Addus HomeCare Announces Pricing of Public Offering of Common Stock

Rhea-AI Summary

Addus HomeCare (Nasdaq: ADUS) announced the pricing of an underwritten public offering of 1,500,000 shares of common stock at $108.00 per share, aiming to raise $162 million in gross proceeds. The underwriters have a 30-day option to purchase an additional 225,000 shares. Addus plans to allocate approximately $81.4 million of the net proceeds for repaying its outstanding credit facility debt, with the remainder used for general corporate purposes, including the acquisition of Gentiva's personal care assets and potential future acquisitions. The offering is anticipated to close around June 28, 2024, subject to standard closing conditions. BofA Securities and Jefferies are leading the offering, with Oppenheimer & Co., Raymond James, RBC Capital Markets, and Stephens Inc. acting as co-managers.

Positive

• Addus HomeCare aims to raise $162 million from the public offering.
• Funds will be used to repay $81.4 million in outstanding credit facility debt.
• Remaining funds will support general corporate purposes and acquisitions.

Negative

• Potential shareholder dilution due to the issuance of 1,500,000 new shares.
• Additional 225,000 shares could further dilute existing shareholders if the underwriters exercise their option.

Insights

Financial Analyst

The pricing of Addus HomeCare Corporation's public offering at $108 per share, raising approximately $162 million, is significant for several reasons. First, the company plans to use about $81.4 million to repay its outstanding credit facility debt. This is a positive move toward deleveraging the company's balance sheet, which can improve its financial stability and reduce interest expenses.

Furthermore, the remaining funds will be allocated for general corporate purposes, including the acquisition of Gentiva's personal care assets. This potential acquisition could enhance Addus' market position in the home care services industry, potentially driving future revenue growth.

However, issuing new shares dilutes existing shareholders' equity, which might lead to some short-term pressure on the stock price. Investors should also note that underwriters have a 30-day option to purchase an additional 225,000 shares, potentially raising more capital but also adding to dilution.

Overall, the offering appears strategically aimed at both debt reduction and growth through acquisition, which could be beneficial in the long term despite the immediate dilution effect.

Market Research Analyst

From a market perspective, Addus HomeCare's decision to raise capital through a public offering aligns with industry trends where companies leverage equity markets to finance growth and strategic acquisitions. The pricing at $108 per share reflects investor confidence, given that the offering price is typically set near current market levels to ensure successful subscription.

Repaying debt using a significant portion of the proceeds is a prudent move, signaling to investors that the company prioritizes financial health. This can enhance Addus' credit profile and potentially lower future borrowing costs.

The acquisition of Gentiva's personal care assets aligns with the rising demand for home care services, driven by an aging population and a shift towards in-home care over institutional settings. This strategic move could provide a competitive edge and expand Addus' service offerings, which is important in a fragmented market.

However, the potential dilution from the additional shares may be a concern for current investors. The long-term benefits hinge on effective integration of the acquired assets and realizing anticipated synergies.

FRISCO, Texas--(BUSINESS WIRE)-- Addus HomeCare Corporation (Nasdaq: ADUS) (“Addus” or the “Company”), a provider of home care services, today announced the pricing of an underwritten public offering of 1,500,000 shares of common stock (“Common Stock”) at the public offering price of $108.00 per share. Addus has granted the underwriters a 30-day option to purchase up to 225,000 additional shares of Common Stock on the same terms and conditions. The gross proceeds to the Company from the offering, before deducting underwriting discounts and commissions and estimated offering expenses, are expected to be $162 million, excluding any proceeds from the exercise of the underwriters’ option to purchase additional shares from the Company. Addus intends to use approximately $81.4 million of the net proceeds it receives from this offering for the repayment of all indebtedness outstanding under its credit facility and the remainder for general corporate purposes, including the Company’s previously announced acquisition of the personal care assets of Gentiva and any future acquisitions or investments. There were no selling stockholders in the offering.

BofA Securities and Jefferies are acting as joint book-running managers for the offering and Oppenheimer & Co., Raymond James, RBC Capital Markets and Stephens Inc. are acting as co-managers. The offering is expected to close on or about June 28, 2024, subject to customary closing conditions.

An automatic shelf registration statement (including a prospectus) relating to the offering of Common Stock was filed with the U.S. Securities and Exchange Commission (the “SEC”) on September 2, 2022, and became effective upon filing. This offering is being made only by means of a prospectus supplement and the accompanying prospectus that forms a part of the effective shelf registration statement. A preliminary prospectus supplement relating to, and describing the terms of, the offering was filed with the SEC on June 26, 2024 and is available on the SEC’s website at www.sec.gov. The final prospectus supplement and the accompanying prospectus relating to the offering will be filed with the SEC and will be available on the SEC’s website at www.sec.gov. When available, copies of the final prospectus supplement and the accompanying prospectus may also be obtained by request from BofA Securities NC1-022-02-25, Attn: Prospectus Department, 201 North Tryon Street, Charlotte, NC 28255, or by emailing dg.prospectus_requests@bofa.com, or Jefferies LLC, Attn: Equity Syndicate Prospectus Department, 520 Madison Avenue, New York, NY 10022, or by telephone at (877) 821-7388, or by emailing Prospectus_Department@Jefferies.com.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities, in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of such state or jurisdiction.

About Addus

Addus is a provider of home care services that primarily include personal care services that assist with activities of daily living, as well as hospice and home health services. Addus’ consumers are primarily persons who, without these services, are at risk of hospitalization or institutionalization, such as the elderly, chronically ill and disabled. Addus’ payor clients include federal, state and local governmental agencies, managed care organizations, commercial insurers and private individuals. Addus currently provides home care services to approximately 49,000 consumers through 214 locations across 22 states.

Certain matters discussed in this press release, including those relating to timing for completion of the offering and the use of proceeds from the offering, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may be identified by words such as “will,” “continue,” “expect,” “believe” and similar expressions. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. Forward-looking statements involve a number of risks and uncertainties that may cause actual results and the timing of certain events to differ materially from those expressed or implied by such forward-looking statements, including, but not limited to, the following: the impact of macroeconomic conditions, including significant global inflation and elevated interests rates, legislative developments, trade disruptions and the potential adverse effects of current geopolitical conditions; business disruptions due to natural disasters, acts of terrorism, pandemics, riots, civil insurrection or social unrest, looting, protests, strikes or street demonstrations; changes in operational and reimbursement processes and payment structures at the state or federal levels; changes in Medicaid, Medicare, other government program and managed care organizations policies and payment rates, and the timeliness of reimbursements received under government programs; changes in, or our failure to comply with existing, federal and state laws or regulations or our failure to comply with new government laws or regulations on a timely basis; competition in the healthcare industry; the geographical concentration of our operations; changes in the case mix of consumers and payment methodologies; operational changes resulting from the assumption by managed care organizations of responsibility for managing and paying for our services to consumers; the nature and success of future financial and/or delivery system reforms; changes in estimates and judgments associated with critical accounting policies; our ability to maintain or establish new referral sources; our ability to renew significant agreements or groups of agreements; our ability to attract and retain qualified personnel; federal, state and city minimum wage pressure, including any failure of any governmental entity to enact a minimum wage offset and/or the timing of any such enactment; changes in payments and covered services due to the overall economic conditions and deficit reduction measures by federal and state governments, and our expectations regarding these changes; cost containment initiatives undertaken by federal and state governmental and other third-party payors; our ability to access financing through the capital and credit markets; our ability to meet debt service requirements and comply with covenants in debt agreements; our ability to integrate and manage our information systems; any security breaches, cyber-attacks, loss of data, or cybersecurity threats or incidents, and any actual or perceived failures to comply with legal requirements related to the privacy of confidential consumer data and other sensitive information; the size and growth of the markets for our services, including our expectations regarding the market for our services; eligibility standards and limits on services imposed by state governmental agencies; the potential for litigation, audits and investigations; discretionary determinations by government officials; our ability to successfully implement our business model to grow our business; our ability to continue identifying, pursuing, consummating and integrating acquisition opportunities, and expand into new geographic markets; the impact of acquisitions and dispositions , including the potential inability to realize the benefits of potential acquisitions on our business; the effectiveness, quality and cost of our services; our ability to successfully execute our growth strategy; changes in tax rates; the impact of inclement weather or natural disasters; and various other matters, and other risks set forth in the section titled “Risk Factors” in our periodic reports filed with the SEC, including, but not limited to, the our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and our other filings with the SEC, including the preliminary prospectus supplement and the final prospectus supplement (when available). We caution readers not to place undue reliance on any such forward-looking statements which speak only as of the date made. Except as required by law, we undertake no obligation to update or revise any forward-looking statements that it makes in its press releases, whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240626167715/en/

Brian W. Poff

Executive Vice President, Chief Financial Officer

Addus HomeCare Corporation

(469) 535-8200

investorrelations@addus.com

Dru Anderson

FINN Partners

(615) 324-7346

dru.anderson@finnpartners.com

Source: Addus HomeCare Corporation

FAQ

What is the pricing of Addus HomeCare's public offering?

The public offering is priced at $108.00 per share.

How many shares is Addus HomeCare offering in the public offering?

Addus HomeCare is offering 1,500,000 shares, with an option for underwriters to purchase an additional 225,000 shares.

What are the expected gross proceeds from Addus HomeCare's public offering?

The expected gross proceeds are $162 million, excluding any additional proceeds from the underwriters' option.

How will Addus HomeCare use the proceeds from the public offering?

Approximately $81.4 million will be used to repay outstanding debt, with the remaining funds allocated for general corporate purposes and acquisitions.

When is the expected closing date for Addus HomeCare's public offering?

The offering is expected to close on or about June 28, 2024, subject to customary closing conditions.

Which banks are managing Addus HomeCare's public offering?

BofA Securities and Jefferies are acting as joint book-running managers, with Oppenheimer & Co., Raymond James, RBC Capital Markets, and Stephens Inc. acting as co-managers.