed care organizations 43.3 46.4 44.3 46.2 Private duty 1.7 2.0 1.8 2.1 Commercial 0.7 0.8 0.7 0.8 Other 0.1 % 0.4 % 0.2 % 0.5 Hospice Medicare 91.5 % 89.1 % 91.1 % 90.2 Commercial 5.0 6.8 5.2 5.8 Managed care organizations 3.2 3.4 3.3 3.3 Other 0.3 % 0.7 % 0.4 % 0.7 Home Health Medicare 70.6 % 72.1 % 69.6 % 73.9 Managed care organizations 24.7 21.9 25.6 20.8 Commercial 4.5 4.2 4.2 4.3 Other 0.2 % 1.8 % 0.6 % 1.0 ADDUS HOMECARE CORPORATION AND SUBSIDIARIES Reconciliation of Non-GAAP Financial Measures (Amounts in thousands, except per share data) (Unaudited) (1) For the Three Months Ended September 30 , For the Nine Months Ended September 30 , 2024 2023 2024 2023 Reconciliation of Adjusted EBITDA to Net Income: (1) Net income $ 20,163 $ 15,411 $ 54,072 $ 42,938 Interest expense, net (1,335 ) 2,619 2,640 7,014 (Gain) Loss on sale of assets (8 ) (1 ) (13 ) (5 ) Income tax expense 7,125 4,809 19,067 13,034 Depreciation and amortization 3,446 3,620 10,316 10,449 Impact of retroactive New York rate increase - - - (868 ) Acquisition expenses 2,072 1,763 7,647 4,792 Stock-based compensation expense 2,833 2,572 8,307 7,831 Restructure and other non-recurring costs - 72 - 242 Adjusted EBITDA $ 34,296 $ 30,865 $ 102,036 $ 85,427 Reconciliation of Adjusted Net Income to Net Income: (2) Net income $ 20,163 $ 15,411 $ 54,072 $ 42,938 (Gain) Loss on sale of assets (8 ) (1 ) (13 ) (5 ) Impact of retroactive New York rate increase - - - (868 ) Acquisition expenses 2,072 1,763 7,647 4,792 Stock-based compensation expense 2,833 2,572 8,307 7,831 Restructure and other non-recurring costs - 72 - 242 Tax Effect (1,280 ) (1,048 ) (4,156 ) (2,793 ) Adjusted Net Income $ 23,780 $ 18,769 $ 65,857 $ 52,137 Reconciliation of Net Income per Diluted Share to Adjusted Net Income per Diluted Share: (3) Net income per diluted share $ 1.10 $ 0.95 $ 3.17 $ 2.63 Impact of retroactive New York rate increase per diluted share - - - (0.04 ) Acquisition expenses per diluted share 0.08 0.08 0.33 0.23 Restructure and other non-recurring costs per diluted share - - - 0.01 Stock-based compensation expense per diluted share 0.12 0.12 0.36 0.37 Adjusted net income per diluted share $ 1.30 $ 1.15 $ 3.86 $ 3.20 Reconciliation of Net Service Revenues to Adjusted Net Service Revenues: (4) Net service revenues $ 289,787 $ 270,721 $ 857,455 $ 782,300 Revenues associated with the closure of certain sites - (259 ) - (1,833 ) Adjusted net service revenues $ 289,787 $ 270,462 $ 857,455 $ 780,467 Footnotes (1) We define Adjusted EBITDA as earnings before net interest expense, income tax expense, depreciation and amortization, acquisition expenses, stock-based compensation expense, restructure expenses and other non-recurring costs, gain on the sale of assets, and retroactive rate increases from New York . Adjusted EBITDA is a performance measure used by management that is not calculated in accordance with generally accepted accounting principles in the United States (GAAP). It should not be considered in isolation or as a substitute for net income, operating income or any other measure of financial performance calculated in accordance with GAAP. (2) We define Adjusted Net Income as net income before acquisition expenses, stock-based compensation expense, restructure and other non-recurring costs, gain on the sale of assets, and retroactive rate increases from New York . Adjusted Net Income is a performance measure used by management that is not calculated in accordance with generally accepted accounting principles in the United States (GAAP). It should not be considered in isolation or as a substitute for net income, operating income or any other measure of financial performance calculated in accordance with GAAP. (3) We define Adjusted diluted earnings per share as earnings per share, adjusted for acquisition expenses, stock-based compensation expense and restructure and other non-recurring costs, gain on the sale of assets, and retroactive rate increases from New York . Adjusted diluted earnings per share is a performance measure used by management that is not calculated in accordance with generally accepted accounting principles in the United States (GAAP). It should not be considered in isolation or as a substitute for net income, operating income or any other measure of financial performance calculated in accordance with GAAP. (4) We define Adjusted net service revenues as revenue adjusted for the closure of certain sites. Adjusted net service revenues is a performance measure used by management that is not calculated in accordance with generally accepted accounting principles in the United States (GAAP). It should not be considered in isolation or as a substitute for net income, operating income or any other measure of financial performance calculated in accordance with GAAP. View source version on businesswire.com : https://www.businesswire.com/news/home/20241104677875/en/ Brian W. Poff Executive Vice President, Chief Financial Officer Addus HomeCare Corporation (469) 535-8200 [email protected] Dru Anderson FINN Partners (615) 324-7346 [email protected] Source: Addus HomeCare Corporation

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