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Table of Contents

 

 

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 March 31, 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 April 26, 2022, Addus HomeCare Corporation had 16,071,408 shares of Common Stock outstanding.

 

 

 

 


Table of Contents

 

 

 

ADDUS HOMECARE CORPORATION

FORM 10-Q

INDEX

 

PART I. FINANCIAL INFORMATION

3

 

 

Item 1. Financial Statements (Unaudited)

3

 

 

Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021

3

 

 

Condensed Consolidated Statements of Income For the Three Months Ended March 31, 2022 and 2021

4

 

 

Condensed Consolidated Statement of Stockholders’ Equity For the Three Months Ended March 31, 2022 and 2021

5

 

 

Condensed Consolidated Statements of Cash Flows For the Three Months Ended March 31, 2022 and 2021

6

 

 

Notes to Condensed Consolidated Financial Statements

7

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

31

 

 

Item 4. Controls and Procedures

31

 

 

PART II. OTHER INFORMATION

32

 

 

Item 1. Legal Proceedings

32

 

 

Item 1A. Risk Factors

32

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

32

 

 

Item 3. Defaults Upon Senior Securities

32

 

 

Item 4. Mine Safety Disclosures

32

 

 

Item 5. Other Information

32

 

 

Item 6. Exhibits

33

 

2


Table of Contents

 

 

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

 

ADDUS HOMECARE CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

As of March 31, 2022 and December 31, 2021

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

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2022

 

 

December 31, 2021

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash

 

$

124,763

 

 

$

168,895

 

Accounts receivable, net of allowances

 

 

136,808

 

 

 

136,955

 

Prepaid expenses and other current assets

 

 

14,658

 

 

 

18,491

 

Total current assets

 

 

276,229

 

 

 

324,341

 

Property and equipment, net of accumulated depreciation and amortization

 

 

19,073

 

 

 

18,483

 

Other assets

 

 

 

 

 

 

 

 

Goodwill

 

 

574,086

 

 

 

504,392

 

Intangibles, net of accumulated amortization

 

 

76,300

 

 

 

64,321

 

Operating lease assets, net

 

 

41,523

 

 

 

36,048

 

Total other assets

 

 

691,909

 

 

 

604,761

 

Total assets

 

$

987,211

 

 

$

947,585

 

Liabilities and stockholders' equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

21,004

 

 

$

19,358

 

Accrued payroll

 

 

27,720

 

 

 

44,083

 

Accrued expenses

 

 

38,820

 

 

 

37,077

 

Government stimulus advances

 

 

4,173

 

 

 

4,173

 

Accrued workers' compensation insurance

 

 

12,640

 

 

 

12,998

 

Total current liabilities

 

 

104,357

 

 

 

117,689

 

Long-term liabilities

 

 

 

 

 

 

 

 

Long-term debt, less current portion, net of debt issuance costs

 

 

256,127

 

 

 

220,912

 

Long-term operating lease liabilities

 

 

39,049

 

 

 

32,859

 

Other long-term liabilities

 

 

1,900

 

 

 

1,781

 

Total long-term liabilities

 

 

297,076

 

 

 

255,552

 

Total liabilities

 

$

401,433

 

 

$

373,241

 

Stockholders' equity

 

 

 

 

 

 

 

 

Common stock—$.001 par value; 40,000 authorized and 16,068 and 15,940 shares

   issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

 

$

16

 

 

$

16

 

Additional paid-in capital

 

 

383,001

 

 

 

380,037

 

Retained earnings

 

 

202,761

 

 

 

194,291

 

Total stockholders' equity

 

 

585,778

 

 

 

574,344

 

Total liabilities and stockholders' equity

 

$

987,211

 

 

$

947,585

 

 

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

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ADDUS HOMECARE CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the Three Months Ended March 31, 2022 and 2021

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

(Unaudited)

 

 

 

For the Three Months

Ended March 31,

 

 

 

2022

 

 

2021

 

Net service revenues

 

$

226,634

 

 

$

205,302

 

Cost of service revenues

 

 

156,448

 

 

 

144,105

 

Gross profit

 

 

70,186

 

 

 

61,197

 

General and administrative expenses

 

 

53,152

 

 

 

45,426

 

Depreciation and amortization

 

 

3,521

 

 

 

3,601

 

Total operating expenses

 

 

56,673

 

 

 

49,027

 

Operating income

 

 

13,513

 

 

 

12,170

 

Interest income

 

 

(58

)

 

 

(22

)

Interest expense

 

 

1,820

 

 

 

1,216

 

Total interest expense, net

 

 

1,762

 

 

 

1,194

 

Income before income taxes

 

 

11,751

 

 

 

10,976

 

Income tax expense

 

 

3,281

 

 

 

2,082

 

Net income

 

$

8,470

 

 

$

8,894

 

Net income per common share

 

 

 

 

 

 

 

 

Basic income per share

 

$

0.54

 

 

$

0.57

 

Diluted income per share

 

$

0.53

 

 

$

0.55

 

Weighted average number of common shares and potential common

   shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

15,811

 

 

 

15,694

 

Diluted

 

 

16,079

 

 

 

16,069

 

 

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

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ADDUS HOMECARE CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the Three Months Ended March 31, 2022 and 2021

(Amounts and Shares in Thousands)

(Unaudited)

 

 

 

For the Three Months Ended March 31, 2022

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Retained

 

 

Total

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Equity

 

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

 

 

115

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,485

 

 

 

 

 

 

2,485

 

Shares issued for exercise of stock options

 

 

13

 

 

 

 

 

 

479

 

 

 

 

 

 

479

 

Net income

 

 

 

 

 

 

 

 

 

 

 

8,470

 

 

 

8,470

 

Balance at March 31, 2022

 

 

16,068

 

 

$

16

 

 

$

383,001

 

 

$

202,761

 

 

$

585,778

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended March 31, 2021

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Retained

 

 

Total

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Equity

 

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

 

 

75

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

2,239

 

 

 

 

 

 

2,239

 

Shares issued for exercise of stock options

 

 

2

 

 

 

 

 

 

101

 

 

 

 

 

 

101

 

Net income

 

 

 

 

 

 

 

 

 

 

 

8,894

 

 

 

8,894

 

Balance at March 31, 2021

 

 

15,903

 

 

$

16

 

 

$

371,835

 

 

$

158,059

 

 

$

529,910

 

 

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

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ADDUS HOMECARE CORPORATION

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31, 2022 and 2021

(Amounts in Thousands)

(Unaudited)

 

 

 

For the Three Months

 

 

 

Ended March 31,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

8,470

 

 

$

8,894

 

Adjustments to reconcile net income to net cash provided by (used in) operating

   activities, net of acquisitions:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

3,521

 

 

 

3,601

 

Deferred income taxes

 

 

126

 

 

 

165

 

Stock-based compensation

 

 

2,485

 

 

 

2,239

 

Amortization of debt issuance costs under the credit facility

 

 

215

 

 

 

184

 

Provision for doubtful accounts

 

 

158

 

 

 

252

 

Impairment of operating lease assets

 

 

1,174

 

 

 

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

7,121

 

 

 

(6,397

)

Prepaid expenses and other current assets

 

 

4,161

 

 

 

(1,007

)

Government stimulus advances

 

 

 

 

 

(11,719

)

Accounts payable

 

 

1,386

 

 

 

(290

)

Accrued payroll

 

 

(17,443

)

 

 

(15,313

)

Accrued expenses and other long-term liabilities

 

 

(5,391

)

 

 

1,025

 

Net cash provided by (used in) operating activities

 

 

5,983

 

 

 

(18,366

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Acquisitions of businesses, net of cash acquired

 

 

(84,490

)

 

 

 

Purchases of property and equipment

 

 

(1,104

)

 

 

(1,021

)

Net cash used in investing activities

 

 

(85,594

)

 

 

(1,021

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Payments on term loan — credit facility

 

 

 

 

 

(245

)

Borrowings on revolver — credit facility

 

 

35,000

 

 

 

 

Cash received from exercise of stock options

 

 

479

 

 

 

101

 

Net cash provided by (used in) financing activities

 

 

35,479

 

 

 

(144

)

Net change in cash

 

 

(44,132

)

 

 

(19,531

)

Cash, at beginning of period

 

 

168,895

 

 

 

145,078

 

Cash, at end of period

 

$

124,763

 

 

$

125,547

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

1,619

 

 

$

1,174

 

 

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

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ADDUS HOMECARE CORPORATION

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Nature of Operations, Consolidation, and Presentation of Financial Statements

Addus HomeCare Corporation (“Holdings”) and its subsidiaries (together with Holdings, the “Company”, “we”, “us” or “our”) operate as a multi-state provider of three distinct but related business segments providing in-home services. In its personal care services segment, the Company provides non-medical assistance with activities of daily living, primarily to persons who are at increased risk of hospitalization or institutionalization, such as the elderly, chronically ill or disabled. In its hospice segment, the Company provides physical, emotional and spiritual care for people who are terminally ill as well as related services for their families. In its home health segment, the Company provides services that are primarily medical in nature to individuals who may require assistance during an illness or after hospitalization and include skilled nursing and physical, occupational and speech therapy. The Company’s payors include federal, state and local governmental agencies, managed care organizations, commercial insurers and private individuals.

Basis of Presentation

The accompanying Unaudited Condensed Consolidated Financial Statements and related notes have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for Quarterly Reports on Form 10-Q. The accompanying balance sheet as of December 31, 2021 has been derived from the Company’s audited financial statements for the year ended December 31, 2021 previously filed with the SEC. Accordingly, these financial statements do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for annual financial statements and should be read in conjunction with our consolidated financial statements and notes thereto for the year ended December 31, 2021 included in our Annual Report on Form 10-K, which includes information and disclosures not included herein.

In the opinion of management, these financial statements reflect all adjustments of a normal, recurring nature necessary for the fair statement of our financial position, results of operations, and cash flows for the interim periods presented in conformity with GAAP. Our results for any interim period are not necessarily indicative of results for a full year or any other interim period.

Principles of Consolidation

These Unaudited Condensed Consolidated Financial Statements include the accounts of Addus HomeCare Corporation, and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

2. Summary of Significant Accounting Policies

Estimates

The financial statements are prepared by management in conformity with GAAP and include estimated amounts and certain disclosures based on assumptions about future events. The Company’s critical accounting estimates include the following areas: revenue recognition, goodwill and intangibles in business combinations and when required, the quantitative assessment of goodwill. Actual results could differ from those estimates.

Computation of Weighted Average Shares

The following table sets forth the computation of basic and diluted common shares for the three months ended March 31, 2022 and 2021:

 

 

 

For the Three Months Ended March 31,

 

 

 

(Amounts in thousands)

 

 

 

2022

 

 

2021

 

Weighted average number of shares outstanding for basic per share calculation

 

 

15,811

 

 

 

15,694

 

Effect of dilutive potential shares:

 

 

 

 

 

 

 

 

Stock options

 

 

235

 

 

 

311

 

Restricted stock awards

 

 

33

 

 

 

64

 

Adjusted weighted average shares for diluted per share calculation

 

 

16,079

 

 

 

16,069

 

Anti-dilutive shares:

 

 

 

 

 

 

 

 

Stock options

 

 

92

 

 

 

 

Restricted stock awards

 

 

77

 

 

 

75

 

 

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Recently Adopted Accounting Pronouncements

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. ASU 2021-10 requires entities to disclose certain information about the nature of certain governmental assistance received, including the nature of the transaction and the related accounting policy, the financial statement line items impacted by the assistance, as well as the significant terms and conditions of the transactions. The ASU was adopted as of January 1, 2022 and did not have an impact on the Company’s results of operations or liquidity.

Recently Issued Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, and other transactions subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The ASU provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. Therefore, it will be in effect for a limited time through December 31, 2022. The ASU can be adopted no later than December 1, 2022 with early adoption permitted. On July 30, 2021, the Company entered into the Second Amendment to the Credit Agreement as discussed further in Note 8. The Credit Agreement contains hardwired fallback language that contemplates a transition from LIBOR, specifically identifies the secured overnight financing rate (“SOFR”) as the replacement reference rate and details the mechanism for transition at LIBOR cessation, which is anticipated to occur on June 30, 2023. The transition to SOFR is not expected to have a material impact on the Company’s results of operations or liquidity.

3. Leases

Amounts reported on the Company’s Unaudited Condensed Consolidated Balance Sheets for operating leases were as follows:

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 

 

(Amounts in Thousands)

 

Operating lease assets, net

 

$

41,523

 

 

$

36,048

 

 

 

 

 

 

 

 

 

 

Short-term operating lease liabilities (in accrued expenses)

 

 

10,766

 

 

 

9,774

 

Long-term operating lease liabilities

 

 

39,049

 

 

 

32,859

 

Total operating lease liabilities

 

$

49,815

 

 

$

42,633

 

 

Lease Costs

Components of lease costs were reported in general and administrative expenses in the Company’s Unaudited Condensed Consolidated Statements of Income as follows:

 

 

 

For the Three Months Ended March 31,

(Amounts in Thousands)

 

 

 

2022

 

 

2021

 

Operating lease costs

 

$

2,801

 

 

$

2,777

 

Short-term lease costs

 

 

751

 

 

 

181

 

Total lease costs

 

 

3,552

 

 

 

2,958

 

Less: sublease income

 

 

(177

)

 

 

(151

)

Total lease costs, net

 

$

3,375

 

 

$

2,807

 

 

Lease Term and Discount Rate

Weighted average remaining lease terms and discount rates were as follows:

 

 

 

March 31, 2022

 

 

December 31, 2021

 

Operating leases:

 

 

 

 

 

 

 

 

Weighted average remaining lease term

 

 

6.27

 

 

 

6.39

 

Weighted average discount rate

 

 

3.80

%

 

 

3.91

%

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Maturity of Lease Liabilities

Remaining operating lease payments as of March 31, 2022 were as follows:

 

 

 

Operating Leases

 

 

 

(Amounts in Thousands)

 

Due in the 12-month period ended March 31,

 

 

 

 

2023

 

$

12,329

 

2024

 

 

10,706

 

2025

 

 

8,476

 

2026

 

 

5,493

 

2027

 

 

4,574

 

Thereafter

 

 

14,748

 

Total future minimum rental commitments

 

 

56,326

 

Less: Imputed interest

 

 

(6,511

)

Total lease liabilities

 

$

49,815

 

 

Supplemental cash flows information

 

 

 

For the Three Months Ended March 31,

 

 

 

(Amounts in Thousands)

 

 

 

2022

 

 

2021

 

Cash paid for amounts included in the measurement of lease liabilities:

 

 

 

 

 

 

 

 

Operating cash flows from operating leases

 

$

3,194

 

 

$

2,517

 

 

 

 

 

 

 

 

 

 

Right-of-use assets obtained in exchange for lease obligations:

 

 

 

 

 

 

 

 

Operating leases

 

$

9,199

 

 

$

2,675

 

 

4. Acquisitions

The Company’s acquisitions have been accounted for in accordance with ASC Topic 805, Business Combinations, and the resulting goodwill and other intangible assets were accounted for under ASC Topic 350, Goodwill and Other Intangible Assets. Under business combination accounting, the assets and liabilities are generally recognized at their fair values and the difference between the consideration transferred, excluding transaction costs, and the fair values of the assets and liabilities is recognized as goodwill. The results of each business acquisition are included on the Unaudited Condensed Consolidated Statements of Income from the date of the acquisition.

Management’s assessment of qualitative factors affecting goodwill for each acquisition includes estimates of market share at the date of purchase, ability to grow in the market, synergy with existing Company operations and the payor profile in the markets.

JourneyCare

On February 1, 2022, we completed the acquisition of the operations of JourneyCare Inc. (“JourneyCare”). The purchase price was approximately $85.0 million, including the amount of acquired excess cash held by JourneyCare at the closing of the acquisition (approximately $0.5 million). The JourneyCare acquisition was funded with a combination of a $35.0 million draw on the Company’s revolving credit facility and available cash. With the JourneyCare acquisition, the Company expanded its hospice services in the state of Illinois. The related acquisition and integration costs were $0.3 million and $1.8 million, respectively, for the three months ended March 31, 2022. These costs were included in general and administrative expenses on the Unaudited Condensed Consolidated Statements of Income and were expensed as incurred.

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Based upon management’s valuations, which are preliminary and subject to completion of working capital adjustments, the fair values of the assets and liabilities acquired are as follows:

 

 

 

Total

(Amounts in Thousands)

 

Goodwill

 

$

70,153

 

Identifiable intangible assets

 

 

13,792

 

Cash

 

 

500

 

Accounts receivable

 

 

7,080

 

Operating lease assets, net

 

 

3,728

 

Other assets

 

 

280

 

Property and equipment

 

 

1,194

 

Accrued expenses

 

 

(6,714

)

Accrued payroll

 

 

(1,486

)

Long-term operating lease liabilities

 

 

(3,537

)

Total purchase price

 

$

84,990

 

 

Identifiable intangible assets acquired included $9.0 million in a trade name and $4.8 million of indefinite lived state licenses. The preliminary estimated fair value of identifiable intangible assets was determined with the assistance of a valuation specialist, using Level 3 inputs as defined under ASC Topic 820. The fair value analysis and related valuations reflect the conclusions of management. All estimates, key assumptions, and forecasts were either provided by or reviewed by the Company. The goodwill and intangible assets acquired are deductible for tax purposes.

The JourneyCare acquisition accounted for $9.5 million of net service revenues and $2.0 million of operating income for the three months ended March 31, 2022.

The following table contains unaudited pro forma condensed consolidated income statement information of the Company for the three months ended March 31, 2022 as if the JourneyCare acquisition closed on January 1, 2021.

 

 

 

 

For the Three Months Ended March 31,

(Amounts in Thousands)

 

 

 

2022

 

 

2021

 

Net service revenues

 

$

231,847

 

 

$

219,920

 

Operating income

 

 

12,240

 

 

 

10,936

 

Net income

 

 

7,629

 

 

 

7,894

 

Net income per common share

 

 

 

 

 

 

 

 

Basic income per share

 

$

0.48

 

 

$

0.50

 

Diluted income per share

 

$

0.47

 

 

$

0.49

 

 

The pro forma disclosures in the table above include adjustments for amortization of intangible assets, tax expense and acquisition costs to reflect results that are more representative of the combined results of the transactions as if the operations of JourneyCare had been acquired effective January 1, 2021. This pro forma information is presented for illustrative purposes only and may not be indicative of the results of operations that would have actually occurred. In addition, future results may vary significantly from the results reflected in the pro forma information. The unaudited pro forma financial information does not reflect the impact of future events that may occur after the acquisition, such as anticipated cost savings from operating synergies.


10


Table of Contents

 

 

5. Goodwill and Intangible Assets

A summary of the goodwill and related adjustments is provided below:

 

 

 

Hospice

 

 

Personal Care

 

 

Home

Health

 

 

Total

 

 

 

(Amounts in Thousands)

 

Goodwill as of December 31, 2021

 

$

328,334

 

 

$

152,688

 

 

$

23,370

 

 

$

504,392

 

Additions for acquisitions

 

 

70,153

 

 

 

 

 

 

 

 

 

70,153

 

Adjustments to previously recorded goodwill

 

 

(113

)

 

 

 

 

 

(346

)

 

 

(459

)

Goodwill as of March 31, 2022

 

$

398,374

 

 

$

152,688

 

 

$

23,024

 

 

$

574,086

 

 

In connection with the JourneyCare acquisition, the Company recognized goodwill in its hospice segment of $70.2 million, during the three months ended March 31, 2022. See Note 4 for additional information regarding the acquisition.

The Company’s identifiable intangible assets consist of customer and referral relationships, trade names and trademarks, non-competition agreements and state licenses. Amortization is computed using straight-line and accelerated methods based upon the estimated useful lives of the respective assets, which range from five to twenty-five years. Customer and referral relationships are amortized systematically over the periods of expected economic benefit, which range from five to ten years.

The carrying amount and accumulated amortization of each identifiable intangible asset category consisted of the following as of March 31, 2022:

 

 

 

Customer

and referral

relationships

 

 

Trade

names and

trademarks

 

 

Non-

competition

agreements

 

 

State

Licenses

 

 

Total

 

 

 

(Amounts in Thousands)

 

Intangible assets with indefinite lives

 

$

 

 

$

 

 

$

 

 

$

25,901

 

 

$

25,901

 

Intangible assets subject to amortization:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross carrying amount

 

 

44,672

 

 

 

51,941

 

 

 

6,785

 

 

 

12,508

 

 

 

115,906