Addus Whiffs on Revenue, Blames Acquisitions
Addus HomeCare Corp. (NASDAQ: ADUS) has broken bad news about its expected earnings for the third quarter of 2015, attributing the results to recent acquisitions that have not contributed expected revenues and rocky transitions to managed care at the state level. Shares slumped 26% on the news Friday morning.
Analysts’ consensus view pegged third quarter revenues at $87.3 million, but the company based in the Chicago suburb of Downers Grove expects revenues to come in at approximately $84.3 million. Net income per diluted share is expected to be in the $0.25 to $0.26 range, compared with $0.29 for the third quarter a year ago.
Addus has staked its strategy on being the in-home personal care provider of choice to Medicaid managed care organizations. But states are transitioning to managed care, specifically for their populations of dual-eligible Medicare and Medicaid beneficiaries, at a slow pace, CEO Mark Heaney said in a conference call with analysts Friday morning. This is negatively affecting revenues.
The issue is not one of poor integration, Heaney stressed, but rather that the company has not been able to grow these businesses at the rate expected.
“They remain utterly accretive,” he said of the acquisitions. “Undoubtedly accretive but not the level … the growth is not at the level we wanted. We will get it there. We’ve done it before.”
As for bright spots, Heaney noted that revenues for Addus’ largest market, Illinois, grew on a year-over-year and sequential quarter basis and beat expectations. He said other markets also are performing on all cylinders, particularly New Mexico.
Just two days before the company announced what Heaney called “disappointing” third quarter results, the company’s share price hit a 52-week high of $38.08.
Final earnings results are scheduled to be released after market close on Nov. 2.
Written by Tim Mullaney