Addus HomeCare (ADUS)

Dru Anderson Corporate Communications
Dirk Allison CEO & Chairman
Brian Poff CFO
Bradley Bickham President & COO
Matthew Borsch BMO Capital Markets
Scott Fidel Stephens
Mitra Ramgopal Sidoti
Call transcript
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Welcome to the Addus HomeCare Corp Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator instructions] Please be advised that today's conference is being recorded. [Operator instructions]. hand over to Dru like now the to conference Anderson. I'd ahead. go Please

Dru Anderson

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

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

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

Dirk Allison

and morning, earnings With Officer; Thank and our our Bickham, second Chief Operating joining today XXXX you our quarter for Officer. Chief and me are call. Financial Poff, Brad President thank you, for Brian us Good Dru.

Brian then second results comments, will some quarter I with begin will As in discuss more overall and usual, detail. the

Yesterday, be our of our comments, would Following results financial we XXXX. questions. the quarter happy respond for to we announced any to second

our We see continue we our environment. proud normal performance to a as be have solid to started operating markets of more return to

of as $XXX.X of revenue the an second $XXX.X quarter increase for as second XXXX quarter was XX.X%. quarter compared XX.X%. XXXX was for per for $X.XX $X.XX to quarter of compared million second diluted million the second the of an for Adjusted XXXX earnings of increase Our to share XXXX, of the

$XX.X as EBITDA million Our XX.X%. adjusted was million quarter $XX.X of an compared XXXX, for XXXX the to second for of quarter of the second increase

During in the started from $XXX effect see billion the second stimulus state the aid, to quarter, of federal plan. positive the which came we

done to to have at of June cases very for cash states leading million. a quarter flow the maintaining in nice nice Addus receivable XX or approximately some job Our payments a increasing in and a cash balance $XXX

which on largest increased X, as Chicago of Our year. last cover April on reimbursement rate effective the statewide Illinois in X their increase, minimum wage July state scheduled was to

increase which rate MCOs. XXXX approximate our retroactive directly of to XX% is this for In made business, through January state addition, the the State to opposed by X, as reimbursed the

be minimum XXXX. X, effective XXXX Illinois In it's Chicago January recent for the originally the of XXXX. come wage to July earnings XXXX, have on was fiscal end. planned an $X Chicago $XX state calls, increase to X, effective minimum State minimum minimum which budget additional X, statewide to wage July was Chicago rate for the wage hour, city's with increase previous budged has reimbursement the final on per As discussed increases now The increase, offset takes wage of we an which to

mentioned which state making it stimulus is the from months, rate the with has of two requested the by X, the federal effective now XX% FMed, November this to earlier bill, government increase receipt in accelerate the from on additional However, XXXX. currently approval place

the We the are weeks. grateful in from few for this consideration by next and expect the government state federal approval

will that for similar additional the states use are We requests federal funding. consider of hopeful other

our from response next CDPAP which this As the for program. to the selection last created which state state consider few to state the survey, our was anticipate we word did the non continue the New this protest We months. over our award discussed process was program. by York to protest await providers awards business, concerning something concerning the In our we call, our on on meantime, formal hearing provider for in for the additional CDPAP to file

While no provided recently XXXX on not program decision winners new when that state additional effective awards, of will there of a the until knowledge this we will X, for have earliest. be at stating be contracts November the timeline a

our locations any will that likely most we're our partially environment, the volumes. operating more past care to will due to in We see believe for to be Illinois revenue, revenue returning improvements growth continue quarter, starting due a as the our increase, or With rate same-store personal to expected increasing changes affect increased of our Addus to same-store XXXX. also normal in segment most but

compared care growth For same-store XXXX quarter the of quarter XXXX. second the second was when of to revenue personal our X.X

of revenue this first quarter same-store was personal for growth previously for X.X%. Our our announced year care

rate, announced would Illinois' for the upper our we recently of experienced X% retro normal X% growth to X.X% adjusted end have payment However, for our direct which business, is target. a the state

the have the be pandemic. the with faced challenges continue our spite over We very to to of this of quarters performance the segment pleased due business last several we in of

segment hire care in our ability also personal to is seeing Our caregivers improvements.

rate previous second a we in last were approximately equal the to in our were was the over of caregiver to personal quarter improvement Our marked six which hires XXXX. our months able hire quarter,

highest a hiring are our to being quarter are we making team XXXX. While progress that with far our challenge hiring area this in so continues for June pleased in be we

pending steadily was our XX.X% continuing up revenue the care health home and increased our Home XXXX, capitalize our and second coverage acquisition helps quarter throughout for As we July. compared the New segment. the Health the fully acquisition to our more Health Home ago, with this the in of our XXXX Health doubled closed of from announced our Since we year. with home into we on the Home quarter growth on increased Hospice. trend weeks year-over-year transaction, than our we offer. State Mexico give have us the of for flat covering of strategy Home admissions our This of A Effective to that levels Health second as August, segment, from our Armada first and few three which same-store favorable revenues growth saw of this beginning this to of quarter

about team are our I company, and them excited the We Addus. joining each want to Armada welcome to of

the quarter our this similar decreased revenue quarter to first of XXXX, For same-store year. X.X% hospice second the of

did as grow which year However, the XXXX, higher the XX% progresses. should quarter to admission we see second census same-store lead over the of

census July. While see not yet returned we end to we nice X,XXX, during months. which the in highest our has of we is to July, over our ADC where ADC census have seen was many did in it the would growth At like be,

increasing XXXX stay in medium our of days was stay to which length improve stay, second XX July of days. of reaching length our length quarter and median quarter first XX XXXX, of our in XX to continues with Our days of medium a

XXXX. of City momentum experience, positive Queen positive Ohio Our grown X,XXX time the from in at XXX operation July in experienced over has in the to acquisition maintaining the

growth excited to also see towards our We are hospice to our continue including markets, New expectations. Mexico, make progress other

As home you Armada care. markets levels saw where we acquisition, our goal acquisitions, continue provide scale, all we our creating multiple of which to focus with on meet three of of

our primarily and care of been personal XXXX, segments has For focus health home our the business. in

in will look we strategic opportunities at segments. to three However, all continue

a during on As liquidity strategic Addus. the strong to several We're to ability we announced we credit and support our next who this desire revolving to the partners facility. to million acquisition complete our stepped excited yesterday, forward and new position, additional the With close grateful $XXX continued we months. have are process bank closed

the of clinical the on care focus a the competitive, services With landscape particularly increasing providers pandemic, acquisition of result very for service scale. home as remains

years, As to pursue continue to will strategy Addus. accretive past few and transactions over operating we have to that that focus will on our are the bring synergies demonstrated revenue and

impact to have COVID-XX more of widely continues the and related improved predict months pandemic the Addus United this States, to evolve. pandemic as effect conditions the to the to in on ultimate have vaccinations recent continues be impossible in situation While available, become as it

in patients to elderly we homes taking shown continuing Delta is the recent have This and the past monitor the in cases. in of team and assist uptick planning, virus of variant that the to in us as and company. the believe care for materials COVID our as consumers invested XX disabled months, and growth we pandemic have awareness value COVID value provides raised fulfilling role such, Our be for the and for industry firmly value has monitor will and industry, of developments. our our to continue an our opportunity We preparation these their

our support hard, However, who outstanding and our on important day. thankful continue of of job families. XX that With each months they focus to I work I'm to care proud us achieving dependent our over our of patients our let the Brian. It have and team call mission operations caregivers so by and consumers, turn to am the putting members is and done me resulting their providing for the past first. patients that, each and our on are dedicated growth each do

Brian Poff

personal another sequential in organic the home quarter growth our targets morning, and with had everyone. improvement of all trends across volume solid with segment Thank operating XXXX and strong and exceeding our and you, in consistent our and segments, good of Dirk financial Hospice and Addus growth emissions growth health profitable performance second experiencing census. care continued

Dirk acquisitions and approximately hospice, service were in XX.X% of care These revenue. care three second the for Hospice Health X.X% $XXX.X million. revenue. XX.X% is personal closed half The of in the at the of of care addition Hospice $XX revenue. $XX.X Ohio, the revenues our or Queen total City Included in XXXX, were results were breakdown million totaled four XXXX. or revenues end which annualized revenue in As second $X.X $XXX.X revenues which revenues completed are revenue. of we personal quarter noted were of the or million the benefits follows; in as one million Home in include incremental net of million results

annualized also and We criteria. look our meet that million closed August on strategic acquisition forward our acquisitions Hospice Home with and $XX additional revenues to Mexico completing X Armada Health in New

first XX It negatively higher and reimbursement the past increase we quarter, as our largely that margin attributable clinical year, was last with second Chicago gross XX.X%. the approximately to most the Xt, up to from Our state by our reimbursement the the recent quarter, July percentage services anticipate scheduled sequentially increased from January the impacted to XX.X% recent of quarter of for saw be increase the basis wage the last impact third on in we offsetting XXXX. scheduled points margin Similar in increase experience, from positive XX.X% for mix minimum effective gross currently X, was in by Illinois.

first basis and was hopeful decrease based The of of and in compensation however quarter. to to the share company's EBITDA of XX.X% reimbursement revenue sequentially XX results quarter the XXXX. for of in of G&A expenses was EBITDA million second G&A $X.XX, revenue quarter essentially costs a income was rate last be increased for that same acquisition the a the quarter second approval expense X.X% statewide and $X.XX. XXXX expense to last year, non-cash in second $XX.X of from decrease margin de sequentially and second quarter. $XX.X first of impact request of of The of restructuring XX% second the quarter $X.XX. the The net are and from Adjusted Adjusted $X.XX XX% for adjusted the to the period adjusted excludes diluted compared accelerate XXXX, from increase they million points flat XXXX XX.X% November from the share increase X $X.X, and We per per the the XX.X% Adjusted was federal with for stock other will novo of year. the Illinois following. quarter state's compared granted. retroactive increased of

assets per loss the compensation of of expenses XXXX adjusted for COVID-XX net $X.XX, acquisition results of $X.XX second stock-based quarter $X.XX. of expenses and sale share of of excluded of and Our $X.XX, on other restructuring costs non-cash $X.XX

our of the the expectations. range XXXX Our effective tax of quarter was second XX.X% for within rate

full at year second we first XX.X with end end rate of XX% the compared days quarter of at days For the range. XXXX were the expect the in XXXX, the mid DSOs the tax a quarter. of XX.X

from Aging of the the end Department expected, at As the strong we at DSO of Illinois days collections saw XXXX. with second XX.X of their quarter

quarter net provided $XX million. second total Our cash by operations

quarter, our also the million approximately $XX.X previously million cash have flow would XXXX. utilized government had under stimulus XX, during we operations June of these our payments, making debt availability funds that which and million been in Addus received, hand $XXX.X million. had we However, million, in cash on $XX.X without $XXX.X The company At bank $XXX.X revolver. of for

With for The million that an from XX, all years incremental be of a has One maturity an acted that bank July by the facility release, in feature XXXX we comments confident questions. expands be leaders immediately million of the the prepared support million on our we're We pursue executed revolver and the as continue funding by XXXX no agent opportunities of facility please agreement industry appreciate by ask sheet, your the our Capital facility also beyond. of remainder term has in concludes facility looking XXXX. now to well-positioned $XXX place well-capitalized to to our acquisitions. $XXX one we credit with facility been loan. to you million I'll secured operator current to enhances credit for And press As enables of group the noted for is our acquisition us. under in our The accordion continued senior revolving additional lenders. availability $XXX an for our forward effective expanded increased our new line our with National and lead extended July an and to morning. new the to $XX This the this for credit us open to our thank three continue to being our allowing and Association additional feel this strategy. Addus balance further new


Your Borsch first Matt the from comes with Capital instructions] [Operator Markets. of question BMO line

Matthew Borsch

hoping the bit you competition morning. about a could acquisitions. Good Yes. was I talk more for little maybe

types I in who I think by you can previously of the the most? you're you're its this -- it perhaps you intense there against reveal been hospice Addus other so organizations intense ask area most if was also, health some most on the competing characterize and Can home now, organizations, side. inquiries could what question about if acquired And being

Dirk Allison

start one Care we it we Well, this certainly as year, Matt, to didn't been earlier, As Home focused hard on you off we've and with you? Health. acquisitions today, said Personal most at want the look

for found, at if a will there of Hospice look things are companies of number there it's we and we've are strategic out that looking Although one the deals.

out private seen If a larger months, you equity There's you've been last companies. firms also private companies. over go few lot acquired that there have competitors our back the of are

that's we -- The And proven and to people or pandemic a is makes that into attractive. it, this market lot sense home are is a think of as look get lot business get a going this at of care wanting I bigger. has so

look our the one our I to discipline thing are to is to think to and want are strategic company. that I that be accreative going deals maintain to at emphasize that we

very build markets talked we six major in or to build to that those past we to in about want we And care. and are that if the like pay in levels our five we the or those opportunities also we want at Mexico at look discipline. where three point strategic willing maintain we But people to constantly want to than realized to will will We we New aggressive a acquisition. more continue are that have continue obviously markets markets some of be it's

anybody your to is Addus sale we last talking not sale, it been way in the about relates of hasn't with for not any that. question, As and part are for


Stephens. line the from question with next Scott Your Fidel of

Scott Fidel

Hi. thanks. Good everyone. morning,

other around potentially like looking with January, rate just update care that type It out visibility in as other to getting of enhanced to the just what in as at the question, of interested this you're into key scheduled care or of update faster of come across called states a float well you're some increase of terms through FNAV the those personal business. personal your November markets, our funds. terms funds visibility in on terms of indications was in any some point that start enhanced the in FNAV First looks how Illinois may the from you for appreciate and starting just

Dirk Allison

of seen what kind dollars trying and planning the lot the an once away. most there's are long-term, add that think would states go think I not of we've funding I underlying require states in plans a thing new that again, stage, to Yeah, long-term still FNAV are

As Illinois you The match have doing do was states know, a decided three years plan which partial to already think funds XX like had to did. for Illinois are pack looking a what what States they funds. of [ph] increase I rate those use days. dollars to what use move are a forward that and year.

today. will I point talk being states, see we other of lines we're in along aware this things could in no plans time, another that but states concrete at that think to those considered you there's about you

Scott Fidel

now be Okay. year to plus up EBITDA margin second about Brian for and in that sequentially the results, having against and the from out progression long-term thinking question, that may after you're just XX% target? full shake helpful into into you full how you it the bring wanted if Then then looking how going higher just market XQ next terms minimum EBITDA on of wage quarter at know, Would year then Chicago just thinking pulled level in when XQ, maybe XQ reported the I impact out expected effect. to

Brian Poff

Yes Scott.

a I was had year which think in the quickly talked year we XXXX had of ago just over about was looking first we real kind XX%, our back years few targets. that full a being

being of quarter result like into happy and second we're XX%, a think of said. a the and quarter ahead I we payroll of we taxes usually as the pretty per this year saw as getting that we have lower

of seeing we're additional leverage release clinical there So off business. incremental some our

bit help a increase is X, the So able of from see Armada the increase they're to help Illinois nice impact we'll wage perspective and from in a going minimum definitely to pull little see November what we'll in Chicago, if a adding to QX margin the headwind in statewide offset I QX. think in forward

I aware, typically margin million plus are nice $XX it. see think attached we with in as you statewide costs, that new revenue to corresponding with a guys increase, but

we So, I to looking XXXX with saw full line think of bottom last year to year to we compared higher definitely our at percentage the coming than see thought margin ourselves expansion. XXXX, process continue a in grow and continue

our So off to to on that and with well that see where strategically bottom expect grow have services expansion clinical leverage I we future. strategy of get continued into the continue we would it think with makes G&A, adding sense line as

Scott Fidel

Got model, margin it. I could Armada closed incremental or, thinking correctly color deal, just just on the to that roll which side now margin we was can and any thanks. model it up on financially. the EBITDA on immediately talked accretive me, I margin follow profile EBITDA in out, you flip that's But for the And just EPS, if on, know about that being the about try into on side the us you I give as that, Armada

Dirk Allison

annualized It's XX million revenues.

health then QX, the with So see QX, health. of primarily a home full months hospice, is for primarily it in margin two but profile little bit in for coming it and home you'll

nice gross as range, Bottom margin in at those for kind us is of that line going margins XX% somewhere So are to be plus. mid-teen well.


Next question with comes line instructions] from Jefferies the Brian [Operator of Tanquilut


Brian for Lebanon Jack strong a quarter. congrats on

side been a updates as you elevate through appreciate look benefits, to back July unemployment we your wanted June, things some to expectations efforts of have any perhaps of commentary. we unemployment of what get line as think growth at the guess in just in May, the from I year. the have of those for kind and labor to the Wanted Personal the I take off Care, roll on all recruitment into top half pull

Bradley Bickham

start for well. we've flow slower, was with the a This flow from is and good tentative July as June hiring of talking both month little May, a standpoint. a numbers I'll look Brad. seen. about kind April, actually us candidate really a good

think and of to I to enhanced these see Care Personal starting for various is out benefits start starting applying unemployment then get that on early to seeing think phase are September in -- you're benefits I to try what entirely ahead and states are as we're jobs. people starting

we're candidate the by the So encouraged increase in flow.

consistent need that X% expect we I goal. though as X% term be the in at that We'll think of is the on I QX. a far end range at trajectory, we've growth the the third, hiring to said that higher think as we long the


well-digested Got think just challenges a and guys the the but average market, the you could like it. tracking business, how July are trends about are year? half stay That's of in you through of obviously you're maybe stay and of ADC the sense where and meeting length then thinking give hospice length at, helpful. back on of understood And the on I

Brian Poff

Yeah, it's Brian.

steady On look XX in of of a And our has increase low our ATC point had as were increase I through when days. where steady in that we have the of at each seen hospice think, stay is pleased side, length at stay and we at we July median a we've July month kind January, length been continued medium in well.

you If point recall our kind XX January low days. remember at that in was of

of is which and kind heading of length continuing. anticipate a the our certainly that looks stay, we on -- there we upper it back get twenties up said towards like normalized a we'll year to day the I back the mid a trend have at month So that and half we're adding of about the think median


that the Medicare Medicare don't too in for have point, me uptake are or the you that payers more collected on in any But pilots this excuse appreciate some running one left much last data you of advantage me. business have kind pilots payer of determinants are of probably, words seen advantage picking in then And determinants side or interested up a of hearing on we're that social health core I chatter and buzz in use. anything about personal think those non-medical care lot the health, of

I set to your hear what think like kind how landscape we rolling just opportunity there a couple about So wanted thoughts forward the of the on could looks and of years.

Brian Poff

Yeah, we to have Medicare seen increased program. of managed the in putting programs interest from inside to a say determine our try of a or payers care advantage number effectiveness personal Medicaid together a pilot program

over In next a announce pilots hope number point of we the that fact, other that months and we're to to busy. on we're few pretty working the

long-term very would well. bodes it So I say

think of it plans of starting as what be to gap what we're or that it Medicare hopeful that I we're a We it advantage to with care. are then on and we their offering. their the work term, are designed that continues able incorporating interim, and into some expect in we we get nonclinical on be it to care of have be, would would as information we that get cost to show data, long do think data see be if that overall our the whether such now affect that as to closures can then payers to programs and measures, and ER whether number we be our to we and visits us clinical give readmissions data

as starting, future, interests we're not It's but So it's excited we're going lot excited of about overnight seeing. take about but we're the some these to pilots a happen going to the are just time.


for And That's Awesome. me? it congrats. Thanks again.


line with the Ramgopal from comes Sidoti. Mitra question next Your of

Mitra Ramgopal

morning. for questions. taking Thanks good the Hi,

Just had the a on labor front. two part question

on etcetera, you you've if impact variants First, caregivers. with can secondly, And in bring both maybe surge regarding vaccines update your if the made business, if to also that's among give the the in an terms into and ability that progress recruiting having an new us of Delta

Bradley Bickham

honestly, not like I front overall. the vaccination On where We're we be overall. at would we're think to XX% about

side efforts actually and XX% process the its the our being our and to However, the a educate care more vaccinated. part-time benefits side on largely, home on ongoing continuing an is workers. side. this on hospice on the We're personal skill certainly higher. XX% But considerably workforce almost health We're of challenging is with that plus caregivers

that. individuals So vaccinated on good and data get honestly getting just those also trying to

With I think is more vaccinated a to little variants is referral number's standpoint variant hiring actually and either from impact and and I fully employees what really higher trends XX% than Delta seen suspect from yet it that through the those respect saying. or challenging it the Delta yet. to a effecting then pull if we're the haven't numbers the of from employee volumes from quarantines that or

seen So mindful it's our something we're impact haven't now right keeping certainly of numbers. on and certainly anything material an eye on. But

Mitra Ramgopal

little M&A significant that. the the you of for a just if the difficult. that's more quick change seeing a today are also question on gotten a just to in And thanks been front, there's curious acquisitions Okay. for and if just year a valuations relative ago, terms environment No, competitive also maybe

Bradley Bickham

Mitra, we evaluation in a of an I think think, haven't there. change front, really from personal care, I much Yeah seen

it I the on we've the with through that think be are driven side folks whether has a to definitely into or skilled market equity earlier, represented Dirk enter private some there. of seen the up otherwise, that lot that was kind competition trying of

as seen size multiple that a So a it paid think, higher you've of particularly haven't hospice, scale impact think and little much. we're bit in of anything seems seen been on, if home quality, I I and health, we

yeah, competitive. from individuals. perspective, a It's of think our very space lot So an it's attractive I for

be You get into competitive. broker processes is going to

the to said, to of to times, we've to close our doing with good I our situations we're do deals. to for and creative a we've kind of auction some where shareholders try assets for continue maybe price of sourcing forced opportunities into I Addus, being to couple making those getting our avoid our As we're higher that got along sure own to situations good think be as strategy and well it's not are best think a of types of try

Mitra Ramgopal

the taking for Thanks Okay. questions.


At call Dirk back like further now this to time, Alison, questions. there are over Mr. to no turn I'd the

Dirk Allison

Thank a operator. Addus Hope part you our you of being Thank everyone you call great interest for your and in have today. week. for


this Thank Ladies you conference for today's participating. and concludes call. gentlemen,

You disconnect. may now