Sidoti & Company Investment Conference June 2012 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, focused primarily on the Dual Eligible population: 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 - 43% of 2011 total revenues Medicare - 12% of 2011 total revenues 2011 revenues of $273.1 million and Adjusted EBITDA of $15.2 million _____________________________________ 118 Locations Across 19 States Note: Adjusted EBITDA is defined as earnings before goodwill and intangible asset impairment charge, revaluation of contingent consideration, net interest (income) expense, taxes, depreciation, amortization, 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. |
Average Census and Revenue Trends 5 Revenues (millions) Average Census (# of clients) |
Our Clients 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. 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 |
Addus Client Profile and Economics 7 Note: Data as of December 31, 2011 (1) Home & Community revenues for the calendar year 2011 of $221.5 million divided by average weekly census for 2011 of 22,786 divided by 12 months multiplied by 20 months. (2) Based on average Medicare revenues per episode completed for calendar 2011 of $2,399 and average length of service of 2.7 months. (3) Gross Margin as a percentage of revenue base on the year ended December 31, 2011. Home & Home Community Health Average length of Service 20 months 2.7 months Average Reimbursement per Client $16,199 (1) $3,199 (2) Gross Profit per Client Episode $4,244 $1,468 Gross Margin Percentage 26.2% 45.9% |
Trends & Preferences 10,000 Americans Turn 65 Every Day! U.S. Population Age 65 + (Millions)) Delivery of Care Preferences Age 50+ 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0 2000 2010 2020 2030 2040 2050 13% 87% Everyday Activities Institutional Care Home Care 27% 73% 24-Hour Help Institutional Care Home Care 8 Source: Wan He, Manisha Sangupta, Victoria A. Velkoff and Kimberly A. DeBarros. National Institute on Aging Report: “ 65+ in the United States: 2005,” (December 2005). 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. |
9 Growth in Long-Term Care Expenditures . SOURCE: KCMU and Urban Institute analysis of HCFA/CMS-64 data. June 2011 Medicaid Long Term Care Expenditures Medicaid Spending per Beneficiary Source: Kassner, Reinhard, Fox-Grage, Houser, Accius, Coleman and Milne. AARP Public Policy Institute: “A Balancing Act: State Long-TermCare Reform, ”July2008 $0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 $80.00 1990 1995 2000 2002 2004 2006 2008 2009 Institutional Care Expenditures (Billions) Home & Community Based Services Expenditures (Billions) $24,500 $9,200 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 Nursing Home Home Care |
Current Market Opportunity 10 $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. |
Addus Positioned to Excel Under Healthcare Reform 11 Addus Dual Advantage SM “The Pre-Acute Solution . . . . to the Post-Acute Problem” SM |
Dual Eligible – What is the Opportunity? Medicare Program Medicaid Programs 12 Pilot Program Features / Objectives Sources: Kaiser Commission on Medicaid and the Uninsured, May 2011 Populations 65+ years Hospital Services (Part A) Post Acute Care SNF / Rehab Duals Represent 36% of Total Medicare Spending Professional Services (Part B) Post acute Home Care Services Prescription Services (Part D) Populations 65+ years w Income limits Home Based Personal Care Long term Nursing Home Care Duals Represent 39% of Total Medicaid Spending 70% of Medicaid Spending is for Long Term Care Total $300 Billion in annual spending for dual eligible enrollees in 2007 Funding for both programs administered through the States 26 States have indicated they will participate over the next 3 years Each State will decide on the size, nature and timing of the pilots Approximately 3.2 million covered lives of an estimated 9 million lives to be in pilots Bids are being solicited from multiple “Managed Care Companies” Health Plan Secondary Objectives: Keep member functioning in the home environment Avoid / lower the cost for Acute Care services Stated Objectives - Eliminate service duplication / streamline administration |
MCO Plans/Programs already implemented 2013 Implementation Plans 2014 Implementation Plans No Implementation Plans Addus location(s) Dual Eligible Programs – State Strategies Source: Kaiser Commission on Medicaid and the Uninsured, May 2012 |
14 The Current Delivery System LOW HIGH Home Personal Care Services Home Health Care Services PCP Outpatient Health Home Skilled Nursing & Inpatient Rehab Long-Term Acute Care Facility Acute Care Hospital COSTS • The current system "silos" provide care with little communication between the pre and post-acute disciplines, resulting in a lack of continuity, which means great opportunity to improve outcomes • Existing infrastructure fails to manage the Member along the pre-acute continuum Low Health Care Costs High “Pre-acute Continuum” |
15 Health Plan’s Nightmare - $9,200 vs. $93,000 In-Home Personal Care $9,200/year Emergency Room $1,700/visit Acute Care Hospital $37,500/stay Rehab Facility $28,500/stay Nursing Home $24,000/year Vs. Ambulance $1,000/ride Total Episodic Cost & one-year of Nursing Home $92,700 Sources: Consumer Health Ratings.com CMS.gov |
16 Addus Home Care Aide Addus Home Health Clinicians Addus Call Center Primary Care Physician Health Plan Case Manager Advocacy Groups Pharmacy Family Community Resources Home Care - Integrated Clinical Strategy Begins In The Home |
The Addus Difference – 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 • Lower costs 17 Addus Integrated Pre-Acute Services: |
18 The Addus Difference – A Care Management Extension Model |
Results . . . and the results are! 19 |
20 Results - Home Care Programs Improve Outcomes Source: CCP Cost Effectiveness: Comparison of CCP growth with Nursing Facility Prevalence Reductions HCBS Strategies Inc. February 10, 2010 Illinois Residents Age 75+ Total vs. Nursing Home Population HCBS Strategies: Illinois Study Reveals Significant Savings Conclusions: Over a 28-year period, corresponding to the development of the State’s “Community Care” Home Care Program: • The nursing home population of residents over age 75 declined by 8% in spite of the total 75+ population increasing by 54%. • The study suggests that 2008 State and Federal annual Nursing Home Savings in Illinois equated to $799 million . |
21 Results - Home Care Programs Improve Outcomes Source: Coming of Age: Tracking the Progress and Challenges of Delivering Long-Term Services and Supports in Ohio Scripps Gerontology Center, Miami University of Ohio, June 2011 Conclusions: Over a 12-year period corresponding to the State’s “Passport” Home Care Program: Ohio Residents Age 60+ Total vs. Nursing Home Population Scripps Gerontology Center: Ohio Study Reveals Significant Savings 2300000 2250000 2200000 2150000 2100000 2050000 2000000 1950000 1900000 1850000 1800000 1750000 50000 48000 46000 44000 42000 40000 38000 36000 2009 1997 The nursing home population of residents over age 60 declined by 14.5% in spite of the total 60+ population increasing by 15%. The study suggests that the State’s annual Nursing Home Savings equates to $541 Million. Ohio 60+ Population Medicaid 60+ Nursing Home Population |
Financial Update – First Quarter 2012 22 Summary Financial Information First Quarter 2012 |
First Quarter 2012 Summary Total net service revenues up 1.6% to $66.8M Home & Community increased 5.1% to $56.9M Home Health decreased 6.6% to $11.9M after considering the one-time adjustment to accrued Medicare estimates of $0.9M Adjusted EBITDA of $2.2M, compared to $3.0M in Q1 2011 Net income of $0.6M, or $0.06 per diluted share, compared to $0.9M, or $0.08 per diluted share in 2011 Cash flows used in operations were $1.3M, compared to $11.5M generated from operations in Q1 2011. Subsequent to the Quarter end we received $16.0M in payments from the State of Illinois above normal levels. Accounts receivable DSO were 96 days compared to 94 days as of December 31, 2011 23 |
Condensed Consolidated Statements of Income 24 ($ in millions except per share amounts) 2007 2008 2009 2010 2011 (1) 3/31/2011 3/31/2012 (2) Net service revenues 194.6 $ 236.3 $ 259.3 $ 271.7 $ 273.1 $ 66.8 $ 67.9 $ Gross profit 55.3 69.1 76.6 79.9 81.8 19.0 18.6 Gross profit % 28.4% 29.2% 29.5% 29.4% 30.0% 28.4% 27.4% Total operating expenses 50.3 58.2 64.8 67.9 70 17.0 17.1 Net income 0.2 4 3.6 6 7.7 0.9 0.6 (3.7) (0.3) (1.8) 6.0 7.7 0.9 0.6 Earnings (loss) per share (3.62) $ (0.24) $ (0.66) $ 0.57 $ 0.72 $ 0.08 $ 0.06 $ For the Year Ended December 31, For the Three Months Ended (3) Net income (loss) attributable to common (1) - - Total operating expenses and net income for 2011 excludes a $16.0 million goodwill and intangible asset impairment charge. Net income includes $2.3 million of Illinois prompt payment interest income. (2) - - Total operating expenses and net income for the first quarter of 2012 includes a $0.5 million gain on the sale of a Home Health agency. Net income includes $0.1 million of Illinois prompt payment interest income. (3) - - Three month amounts for 2011 and 2012 are unaudited. |
Home & Community Segment 25 ($ in millions) Home & Community 12/31/2007 12/31/2008 12/31/2009 12/31/2010 12/31/2011 Average Census 18,527 21,032 21,844 22,598 22,786 Billable Hours (in thousands) 10,421 12,139 12,835 13,132 13,066 Reimbursement Rate per Billable Hour $14.36 $15.57 $16.37 $16.81 $16.95 $149.6 $189.0 $210.1 $220.8 $221.5 11.1% 11.6% 11.3% 11.5% 12.9% 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 CY 2011 (2) Revenue Division Pre-Corporate EBITDA Margin (1) (1) Pre-Corporate EBITDA is defined as division operating income plus depreciation and amortization. Pre-Corporate EBITDA margin is computed as the percentage of Pre-Corporate EBITDA to revenue for the applicable period. Pre-Corporate 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. Pre-Corporate EBITDA margin is computed as the percentage of Pre-Corporate EBITDA to revenue for the applicable period. (2) Includes incremental increase in bad debt expense of $1.5 million, recorded in the fourth quarter of 2009. |
Home Health Segment 26 ($ in millions) Home Health 12/31/2007 12/31/2008 12/31/2009 12/31/2010 12/31/2011 Average Census 2,565 2,683 2,955 2,976 3,232 % of Medicare Revenues 55.1% 58.3% 61.3% 64.1% 64.8% Medicare Episodic Amount $2,563 $2,606 $2,569 $2,634 $2,399 (1) Pre-Corporate EBITDA is defined as division operating income plus goodwill and intangible asset impairment charge plus depreciation and amortization. Pre-Corporate EBITDA margin is computed as the percentage of Pre-Corporate EBITDA to revenue for the applicable period. Pre-Corporate 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. Pre-Corporate EBITDA margin is computed as the percentage of Pre-Corporate EBITDA to revenue for the applicable period. (2) Pre-Corporate EBITDA for 2011 excludes a $16.0 million goodwill and intangible asset impairment charge. Division Pre-Corporate EBITDA Margin (1) Revenue $44.9 $47.3 $49.2 $51.0 $51.6 10.5% 14.3% 15.3% 11.7% 4.2% 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 $50.0 CY 2007 CY 2008 CY 2009 CY 2010 CY 2011 (2) |
Summary Balance Sheet 27 ($ in millions) Key Balances 12/31/2010 12/31/2011 3/31/2012 Cash $0.8 $2.0 $ 1.3 Accounts receivable, net 71.0 72.4 73.8 Total assets 166.9 154.7 154.4 Debt, including current maturities 45.2 31.5 31.9 Stockholders’ equity 88.1 86.4 87.1 Debt to capital ratio 33.9% 26.7% 26.8% |
Investment Highlights 28 Multiple Organic Growth Opportunities Experienced Management Team History of Growth through Acquisition Significant Operational Scale Across National Footprint Positioned to Excel under Healthcare Reform Differentiated, Integrated Care Model Broad Range of Services and Payors Large & Growing Market |
Pre-Corporate Divisional EBITDA by Reporting Segment ($ in millions) 29 Home & Community Home Health Note: Pre-Corporate EBITDA is defined as division operating income plus goodwill and intangible asset impairment charge plus depreciation and amortization. Pre-Corporate EBITDA margin is computed as the percentage of Pre-Corporate EBITDA to revenue for the applicable period. Pre-Corporate 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. 3/31/2012 and 3/31/2011 amounts are unaudited. (1) Home Health division’s general & administrative expenses and Pre-Corporate EBITDA for 2011 excludes a $16.0 million goodwill and intangible asset impairment charge. (2) Q1-2012 net service revenues and Division Pre-Corporate EBITDA for the Home Health division includes a $0.9 million reduction of estimates of accrued Medicare revenues. 29 Year Ended Three Months Ended 12/31/2007 12/31/2008 12/31/2009 12/31/2010 12/31/2011 3/31/2011 3/31/2012 Net Service Revenues $149.6 $189.0 $210.1 $220.8 $221.5 $54.1 $56.9 Cost of Service Revenues (113.8) (141.8) (156.6) (164.6) (163.4) (40.8) (42.6) General & Administrative (19.2) (25.2) (29.7) (30.7) (29.4) (7.4) (7.4) Division Pre-Corporate EBITDA $16.6 $22.0 $23.8 $25.5 $28.7 $5.9 $6.9 Year Ended Three Months Ended 12/31/2007 12/31/2008 12/31/2009 12/31/2010 12/31/2011 (1) 3/31/2011 3/31/2012 (2) Net Service Revenues $44.9 $47.3 $49.2 $51.0 $51.6 $12.7 $11.0 Cost of Service Revenues (25.5) (25.4) (26.1) (27.2) (27.9) (7.0) (6.7) General & Administrative (14.7) (15.2) (15.6) (17.8) (21.5) (4.9) (5.5) $4.7 $6.7 $7.5 $6.0 $2.2 $0.8 $(1.2) Division Pre-Corporate EBITDA |
Adjusted EBITDA Reconciliation 30 ($ in millions) Year Ended Three Months Ended 12/31/2007 12/31/2008 12/31/2009 12/31/2010 12/31/2011 3/31/2011 (3) 3/31/2012 (3) Net Income (loss) $0.2 $4.0 $3.6 $6.0 $(2.0) $0.9 $0.6 Goodwill and intangible asset impairment charge -- -- -- -- 16.0 -- -- Revaluation of contingent consideration -- -- -- -- (0.5) -- -- Interest Income -- -- -- (0.2) (2.2) -- -- Interest Expense 4.8 5.8 6.8 3.2 2.5 0.7 0.4 Income Tax Expense 0.1 1.1 1.4 3.0 (2.5) 0.4 0.5 Depreciation & Amortization 6.0 6.1 4.9 4.0 3.6 0.9 0.6 Severance Costs Related to Former Chairman -- -- 1.2 -- -- -- -- Stock-based Compensation Expense 0.9 0.2 0.3 0.3 0.3 0.1 0.1 Adjusted EBITDA $12.0 $17.2 $18.2 $16.3 $15.2 $3.0 $2.2 _____________________________________ (1) Included as one-time charge associated with the Company’s IPO completed in November 2009. (2) Adjusted EBITDA is defined as earnings before goodwill and intangible asset impairment charge, revaluation of contingent consideration, net interest (income) expense, taxes, depreciation, amortization, severance costs for former employees, and stock-based compensation expense. Adjusted EBITDA is a performance measure used by management that is not calculated under generally accepted accounting principles in the United States (GAAP). It should not be considered in isolation or as a substitute for net income, operating income or any other measure of financial performance calculated in accordance with GAAP. (3) 3/31/2011 and 3/31/2012 amounts are unaudited. (2) (1) |
Divisional EBITDA Reconciliation 31 ($ in millions) Home & Community Home Health Year Ended Three Months Ended 12/31/2007 12/31/2008 12/31/2009 12/31/2010 12/31/2011 3/31/2011 3/31/2012 Operating Income $12.7 $17.6 $20.4 $22.7 $26.2 $5.3 $6.4 Depreciation & Amortization 3.9 4.4 3.4 2.8 2.4 0.6 0.5 Divisional EBITDA (1) $16.6 $22.0 $23.8 $25.5 $2.86 $5.9 $6.9 Year Ended Three Months Ended 12/31/2007 12/31/2008 12/31/2009 12/31/2010 12/31/2011 3/31/2011 3/31/2012 Operating Income (loss) $3.5 $5.8 $6.8 $ 5.3 $(14.2) $0.7 $(1.2) Goodwill and intangible asset impairment charge -- -- -- -- 16.0 -- -- Depreciation & Amortization 1.2 0.9 0.7 0.7 0.4 0.1 0.0 Divisional EBITDA $4.7 $6.7 $7.5 $6.0 $2.2 $0.8 $(1.2) (1) Divisional EBITDA is defined as divisional operating income plus goodwill and intangible asset impairment charge, and 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. (1) |