ADUS - Earnings call transcript Q2 2018 | Addus HomeCare Corporation

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Operator

Good morning, and welcome to the Addus HomeCare Corporation Second Quarter 2018 Earnings Conference Call. Today's call is being recorded. To the extent any non-GAAP financial measure is discussed in today's call, you will also find a reconciliation of that measure to the most directly comparable financial measure calculated according to GAAP by going to the company's Web site and reviewing yesterday's news release. This conference call may also contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding Addus' expected quarterly and annual financial performance for 2018 or beyond.

For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statement. discussions like estimates, forward-looking are foregoing, expectations plans, statements. the the and intended limiting of targets, forecast, beliefs, Without to identify

by news the materially discussed Securities You may Exchange may Commission set that differ cautioned its and actual in important second in operations in affected results quarter forth with are results others, Consequently, factors, the from filings these Addus' the and among forward-looking undertakes otherwise. Chief no to release. as obligation hereby be to forward-looking statements, statements statements. Please any information, or whether President Executive result update event turn The Allison. Dirk I’d go new of and company Mr. the company's over a sir. to ahead, like Officer, the future and call now

Dirk Allison

Good will you Poff, Thank overall with happy our yesterday be me morning, us for call. thank we we'd that I quarter Brian comments, afternoon. today any to second then is will everyone issued After to Officer. joining begin and second that, Financial respond discuss for conference the With Brian questions. quarter some results and Chief you, our Scott.

growth As we in which second results. XX.X% by the for continued XXXX, to acquisitions. increase operating announced in strong an and XXXX organic $XXX.X financial second a of of Revenue driven to our our solid the quarter $XXX.X million performance led for combination quarter was the compared yesterday, million same of period

$X.XX increased XXXX, the in adjusted $X.XX Our same share diluted to XX.X%. the increase of earnings per for of an to quarter for as compared second XXXX period

our EBITDA ended $XX.X million million of of quarter an margin second to $XXX.X quarter increased in and from increase approximately the bank the million with second to with We for $XX.X of the XX.X% EBITDA adjusted debt. Our X.X%. $X.X million adjusted cash in XXXX

of from of reflected in be continue Illinois. position, including all our our cash state collections payers, our strong cash to As the

year. timely reimbursement This next XXXX is a state of continue this more the year will June, of a Illinois budget and the Illinois budget, cash State for consecutive from passed months. the the second fiscal XX the for During that ensures

of expecting in means good This the news, the were we get that budget was will passing points until we was in we a approximately minimum state. quarters, the were final that basis overall this offset wage for to a see version margins passed. our this few that next that not While disappointed the the was a increase XX can we budget from decrease of

to and offset We are will veto working state try of the minimum-wage passed have as in this a with potential be part the of leaders which held November. session,

difficulty] be may [technical these session. we cannot certain elections the chance increased minimum-wage there rates to which is occurred made believe an see to a handle of good in timing adjustment this July. of the do We While be we in increase, November upcoming

of the about Homecare addition health excited the this have services. these operating new our the converting hospice and Homebase, to we leading system home We're to operations to process for moving With software of platform. those company, begun

is this in home-based by enables that needed business a model, of Ambercare the care also to add our by be conversion believe that to of will partners. to The our XXXX. services homes, an managed services continue We acquisition completed individuals model strategy stay offering while to end our example their care

benefit patients, payers. to add services that and look consumers, opportunities continue our will for We to

Arcadia both as and of expected. integration Our continue Ambercare

of of a months. over synergies first these mentioned, in As acquisition start year the complete savings companies We XXXX. this number quarter of the in been from seeing we’ve should has of two quarter starting a these previously the of with integration realization completed fourth

continue As companies we as perform far both to as financial expected. performance,

grow to our XXXX. integration team these will during least other on Addus through transaction that have additional efforts the believes our ongoing, at to are acquisitions opportunity one to and close as acquisition Even opportunities continues we evaluate

on expanding personal by I possibility announced hospice care Plans Addus that care services is in which last discussing to share This On which looking with that continue in earnings one added will our MCO our been states and opportunities. Medicare may have beginning We Advantage had an be market to mentioned at focus our their CMS XXXX. exciting personal both call, offerings in for we we care partners. and operate

care develop outsource to managed to as the As you to have MCOs. relationships Medicaid strong know, states more providers we have decision worked with their made programs

could availability of potential an of value-based and healthcare. is services personal indication Addus, the the early towards awareness increasing too home our positive the impact the and While lowering to what is this care step tell payment system of another value care cost of for it of services a improving quality in be the the expanding under

who you Brian a of Before employees patients. each of day of I to the care Addus of understand performance, through walks let work the every importance hard job. review you more of second-quarter me taking thank your want detailed

hard homes the stay The to You that Addus employees. made of work is patients intimate and in help me good possible our enable our much that, instead in more XX,XXX every Brian. call settings. progressing to to day less turn expensive of With by let all their work to health over does care the each

Brian Poff

morning, good and everyone. Dirk, you, Thank

level in demonstrated an Our model, for industry and leadership results growth organic ongoing XXXX scaled levered acquisitions. years growth in position dynamics of second over personal positive our our has drive quarter past which profitable the of of the to the steady the potential homecare the from at care increasing business financial few

annualized acquisitions of growth into quarter we profitable produce XXXX Arcadia we revenue which $XXX remainder of million, the believe further XXXX. historical and of well-positioned are Ambercare, to combined have over through second the and With

of supported a transactions. through same-store We pipeline with to in of potential robust from expect this increasing will acquisitions an increasingly by continued additional X% revenue X% be organic also revenues growth range expansion and accretive

for XX.X% million, impact of the the As in increased to to net which a a XX% and health Dirk mentioned, revenues $XXX.X XX% growth in personal increase included of per billable revenue business care our increase revenue billable X.X% from XX% the hours growth was initial in service revenues services. remaining reflected revenue. of quarter, per a total Approximately revenues a for our total hour. XX.X% in hospice same-store approximately home came which revenue increase increase X.X% The day turn due and second total for quarter in

of noted P&L of items press on revenue. adoption ASU X January percentage growth a comparability affected release, and in revenue of As XXXX-XX the our the as

for as This in the operating for revenue XXX quarter the the change as revenue expense prior $X.X for of growth provision an by approximately million directly reduced quarter against periods. basis our of bad debt As than was instead rate more points. netted

on second income, adjusted per share. effect quarter adjusted no Gross has year. change with reporting diluted EBITDA, XX.X% margin was last XX.X% for this compared earnings quarter net or second the for Although the

of adoption quarter XXXX-X gross the with most the However, ASU margin recent XXX basis for our lowering points. by a

percentage to was margin the of gross of higher-margin year prior reflective impact profile business. the comparable XX.X% quarter our of the skill Our acquired

acquisitions year. increased the X.X%. last the costs Although $X.XX increases is compared second anticipate maintain reduce last charges expenses G&A growth the recent in the related of in of XX.X% basis restructuring ability offset to costs $X.XX, quarter M&A and second was compensation severance we've from wage noncash Dirk and of as other of diluted adjusted XX.X% integration the to due end to other for year. and Approximately the Illinois, points on we quarter grew company's $XX.X quarter adoption increase The other XX our $X.XX, to timing following: reimbursement from per the for restructuring charges increased Adjusted stock-based quarter of in EBITDA results for revenue largely XX.X% $X.XX, The the offset expenses, of quarter in second a from of costs to of exclude toward while of which basis compensation, and our margin quarter minimum-wage points quarter attributable EBITDA for the associated the increases adjusted XXXX second mandated to XXXX. our million mentioned this quarter the XXXX XX states gaining the transaction the quarter impact income increase stock-based to $X.XX for The of XX XXXX, with of been remainder G&A successful to points the was year second with the with per margins the standards margins. for process the XXXX, the adjusted compared complete update. another severance second share and expense the for net second of impact accounting of share of second the M&A to of XX.X% basis of we $X.XX.

noncash of XXXX exclude of M&A the Our issuance stock-based adjusted $X.XX. share of expenses write-off results per and costs compensation transaction $X.XX, second quarter of for the the $X.XX

XX.X% the declined rate Our for tax to quarter year from XXXX the XX.X% quarter second same for with consistent expectations. prior of

the to XXXX, continue to low expect in our remainder rate For be tax we of XX% range. the

million. first XX the first XXXX with the DSOs our of quarter, quarter credit million for XX, DSOs XXXX, quarter. of the the million well from remain compared help Reflecting XX and impact with the the days Ambercare Department $XXX.X end our $X.X in Aging now up. days the acquisition to XX declined operations the of cash facilities of to quarter days at the $XX.X capacity the hand strategy. on termed of days were totaled second end on Arcadia At of the June second Our at support cash the at at we second net capitalized we have in XX and of quarter. acquisitions with end end under during quarter Illinois compared

their As with your This efforts consistent you are ask for I continued questions. want from now morning open our for as please possible. Dirk the prepared concludes to operator Illinois comments and see us thank payments the being keep we’ve this pleased to mentioned, to to and line as current will I us. with

Operator

with you. question will Matthew Instructions] Thank from Baird. [Operator of our line Gillmor Robert the come And first

is now line Your open.

Matthew Gillmor

Thanks more you comments. the reiterated for by but deal had to activity I also taking close acquisition question. the levels the morning. increased. the Good thanks. about it like wanted pipeline year-end, sounded one Hey, to in pipeline expectation ask Dirk,

there you provide If seeing increase any where are dynamics? was around correct, hoping sort cause more detail I past? the particular that more you’re pipeline to recent could some activity I’m areas do the you So and of what think relative that

Dirk Allison

lot none pipeline potential acquisitions. Well, working opportunities obviously a have a at. we looking a in in seeing that couple out opportunities are increase we're but Matt. for it's deals, ready, work we're announce we do Thanks, hospice care on to although continue there, area. personal today, number additional our of seeing, do we we're largely of do What of which We're of to

be seeing didn't I is think is past acquisition might that may willing we some As -- Addus that and our far why additional opportunities, we’re to able the we forward, as people business understand deals of the to reason and see. we one be in opportunities it so strategy is moving Matt, at look see part starting had

care, that, had very an investment are that's Congress. make have to personal by expensive I January EVV XXXX, proposition companies on IT think to a forward interface be moving the But personal it's by the with still care for we around was mandate states. EVV delayed smaller all most that states to recently have one-time, an quickly, states that particularly at year X,

we're So some I seeing movement there. think

those out that reasons seeing our increase other there we’re the that, probably fact in well really the are so, capitalized, pipeline. two than think, largest we're that people we’re buying, an I And see

Matthew Gillmor

a want emphasize the terms hours in over going Okay. growth? outlook. hours. in the we point your with are penetration the know with to you that'll update emphasis your expect same-store I in trend. one of hours census. growth where continue census where versus into on allowable And to in growths there organic the did And census in were just then drive terms of the And you are you'll same-store census revenue should or But dynamics I from the get some are line your rate an growth hour on maybe trend overall a standpoint approaching

Dirk Allison

into emphasize of if we us in will got growth becoming is always we hour ask point again because but at. census look the we do we bill now just part where by Well, to pick what you time hours, one we believe

when if sequential emphasizing ADC In deemphasizing since started we the you first quarter-over-quarter I XXXX started the quarter had this ADC we third fact, quarter, at increase of think hours. in look and really

forward. with both those will We continue emphasis a on of going

both starting back Our of those. to the operating job team a focus has really done good second in quarter moving

go we We that at forward. continue to look as will

Matthew Gillmor

more for one And me.

level get offset folks the if sense provide when rate a to just I talking have understand wanted to for the On Illinois rate the And it is of increase. would confidence give the issue the half actually and I whether minimum the you up us basis, you’re there gets in update wage there a this session. this in of of issue that and caught with back veto local could is for chance any passed they year? kind you on as that timing be your terms in mismatch be you retroactive would this any lobbyists, a so

Dirk Allison

not very would retroactive We to otherwise assuming able is If debate. Matt, are didn't Whether historically, is a goes we I'm if waited and they session got Republican the right at working our things amendment there, the so Democrat to to right what discussions was us veto we'll We the like, little the going something a I this of wayside certainly it the be We have we this after Congress, where to open by the January what the to -- been work was have you that that. not election bill rate. the to it the that done. sign not of we due increase. this and expect go a a an session veto probability to Illinois something Well, everybody how give rate the how to we and dynamics way, adjustment, had will we Illinois the then the we end, in the had governor look once get for out last with with to will legislator actually the until have think is to timeframe in get governor governorship, I’m and going budget. is year is And get a have happened then four politics takes sure was the than budget wins a the be effect the before as higher get get felt make to one that to Democratic We an went lot with adjustment November. years passed. of the the to new legislator. up

believe in will next of whether January have So that is we’re we very till that of confident to it matter occur. something it's wait timing a or July get year. We

Matthew Gillmor

hop back in Okay. queue. Thanks will very much. I

Operator

you. The question the from will Mitra with Thank next come line of Ramgopal Sidoti.

Your line is now open.

Mitra Ramgopal

Yes. Hi, good morning.

was and Just I issue of seeing the of tracking you’re this with terms in what on the you’re facing are reimbursement the state other road? if down there currently that maybe wondering you’re similar states in Illinois, involved

Dirk Allison

came we positive state Mitra, minimum nice Every had really through. the Actually, got increases. We this wage results year. increases, covered some

we just while And exception the the we it its emphasize, Illinois, say of very, again very is I disappointing with do all in to by that giving of they is reimburses. So budget, affected importance This me pass that let didn't the the an Illinois, wage the would well. the did that with companies. anybody issue. state in that understand state they Addus believe minimum This isn't

very the getting So confident nature wage in as far getting occur. we’re companies be to like critical beat future. it we reimbursed handle not handle because the understand this to without of not this are ourself, we'd it going smaller not passed, missing growth higher Companies as able will while a it. things for acquisitions minimum We certainly rather can and do they

really year. we states we're it All good get did comfortable other this Illinois. job So a will with

Mitra Ramgopal

Okay.

consulting maybe are of mind partners some your in also terms And enter? any you’re states you with that’s would and they in in. I the in you’re see some managed of like to in of reimbursement to as looking acquisitions of And great. terms also Now places you assume care you expanding, look new keeping

Dirk Allison

Absolutely.

state. absolutely for environment If not on state ability them of you need increases, and smaller at put wage strategy, we minimum we is look states once fiscal of one acquisitions. be in target they to the the minimum the we're look our the that, opposed things wage understands. for like at that we or but the acquisition find to state, to us If the first financial the look The

As are look But would approach. those states. disciplined like in to MCO as people work to partners with had you our yes, looking to have it Would additional in in well a say us of some relates working our have in, states, and with understand consider we number MCO we've we stay we partners, going into. and in states, state, we other we those come couple one we a come you very

have Our state or into based allowing place we hospice They us deals so as to we two strategy to in scene just accretive. eventually have those than offer of get can that the one to homecare one to we It's relates helpful, a service. it very can behind personal to more find if fit our be care. market, the where add

with say our to potential it MCO our would acquisitions I So grow discussions partners as that M&A. relates

All of those strong and very ongoing. are

Mitra Ramgopal

Okay. Thanks. the the And you terms in a are look little in end, more seeing potential competition marketplace valuations you of higher or terms moving transactions, as other maybe there? entrants change no of on and then, in

Dirk Allison

the if at Most and still firms, personal care we’re maybe today, there, around PE sting PE to range in in. want to the nature. of very we’re Well the it's stake -- in a seeing side, or lot those or a personal X out deals the in be to multiples bigger of looking the competitive not aren't to we competition that the competition. little smaller be two care of companies is And the X state on Most strong tend the range. they competition with

Now hospice is different.

want then XX, that, pay If PE XXx can. going hospice. firms We to they pay for to are not

We mainly we that pay more hospice care. will us. markets for obviously look than make at we of have -- will a will for strategic try in lot to opportunities, pay personal will And to sense we

will market only if synergies where it hospice we care willing and We that to have that had sell market. network opportunities we’re we strategically up synergies, the see personal between also for to do our pay but the cost but fits in not some some, synergies,

Mitra Ramgopal

of caregivers on of tight I Okay, curious thanks. just the in you? having out And what’s out environment and -- kind was there, there given difficulty for attracting the labor if you’re just any market terms the

Dirk Allison

environment wage it. pressure with to there to have seeing of what been our Yes, on has COO what They’ve put some the done many use be experience offer close kind current focused with in Mitra, minimum and our all It But services, teams we But a and labor job focused. care I we’ve gap so out and his others. between great that a mean we recruiting very tight able that caregivers pressure our team minimum Brad, and job is wage today area. job a that our is wonderful a doing health caregivers. -- like in are market in done to great

Mitra Ramgopal

one give then following and can Brian, me how Arcadia? to Ambercare a much in you as sense your if follow-up of terms quickly, facilities And Thanks. question available credit you’ve

Brian Poff

$XXX Yes. Total our we still a and outside our that’s EN revolver set. north to all remaining, be of of DTL core in combined in availability million have

Mitra Ramgopal

Okay. taking again the Thanks for questions.

Operator

of you. Dana Hambly the Instructions] Stephens. [Operator will our from with question line come Thank And next

open. now is line Your

Jacob Johnson

how on do This much you quick have morning. thanks. left how draw? is A much Dana. you on for Good -- the delay left room debt. Johnson do Hey, on Jacob have the Brian, follow-up

Brian Poff

million left, We’ve that’s Jacob. got $XX

Jacob Johnson

Chicago should addition But the is point to it so margin. hospice we'd gross pressure. then, somewhat be that home like guess about and sounds accretive health of And Okay. basis I gross margins, XX a on think

be possible which minimum of will the from is business is quarter? that offset, it third impact the wage So the due and to the fourth of mix some hike in

Brian Poff

Jacob, Ambercare in look quarter. we two at Yes, you months had quarter, for the second the there remember, in

impact seen already. So you’ve that of some

you’re moment month another see in that right. us with You should yes, in That a little of still keep QX. bit But full should level. help quarter

Jacob Johnson

hospice a lot duty. haven't mention and to a got of of M&A I that’s that and on about this that that entering new Okay, private of business something guess but I morning question into a you to maybe You line states, interest use M&A, talk M&A? is sort personal try Is you something heard grow grow it. organically. or still it will to you care,

Dirk Allison

we're is care. market look that No, is biggest model we participate in companies deals are able private or private that additional a like standpoint Jacob, good larger -- we we be an It most in. the franchise nurse from in and not market. there duty to to duty that's for and The duty we of operate like have challenge, looking personal grow would acquisition that private personal which or a we a quite for additional care models

private So look personal deals continue most transactions, be them. will of but we smaller for your do to side care

Jacob Johnson

Got taking it. That’s it for questions, Dirk and the for me. Thanks Bryan.

Dirk Allison

Thanks, Jacob.

Brian Poff

Thanks, Jacob.

Operator

Thank turn you. And the no like I further closing over I’m back conference Allison would remarks. questions. now to to showing for Mr.

Dirk Allison

for your you. Thank you in week. our want to you, participation a you Hope Thank thank today in call. operator. earnings Addus great for and your interest have I

Operator

Ladies and This in thank concludes gentlemen, for the today's program. participating conference. you

disconnect. Everyone have all may great day. a You

Addus HomeCare (ADUS) 11 Aug 182018 Q2 Earnings call transcript