Addus Eyes More Acquisitions, Beefs Up Credit Facility
Addus HomeCare (Nasdaq: ADUS) is prepping for growth and looking to buy.
That was the general theme of a May 9 earnings call with analysts in which the Downers Grove, Illinois-based personal care company announced a first quarter net income of $4.3 million, an increase over its net income of $157,000 in the same quarter last year. The company also posted a net service revenue of $101.6 million, a 9.7% increase over the $92.6 million it reported in the first quarter of 2016.
Addus spent the past year reducing its expenses by improving its operating efficiency, such as working on a plan to implement a new payroll system by July 1, CEO and President Dirk Allison said on the call.
The company also recently completed a new senior secured credit facility with a $125 million revolver that will give it more room to grow. Under the terms of the new agreement, $100 million in incremental term debt is available for acquisitions.
The operational changes, combined with the new credit facility, will allow the company to more efficiently scale with new acquisition growth. Earlier this year, Addus hired a new COO, Brian Bickham, who will help lead the company in future acquisitions. The company announced on May 4 a new agreement to purchase Options Home Care, a provider of personal care services in 20 counties in New Mexico that has annual revenues of more than $20 million.
And it seems more purchases could be on the way.
“We continue to be active with a pipeline of potential acquisitions, though we have walked away from a few deals,” Allison added.
Where to next?
Addus leadership believes the company should expand in states with growing elderly populations that are well-run financially, such as Florida, Texas, and Arizona. The company also seeks to expand its footprint in states where it already operates.
“We really want to be very strong in the states in which we operate as opposed to just being in a state,” Allison said. “We look at those markets where we want to grow our strength.”
In the months ahead, Addus also will look to buy well-established home care agencies as opposed to “fixer-uppers,” and doesn’t want to stray too far from its current bill of home health care services, he added
Addus’ first-quarter earnings per share of $0.34 beat analyst estimates by $0.01, although it missed on revenue by $1.06 million. ADUS shares were up 6.5% to $39.30 in the morning following the earnings call.
Written by Tim Regan