JMP 2011 Healthcare Conference September 2011 EXHIBIT 99.1 |
2 Mission Statement It is the primary mission of Addus HealthCare to improve the health and well being of our consumers through the provision of quality, cost-effective health care services. We will accomplish our goals by fostering an environment in which our employees enthusiastically support and advance our mission. Reward for accomplishing our mission includes pride in our organization, contribution to the community and a reasonable profit. |
Forward-Looking Statements 3 The following information contains, or may be deemed to contain, forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The future results of Addus may vary from the results expressed in, or implied by, the following forward-looking statements, possibly to a material degree, and historical results may not be an indication of future performance. For a discussion of some of the important factors that could cause Addus' results to differ from those expressed in, or implied by, the following forward-looking statements, please refer to Addus’ most recent Annual Report on Form 10-K, and its Quarterly reports on Form 10-Q each of which is available at www.SEC.gov, particularly the Sections entitled “Risk Factors”. Addus undertakes no obligation to update or revise any forward-looking statements, except as may be required by law. , |
About Addus Founded in 1979 Comprehensive provider of social and medical services in the home: — Personal Care — Home Health — Private Duty — Adult Day Service 13,000+ employees 26,000+ consumers (many dual eligible) 4 Diversified payor base (200+ payors) — Largest payor - 38% of 2010 total revenues — Medicare - 12% of 2010 total revenues 2010 revenues of $271.7 million and Adjusted EBITDA of $16.3 million _____________________________________ Note: Adjusted EBITDA is defined as net income plus depreciation and amortization, net interest expense, income tax expense and stock-based compensation expense. Adjusted EBITDA is a performance measure used by management that is not calculated under 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. Adjusted EBITDA margin is computed as the percentage of Adjusted EBITDA to revenue for the applicable period. 125 Locations Across 19 States 81% 19% Two Primary Divisions 2010 Revenue Percentage Home & Community Home Health |
Census and Revenue Trends 5 Census Revenues (millions) 0 5,000 10,000 15,000 20,000 25,000 2007 2008 2009 2010 $0 $50 $100 $150 $200 $250 $300 2007 2008 2009 2010 |
Our Clients 6 Addus provides care for the 5% of the population that is the most costly! Source: Kaiser Family Foundation calculations using data from U.S. Department of Health and Human Services, Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey (MEPS), 2007 22.9% 49.5% 65.2% 74.6% 81.2% 97.0% 3.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% Top 1% Top 5% Top 10% Top 15% Top 20% Top 50% Bottom 50% ( $44,482) ( $4,064) ( $5,798) ( $8,716) ( $15,806) ( $786) (<$786) Percent of Population, Ranked by Health Care Spending Concentration of Health Care Spending in the U.S. Population, 2007 Facts: Nearly 75% of those who live to 85 will eventually need assistance at home. Approximately 50% of US healthcare spending is concentrated in 5% of the population. 97% of healthcare spending is concentrated on 50% of the population. |
Addus Client Profile and Economics 7 Home & Community Home Health Average Length of Service 20 months 2.7 months Average Reimbursement per Consumer Episode $17,622 $3,512 Gross Profit per Consumer Episode Gross Margin $4,476 25.4% $1,637 46.6% Divisional Earnings per Consumer Episode Division Pre-Corporate Earnings Margin $1,815 10.3% $365 10.4% Note: Data as of December 31, 2010 (1) Home & Community revenues for the calendar year 2010 of $220.8 million divided by average weekly census for 2010 of 20,878 divided by 12 months multiplied by 20 months. (2) Based on Medicare revenues per episode completed for calendar 2010 of $2,634 and the average length of service of 2.7 months (3) For the year ended December 31, 2010. (4) For the year ended December 31, 2010. Divisional Earnings is defined as Divisional operating income . Divisional Earnings margin is computed as the percentage of Divisional Earnings to revenue for the applicable period. (1) (2) (3) (4) |
Macro Growth Drivers Aging U.S. population projected to more than double by 2050 — Age 65 and over – fastest-growing segment 8 Consumer preference / Public policy awareness — Consumers prefer to receive care at home — Increasing awareness of home care as viable option Cost effectiveness — Home care costs less than hospital or nursing home care Nursing Homes Home Care (in millions) 35.0 40.2 54.8 72.1 81.2 88.6 0 25 50 75 100 2000 2010 2020 2030 2040 2050 Annual Medicaid Spending per Beneficiary (3) Consumer Preference for People Age 50 & Older with Disabilities (2) U.S. Population Age 65 and Over (1) (1) Source: Grayson Vincent and Victoria Velkoff. The Next Four Decades. The Older Population in the United States: 2010 to 2050” (May 2010) http://www.aoa.gov/AoARoot/Aging_Statistics/future_growth/DOCS/p25-1138.pdf (2) Source: Mary Jo Gibson. AARP Public Policy Institute: “Beyond 50 2003: A Report to the Nation on Independent Living and Disability,” http://assets.aarp.org/rgcenter/il/beyond_50_il_1.pdf. Note: Home Care includes care administered in the home by friends, family, or an agency. Institutional care includes care that is provided in an assisted living or residential setting, nursing home or other. (3) Source: Kassner, Reinhard, Fox-Grage, Houser, Accius, Coleman and Milne. AARP Public Policy Institute: “A Balancing Act: State Long-Term Care Reform,” (July 2008). (4) http://assets.aarp.org/rgcenter/il/inb161_ltc.pdf. |
Current Market Opportunity 9 $200 - $210 billion $70 - $75 billion Home Care Market Long-Term Care Market Social Funding Medical Funding Source: Company estimates based on: Georgetown University Long-Term Care Financing Project. “Medicare and Long-Term Care,” (February 2007), http://ltc.georgetown.edu/pdfs/medicare0207.pdf and Center for Medicare and Medicaid Services. “National Health Expenditure Projections 2008-2018,” http://www.cms.hhs.gov/NationalHealthExpendData/downloads/proj2008.pdf, and MedPAC. “A Data Book: Healthcare spending and the Medicare program: June 2010,” http://www.medpac.gov/chapters/Jun09DataBookSec9.pdf. |
Increased Use of Homecare 10 Home and Community-Based Services as % of Medicaid Long-Term Care Expenditures (1) 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 24% 26% 27% 28% 30% 31% 34% 37% 38% 40% 43% 44% 45% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 (1) Source: Thomson Reuters (formerly Medstat). “Medicaid Long Term Care Expenditures FY 2000,” (August 17, 2010). http://www.hcbs.org/files/193/9639/2009LTCExpenditures.pdf 3. Note: Medicaid data represents home & community services, which is comprised of personal care and HCBS waivers. |
Addus Positioned to Excel Under Healthcare Reform 11 “The Pre-Acute Solution . . . . to the Post-Acute Problem” SM |
The Healthcare “Dis-continuum” 12 HIGH COSTS LOW |
Addus Integrated Services – Early Intervention Lowers Cost 13 Homecare Aid identifies change in condition. Home Health nurse conducts home assessment. Coordinates with payor. Physician is consulted and Home Health services ordered. Home Health field nurse / therapists provide medical services. Coordinate with Homecare Aid. Family advised throughout the process for additional support. |
The Addus Difference – Integrated Pre-Acute Services 14 Addus Integrated Pre-Acute Services: • Continuous monitoring of client / member medical condition(s) • Coordination of medical care with healthcare team • Early identification of disease processes • Early intervention / lower costs • Reduced pain and suffering • Improved quality of life |
15 The Addus Difference – Geographic Coverage |
16 The Addus Difference – Geographic Coverage |
17 The Addus Difference – Geographic Coverage |
Addus Integrated Services – Changing the Cost Curve 18 HIGH COSTS LOW Time Current Cost Curve Projected Cost Curve |
19 Homecare Utilization Dramatically Lowers Costs 19 Source: CCP Cost Effectiveness: Comparison of CCP growth with Nursing Facility Prevalence Reductions HCBS Strategies Inc. February 10, 2010 Conclusion: Over a 28 year period, which corresponds to the growth of the Community Care Program in Illinois and Addus, the 75 + years old population grew 54%, while nursing home residents declined 8.2%. The annual savings to the State and Federal Governments is $1 Billion. 1980 2008 0 100000 200000 300000 400000 500000 600000 700000 800000 900000 Illinois Population > 75 years 68000 70000 72000 74000 76000 78000 80000 Medicaid Nursing Home Residents |
Second Quarter 2011 Summary Total net service revenues up 1.6% to $68.3M Home & Community increased 1.6% to $55.0M Home Health increased 1.7% to $13.2M Adjusted EBITDA of $3.7M, compared to $4.3M in Q2 ’2010 Net income of $1.3M, or $0.12 per diluted share, compared to $1.7M, or $0.16 per diluted share Cash flows from operations of $29.1M*, compared to $0.8M Accounts receivable DSO has sequentially improved to 65 days from 84 as of March 31, 2011 20 * Includes a significant payment received from the state of Illinois at the end of June 2011 |
Condensed Consolidated Statements of Income ($ in millions Except per share amounts) 21 (1) (1) Six Month amounts for 2010 and 2011 are Unaudited 2007 2008 2009 2010 6/30/2010 6/30/2011 Net service revenues 194.6 $ 236.3 $ 259.3 $ 271.7 $ 131.8 $ 135.1 $ Gross profit 55.3 69.1 76.6 79.9 38.6 39.2 Total operating expenses 50.3 58.2 64.8 67.9 32.6 34.5 Net income 0.2 4.0 3.6 6.0 3.0 2.2 Net income (loss) attributable to common shareholders (3.7) $ (0.3) $ (1.8) $ 6.0 $ 3.0 $ 2.2 $ Earnings (loss) per share (3.62) $ (0.24) $ (0.66) $ 0.57 $ 0.29 $ 0.20 $ For the Year Ended December 31, For the Six Months Ended |
Organic Growth Augmented by Acquisitions Fragmented industry 12,000+ homecare agencies in U.S. Numerous acquisition opportunities Smaller players struggling; expect consolidation to increase Acquired 12 homecare agencies since 2007 Average purchase price multiple of 3.4x trailing actual EBITDA Average cash consideration of 62% and earnout / other contingent payments of 38% 22 Historic Growth Through M & A $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 2007 2008 2009 2010 Organic Revenue M&A Revenue |
Home & Community Segment 23 ($ in millions) Home & Community 12/31/2007 12/31/2008 12/31/2009 12/31/2010 Average Weekly Census 17,117 19,432 20,182 20,878 Billable Hours (in thousands) 10,421 12,139 12,835 13,132 Reimbursement Rate per Billable Hour $14.36 $15.57 $16.37 $16.81 (1) Divisional EBITDA is defined as Divisional operating income plus depreciation and amortization. Divisional EBITDA margin is computed as the percentage of Divisional EBITDA to revenue for the applicable period. Divisional EBITDA is a performance measure used by management that is not calculated under 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. Divisional EBITDA margin is computed as the percentage of Divisional EBITDA to revenue for the applicable period. (2) Includes incremental increase in bad debt expense of $1.5 million, recorded in the fourth quarter of 2009. $149.6 $189.0 $210.1 $220.8 11.1% 11.6% 11.3% 11.5% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% $0.0 $25.0 $50.0 $75.0 $100.0 $125.0 $150.0 $175.0 $200.0 $225.0 CY 2007 CY 2008 CY 2009 CY 2010 (2) Divisional EBITDA Margin Revenue (1) |
Home Health Segment 24 ($ in millions) Home Health 12/31/2007 12/31/2008 12/31/2009 12/31/2010 Average Weekly Census 2,565 2,683 2,955 2,976 % of Medicare Revenues 55.1% 58.3% 61.3% 64.1% Medicare Episodic Amount $2,563 $2,606 $2,569 $2,634 Divisional EBITDA Margin (1) Revenue $44.9 $47.3 $49.2 $51.0 10.5% 14.3% 15.3% 11.7% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 CY 2007 CY 2008 CY 2009 CY 2010 $44.9 $47.3 $49.2 (1) Divisional EBITDA is defined as Divisional operating income plus depreciation and amortization. Divisional EBITDA margin is computed as the percentage of Divisional EBITDA to revenue for the applicable period. Divisional EBITDA is a performance measure used by management that is not calculated under generally accepted accounting principles in the United States (GAAP). It should not be considered in isolation or as a substitute for net income, operating income or any other measure of financial performance calculated in accordance with GAAP. Divisional EBITDA margin is computed as the percentage of Divisional EBITDA to revenue for the applicable period. |
Divisional EBITDA by Reporting Segment ($ in millions) 25 Year Ended Six Months Ended 12/31/2007 12/31/2008 12/31/2009 12/31/2010 6/30/2010 6/30/2011 Net Service Revenues $149.6 $189.0 $210.1 $220.8 $106.8 $109.2 Cost of Service Revenues (113.8) (141.8) (156.6) (164.6) (79.7) (81.9) General & Administrative (19.2) (25.2) (29.7) (30.7) (14.9) (14.7) Divisional EBITDA $16.6 $22.0 $23.8 $25.5 $12.2 $12.6 Home & Community Home Health Year Ended Six Months Ended 12/31/2007 12/31/2008 12/31/2009 12/31/2010 6/30/2010 6/30/2011 Net Service Revenues $44.9 $47.3 $49.2 $51.0 $24.9 $25.9 Cost of Service Revenues (25.5) (25.4) (26.1) (27.2) (13.5) (14.1) General & Administrative (14.7) (15.2) (15.6) (17.8) (8.4) (10.0) Divisional EBITDA $4.7 $6.7 $7.5 $6.0 $3.0 $1.8 25 Note: Divisional EBITDA is defined as Divisional operating income plus depreciation and amortization. Divisional EBITDA margin is computed as the percentage of Divisional EBITDA to revenue for the applicable period. Divisional EBITDA is a performance measure used by management that is not calculated under generally accepted accounting principles in the United States (GAAP). It should not be considered in isolation or as a substitute for net income, operating income or any other measure of financial performance calculated in accordance with GAAP. 6/30/2010 and 6/30/2011 amounts are unaudited. |
Summary Balance Sheet 26 ($ in millions) * Includes a significant payment received from the state of Illinois at the end of June 2011 6/30/2011 amounts are unaudited Key Balances 12/31/2009 12/31/2010 6/30/2011 Cash $0.5 $0.8 $ 24.1 * Accounts receivable, net 70.5 71.0 51.3 Total assets 161.3 166.9 170.1 Debt, including current maturities 49.2 45.2 40.0 Stockholders’ equity 80.6 88.1 90.4 Debt to capital ratio 37.9% 33.9% 30.7% |
Improving Days Sales Outstanding 27 # of Days Accounts Receivable Days Sales Outstanding 40 60 80 100 120 140 160 180 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Total Company - DSO Largest Payor in Illinois DSO |
Key Management Initiatives – Positioning for Growth 28 Improve Operating Margins and Outcomes People: • New leadership in Finance, Operations and Sales • Agency staff focused on growth • Professional Call Center staff • Sales team expansion Process: • Focus on Integrated Model • Centralized Call Center • Centralizing administrative processes and activities • Focus on operating standards and managing to metrics Technology: • Telephony solution • Enhanced VOIP telephone solutions linking all offices • Enhanced Business Intelligence solutions • Standardize and install human resource and payroll solutions • Point of Care for Home Health Division Process Technology People 28 |
Investment Highlights 29 Large & Growing Market Broad Range of Services and Payors Positioned to Excel under Healthcare Reform Significant Operational Scale Across National Footprint History of Growth through Acquisition Multiple Organic Growth Opportunities Experienced Management Team Differentiated, Integrated Care Model |
Adjusted EBITDA Reconciliation 30 ($ in millions) Year Ended Sis Months Ended 12/31/2007 12/31/2008 12/31/2009 12/31/2010 6/30/2010 6/30/2011 Net Income $0.2 $4.0 $3.6 $6.0 $3.0 $2.2 Net Interest Expense 4.8 5.8 6.8 3.0 1.5 1.4 Income Tax Expense 0.1 1.1 1.4 3.0 1.5 1.4 Depreciation & Amortization 6.0 6.1 4.9 4.0 1.9 1.9 Severance Costs Related to Former Chairman -- -- 1.2 -- -- -- Stock-based Compensation Expense 0.9 0.2 0.3 0.3 0.1 0.1 Adjusted EBITDA $12.0 $17.2 $18.2 $16.3 $8.0 $6.7 _____________________________________ (1) Included as one-time charge associated with the Company’s IPO completed in November 2009. (2) Adjusted EBITDA is defined as net income plus depreciation and amortization, net interest expense, income tax expense and stock-based compensation expense. Adjusted EBITDA is a performance measure used by management that is not calculated under generally accepted accounting principles in the United States (GAAP). It should not be considered in isolation or as a substitute for net income, operating income or any other measure of financial performance calculated in accordance with GAAP. (3) 6/30/2010 and 6/30/2010 and 6/30/2011 amounts are unaudited. (3) (2) (1) |
Divisional EBITDA Reconciliation 31 ($ in millions) Year Ended Six Months Ended 12/31/2007 12/31/2008 12/31/2009 12/31/2010 6/30/2010 6/30/2011 Operating Income $12.7 $17.6 $20.4 $22.7 $11.0 $11.3 Depreciation & Amortization 4.4 3.4 2.8 1.2 1.3 Divisional EBITDA $16.6 $22.0 $23.8 $25.5 $12.2 $12.6 Home & Community Home Health Year Ended Six Months Ended 12/31/2007 12/31/2008 12/31/2009 12/31/2010 6/30/2010 6/30/2011 Operating Income $3.5 $5.8 $6.8 $5.3 $2.7 $1.5 Depreciation & Amortization 1.2 0.9 0.7 0.7 0.3 0.3 Divisional EBITDA $4.7 $6.7 $7.5 $3.0 $1.8 $6.0 (1) (1) 3.9 (1) Divisional EBITDA is defined as divisional operating income plus depreciation and amortization. Divisional EBITDA is a performance measure used by management that is not calculated under 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. |