UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 

Commission file number 001-34504

ADDUS HOMECARE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	20-5340172
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
6303 Cowboys Way, Suite 600 Frisco, TX	75034
(Address of principal executive offices)	(Zip Code)

(469) 535-8200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	ADUS	The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒	Accelerated Filer	☐
Non-Accelerated Filer	☐	Smaller Reporting Company	☐
Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ☐    No ☒

As of July 25, 2022, Addus HomeCare Corporation had 16,080,337 shares of Common Stock outstanding.

ADDUS HOMECARE CORPORATION

FORM 10-Q

INDEX

PART I. FINANCIAL INFORMATION	3
Item 1. Financial Statements (Unaudited)	3
Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021	3
Condensed Consolidated Statements of Income For the Three and Six Months Ended June 30, 2022 and 2021	4
Condensed Consolidated Statement of Stockholders’ Equity For the Three and Six Months Ended June 30, 2022 and 2021	5
Condensed Consolidated Statements of Cash Flows For the Six Months Ended June 30, 2022 and 2021	7
Notes to Condensed Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3. Quantitative and Qualitative Disclosures About Market Risk	35
Item 4. Controls and Procedures	35
PART II. OTHER INFORMATION	36
Item 1. Legal Proceedings	36
Item 1A. Risk Factors	36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3. Defaults Upon Senior Securities	36
Item 4. Mine Safety Disclosures	36
Item 5. Other Information	36
Item 6. Exhibits	37

2

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

ADDUS HOMECARE CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

As of June 30, 2022 and December 31, 2021

(Amounts and Shares in Thousands, Except Per Share Data)

(Unaudited)

	June 30, 2022		December 31, 2021
Assets
Current assets
Cash	$	120,917	$	168,895
Accounts receivable, net of allowances for credit losses		124,554		136,955
Prepaid expenses and other current assets		10,901		18,491
Total current assets		256,372		324,341
Property and equipment, net of accumulated depreciation and amortization		17,733		18,483
Other assets
Goodwill		574,752		504,392
Intangibles, net of accumulated amortization		74,464		64,321
Operating lease assets, net		41,207		36,048
Total other assets		690,423		604,761
Total assets	$	964,528	$	947,585
Liabilities and stockholders' equity
Current liabilities
Accounts payable	$	21,346	$	19,358
Accrued payroll		39,432		44,083
Accrued expenses		38,054		37,077
Government stimulus advances		16,735		4,173
Accrued workers' compensation insurance		12,437		12,998
Total current liabilities		128,004		117,689
Long-term liabilities
Long-term debt, net of debt issuance costs		196,342		220,912
Long-term operating lease liabilities		38,343		32,859
Other long-term liabilities		2,062		1,781
Total long-term liabilities		236,747		255,552
Total liabilities	$	364,751	$	373,241
Stockholders' equity
Common stock—$.001 par value; 40,000 authorized and 16,081 and 15,940 shares    issued and outstanding as of June 30, 2022 and December 31, 2021, respectively	$	16	$	16
Additional paid-in capital		385,750		380,037
Retained earnings		214,011		194,291
Total stockholders' equity		599,777		574,344
Total liabilities and stockholders' equity	$	964,528	$	947,585

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

3

ADDUS HOMECARE CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the Three and Six Months Ended June 30, 2022 and 2021

(Amounts and Shares in Thousands, Except Per Share Data)

(Unaudited)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2022			2021			2022			2021
Net service revenues	$	236,940		$	217,893		$	463,574		$	423,195
Cost of service revenues		161,342			149,083			317,790			293,188
Gross profit		75,598			68,810			145,784			130,007
General and administrative expenses		55,095			48,175			108,247			93,601
Depreciation and amortization		3,609			3,587			7,130			7,188
Total operating expenses		58,704			51,762			115,377			100,789
Operating income		16,894			17,048			30,407			29,218
Interest income		(108	)		(31	)		(166	)		(53	)
Interest expense		1,986			1,262			3,806			2,478
Total interest expense, net		1,878			1,231			3,640			2,425
Income before income taxes		15,016			15,817			26,767			26,793
Income tax expense		3,766			4,220			7,047			6,302
Net income	$	11,250		$	11,597		$	19,720		$	20,491
Net income per common share
Basic income per share	$	0.71		$	0.74		$	1.25		$	1.30
Diluted income per share	$	0.70		$	0.72		$	1.22		$	1.28
Weighted average number of common shares and potential common    shares outstanding:
Basic		15,854			15,738			15,833			15,716
Diluted		16,131			16,043			16,113			16,063

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

4

ADDUS HOMECARE CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the Three and Six Months Ended June 30, 2022

(Amounts and Shares in Thousands)

(Unaudited)

	For the Three Months Ended June 30, 2022
	Common Stock					Additional Paid-in Capital		Retained Earnings		Total Stockholders' Equity
	Shares			Amount
Balance at April 1, 2022		16,068		$	16	$	383,001	$	202,761	$	585,778
Issuance of shares of common stock under    restricted stock award agreements		15			—		—		—		—
Forfeiture of shares of common stock under    restricted stock award agreements		(3	)		—		—		—		—
Stock-based compensation		—			—		2,680		—		2,680
Shares issued for exercise of stock options		1			—		69		—		69
Net income		—			—		—		11,250		11,250
Balance at June 30, 2022		16,081		$	16	$	385,750	$	214,011	$	599,777
	For the Six Months Ended June 30, 2022
	Common Stock					Additional Paid-in Capital		Retained Earnings		Total Stockholders' Equity
	Shares			Amount
Balance at January 1, 2022		15,940		$	16	$	380,037	$	194,291	$	574,344
Issuance of shares of common stock under    restricted stock award agreements		130			—		—		—		—
Forfeiture of shares of common stock under    restricted stock award agreements		(3	)		—		—		—		—
Stock-based compensation		—			—		5,165		—		5,165
Shares issued for exercise of stock options		14			—		548		—		548
Net income		—			—		—		19,720		19,720
Balance at June 30, 2022		16,081		$	16	$	385,750	$	214,011	$	599,777

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

5

ADDUS HOMECARE CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the Three and Six Months Ended June 30, 2021

(Amounts and Shares in Thousands)

(Unaudited)

	For the Three Months Ended June 30, 2021
	Common Stock				Additional Paid-in Capital		Retained Earnings		Total Stockholders' Equity
	Shares		Amount
Balance at April 1, 2021		15,903	$	16	$	371,835	$	158,059	$	529,910
Issuance of shares of common stock under    restricted stock award agreements		13		—		—		—		—
Stock-based compensation		—		—		2,525		—		2,525
Shares issued for exercise of stock options		1		—		23		—		23
Net income		—		—		—		11,597		11,597
Balance at June 30, 2021		15,917	$	16	$	374,383	$	169,656	$	544,055
	For the Six Months Ended June 30, 2021
	Common Stock				Additional Paid-in Capital		Retained Earnings		Total Stockholders' Equity
	Shares		Amount
Balance at January 1, 2021		15,826	$	16	$	369,495	$	149,165	$	518,676
Issuance of shares of common stock under    restricted stock award agreements		88		—		—		—		—
Stock-based compensation		—		—		4,764		—		4,764
Shares issued for exercise of stock options		3		—		124		—		124
Net income		—		—		—		20,491		20,491
Balance at June 30, 2021		15,917	$	16	$	374,383	$	169,656	$	544,055

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

6

ADDUS HOMECARE CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30, 2022 and 2021

(Amounts in Thousands)

(Unaudited)

	For the Six Months
	Ended June 30,
	2022			2021
Cash flows from operating activities:
Net income	$	19,720		$	20,491
Adjustments to reconcile net income to net cash provided by (used in) operating    activities, net of acquisitions:
Depreciation and amortization		7,130			7,188
Deferred income taxes		291			396
Stock-based compensation		5,165			4,764
Amortization of debt issuance costs under the credit facility		430			368
Provision for doubtful accounts		318			529
Impairment of operating lease assets		1,174			—
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		20,249			(6,232	)
Prepaid expenses and other current assets		7,909			(3,004	)
Government stimulus advances		12,562			(23,993	)
Accounts payable		1,398			111
Accrued payroll		(5,756	)		(1,900	)
Accrued expenses and other long-term liabilities		(8,088	)		(2,039	)
Net cash provided by (used in) operating activities		62,502			(3,321	)
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired		(84,490	)		(81	)
Purchases of property and equipment		(1,538	)		(1,847	)
Net cash used in investing activities		(86,028	)		(1,928	)
Cash flows from financing activities:
Payments on revolver loan — credit facility		(60,000	)		—
Proceeds from borrowings on revolver — credit facility		35,000			—
Payments on term loan — credit facility		—			(490	)
Cash received from exercise of stock options		548			124
Other		—