Executive shakeups at one of the leading personal care businesses in the country appear to be having a positive effect, if the latest quarterly earnings are any indication. Addus HomeCare Corp. (NASDAQ: ADUS), which named Dirk Allison as CEO and president in January 2016, reported stronger revenue earnings in the first quarter of the year, seemingly turning around after it missed estimates from 2015.
Net revenue for the Downer’s Grove, Illinois-based personal care services provider increased to $92.6 million during the first quarter of 2016, up 13.1% from $81.9 million from the same quarter a year prior.
The company appears to be in far better shape than where it was toward the end of 2015, after a disappointing third quarter. In the aftermath of those quarterly earnings, which missed revenue expectations, Addus put in place several cost cutting initiatives in addition to changes in its executive positions.
“The past 90 days have been very busy as we’ve made a number of operational changes,” Allison said during a call with investors Tuesday.
The company closed its Contact Center facility and expects to generate $1.2 million in annualized savings beginning in the second quarter of 2016. Additional savings are expected as a result of changes in telecommunications, payroll processes and outgoing software no longer in use.
After closing on its acquisition of South Shore, a New York state licensed home care services agency that primarily provides personal care services, Addus aimed to capture more revenue from billable hours instead of measuring patient volume, as this patient group tended to have longer per-patient hours, executives said Tuesday.
The company is also currently dealing with headwinds in the state of Illinois, where lawmakers have failed to pass a budget for nearly a year. As a result, Addus is missing nearly $15 million per quarter form the state, executives said Tuesday. However, Addus is still bullish on its presence in the state. In fact, most of the business’ revenue growth was derived from its same-store operations in Illinois, New Mexico and the Midwest region overall.
“We’ve been able to manage through the fact that the state is not paying us approximately $15 million per quarter,” Addus CEO and President Dirk Allison. “We believe we are going to be in great shape to allow us to work through this issue with the state and look for acquisitions aggressively.”
The budget crisis in the state only impacts Addus’ non-Medicaid patients, representing less than 15% of the company total revenue, Allison said.
The company is still looking to expand its acquisition pipeline, potentially seeing opportunity in Illinois as some smaller home health organizations are forced to fold under the budget environment.
By the end of the day Tuesday, Addus’ stock price hovered above $18 per share.
Written by Amy Baxter