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Addus(ADUS) - 2021 Q1 - Quarterly Report
AddusAddus(US:ADUS)2021-05-06 16:00

PART I. FINANCIAL INFORMATION This section provides unaudited financial statements and management's analysis of Addus HomeCare Corporation's financial performance and condition Item 1. Financial Statements (Unaudited) This section presents Addus HomeCare Corporation's unaudited condensed consolidated financial statements, including balance sheets, income, equity, and cash flow statements, along with detailed notes on operations and accounting policies Condensed Consolidated Balance Sheets This section provides the company's condensed consolidated balance sheets as of March 31, 2021, and December 31, 2020 | Metric | March 31, 2021 (Thousands) | December 31, 2020 (Thousands) | | :----------------------------------- | :------------------------- | :---------------------------- | | Assets | | | | Total current assets | $275,140 | $287,697 | | Total assets | $877,577 | $892,582 | | Liabilities & Equity | | | | Total current liabilities | $118,088 | $143,901 | | Total long-term liabilities | $229,579 | $230,005 | | Total liabilities | $347,667 | $373,906 | | Total stockholders' equity | $529,910 | $518,676 | Condensed Consolidated Statements of Income This section presents the company's condensed consolidated statements of income for the three months ended March 31, 2021, and 2020 | Metric | Three Months Ended March 31, 2021 (Thousands) | Three Months Ended March 31, 2020 (Thousands) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net service revenues | $205,302 | $190,216 | | Cost of service revenues | $144,105 | $134,381 | | Gross profit | $61,197 | $55,835 | | General and administrative expenses | $45,426 | $42,287 | | Operating income | $12,170 | $10,661 | | Net income | $8,894 | $8,658 | | Basic income per share | $0.57 | $0.56 | | Diluted income per share | $0.55 | $0.54 | Condensed Consolidated Statements of Stockholders' Equity This section details changes in stockholders' equity for Addus HomeCare Corporation from January 1, 2021, to March 31, 2021 | Metric | Balance at Jan 1, 2021 (Thousands) | Balance at Mar 31, 2021 (Thousands) | | :----------------------------------- | :--------------------------------- | :-------------------------------- | | Common Shares | 15,826 | 15,903 | | Stock Amount | $16 | $16 | | Additional Paid-in Capital | $369,495 | $371,835 | | Retained Earnings | $149,165 | $158,059 | | Total Stockholders' Equity | $518,676 | $529,910 | Condensed Consolidated Statements of Cash Flows This section outlines the company's cash flow activities for the three months ended March 31, 2021, and 2020 | Metric | Three Months Ended March 31, 2021 (Thousands) | Three Months Ended March 31, 2020 (Thousands) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net cash (used in) provided by operating activities | $(18,366) | $20,442 | | Net cash used in investing activities | $(1,021) | $(2,834) | | Net cash (used in) provided by financing activities | $(144) | $1,141 | | Net change in cash | $(19,531) | $18,749 | | Cash, at end of period | $125,547 | $130,463 | Notes to Condensed Consolidated Financial Statements This section provides detailed notes to the unaudited financial statements, covering operations, accounting policies, leases, acquisitions, goodwill, debt, taxes, and segment information 1. Nature of Operations, Consolidation, and Presentation of Financial Statements This section describes Addus HomeCare Corporation's business segments, including personal care, hospice, and home health services, and its diverse payor base - Addus HomeCare Corporation operates as a multi-state provider of three distinct but related business segments: personal care (non-medical assistance), hospice (physical, emotional, and spiritual care for terminally ill), and home health (medical services during illness or post-hospitalization)21 - The company's payors include federal, state, and local governmental agencies, managed care organizations, commercial insurers, and private individuals21 2. Summary of Significant Accounting Policies This section outlines the company's critical accounting estimates and the adoption of new accounting standards - The company's critical accounting estimates include revenue recognition, allowance for doubtful accounts, intangible assets acquired in business combinations, and the quantitative impairment assessment of goodwill and indefinite-lived intangible assets25 - ASU 2019-12 (Income Taxes) was adopted as of January 1, 2021, with no impact on the company's results of operations or liquidity. The company is evaluating ASU 2020-04 (Reference Rate Reform) for its potential effect2829 3. Leases This section details the company's operating lease assets and liabilities, including weighted average lease terms and discount rates | Lease Metric | March 31, 2021 (Thousands) | December 31, 2020 (Thousands) | | :----------------------------------- | :------------------------- | :---------------------------- | | Operating lease assets, net | $38,325 | $37,991 | | Short-term operating lease liabilities | $9,498 | $9,283 | | Long-term operating lease liabilities | $35,623 | $35,516 | | Total operating lease liabilities | $45,121 | $44,799 | | Total lease cost, net (3 months ended) | $2,807 | $2,310 | - As of March 31, 2021, the weighted average remaining lease term for operating leases was 6.83 years, with a weighted average discount rate of 4.04%35 4. Acquisitions This section summarizes the company's recent acquisitions in late 2020, detailing their financial impact and strategic expansion - In late 2020, the company completed several acquisitions: Queen City Hospice ($194.8 million, expanded hospice services in Ohio), County Homemakers ($15.8 million, expanded personal care in Pennsylvania), A Plus Health Care ($14.5 million, expanded personal care in Montana), and SunLife Home Care ($1.7 million, expanded personal care in Arizona)40434547 - Goodwill and identifiable intangible assets acquired from these transactions are deductible for tax purposes. Integration costs were expensed as incurred and included in general and administrative expenses424446 5. Goodwill and Intangible Assets This section provides details on the company's goodwill and identifiable intangible assets, including their amortization and useful lives | Metric | March 31, 2021 (Thousands) | December 31, 2020 (Thousands) | | :----------------------------------- | :------------------------- | :---------------------------- | | Goodwill | $469,036 | $469,072 | | Intangibles, net | $69,395 | $71,549 | - Identifiable intangible assets consist of customer and referral relationships, trade names and trademarks, non-competition agreements, and state licenses, with estimated useful lives ranging from one to twenty-five years50 - Amortization expense for identifiable intangible assets was $2.2 million for the three months ended March 31, 2021, compared to $1.8 million for the same period in 2020. The weighted average remaining useful life is 9.6 years52 6. Details of Certain Balance Sheet Accounts This section provides specific details on selected balance sheet accounts, including prepaid expenses, accrued expenses, and government stimulus advances | Account | March 31, 2021 (Thousands) | December 31, 2020 (Thousands) | | :----------------------------------- | :------------------------- | :---------------------------- | | Prepaid expenses and other current assets | $10,787 | $9,969 | | Accrued expenses | $38,654 | $37,564 | | Government stimulus advances | $20,368 | $32,087 | - Government stimulus advances decreased significantly due to the repayment of $10.8 million from the Medicare Accelerated and Advance Payment Program by Queen City Hospice in March 20215860 - The company utilized $0.9 million of Provider Relief Fund grants for healthcare-related expenses attributable to COVID-19 in Q1 2021 and expects to utilize additional funds through June 30, 202159 7. Long-Term Debt This section outlines the company's long-term debt, including revolving and term loans under its credit facility and compliance with covenants | Debt Type | March 31, 2021 (Thousands) | December 31, 2020 (Thousands) | | :----------------------------------- | :------------------------- | :---------------------------- | | Revolving loan under credit facility | $178,458 | $178,458 | | Term loan under credit facility | $17,885 | $18,130 | | Total long-term debt (net of current portion) | $193,839 | $193,901 | - The company's credit facility totals $300.0 million in revolving loans and a $19.6 million delayed draw term loan, with a maturity date of May 8, 20236467 - As of March 31, 2021, the company had $112.8 million available for borrowing under its credit facility and was in compliance with all financial covenants6669 8. Income Taxes This section details the company's effective income tax rate and the factors contributing to its deviation from the federal statutory rate | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Effective income tax rate | 19.0% | 14.2% | - The difference between the federal statutory rate (21%) and the effective income tax rate is primarily due to excess tax benefits from equity share vesting and federal employment tax credits, offset by state taxes and non-deductible compensation70 9. Commitments and Contingencies This section addresses the company's legal and administrative proceedings and the impact of government actions to mitigate COVID-19's effects - Management believes the outcome of pending legal and/or administrative proceedings will not have a material effect on the company's financial position and results of operations74 Government Actions to Mitigate COVID-19's Impact This section details the impact of federal legislation and temporary measures on healthcare providers, including funding and Medicare sequester relief - The CARES Act, PPPHCE Act, CAA, and ARPA provided over $178 billion in funding to healthcare providers through the Provider Relief Fund and temporary changes to Medicare/Medicaid payment rules71 - Medicare sequester relief increased home health net service revenues by $0.1 million and hospice net service revenues by $0.7 million for the three months ended March 31, 2021. However, the ARPA may trigger additional Medicare spending reductions (up to 4%) in fiscal year 202272 10. Segment Information This section provides a breakdown of the company's operating income across its personal care, hospice, and home health segments - The company operates as a multi-state provider of three distinct but related business segments: personal care, hospice, and home health services757678 | Segment Operating Income (Thousands) | 3 Months Ended Mar 31, 2021 | 3 Months Ended Mar 31, 2020 | | :----------------------------------- | :-------------------------- | :-------------------------- | | Personal Care | $26,746 | $26,035 | | Hospice | $9,035 | $6,437 | | Home Health | $705 | $281 | | Total Segment Operating Income | $36,486 | $32,753 | 11. Significant Payors This section details the company's revenue distribution by payor type and significant states for its personal care and hospice segments | Personal Care Revenue by Payor | 3 Months Ended Mar 31, 2021 (%) | 3 Months Ended Mar 31, 2020 (%) | | :----------------------------------- | :------------------------------ | :------------------------------ | | State, local and other governmental programs | 49.0% | 49.4% | | Managed care organizations | 45.8% | 44.9% | | Private pay | 3.0% | 3.3% | | Commercial insurance | 1.4% | 1.6% | | Other | 0.8% | 0.8% | | Hospice Revenue by Payor | 3 Months Ended Mar 31, 2021 (%) | 3 Months Ended Mar 31, 2020 (%) | | :----------------------------------- | :------------------------------ | :------------------------------ | | Medicare | 94.2% | 92.1% | | Managed care organizations | 4.1% | 5.5% | | Other | 1.7% | 2.4% | - Illinois is a significant revenue source, representing 35.8% of total net service revenues for the three months ended March 31, 2021. The Illinois Department on Aging, the largest payor program for the company's Illinois personal care operations, accounted for 20.4% of net service revenues in Q1 202189 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of the company's financial condition, operational results, COVID-19 impact, acquisitions, revenue trends, and liquidity Overview This section provides an overview of Addus HomeCare's business, including its service segments, geographic reach, and client base - Addus HomeCare is a home care services provider operating in three segments: personal care, hospice, and home health, primarily serving "dual eligible" consumers (Medicare and Medicaid benefits)92 | Metric | 3 Months Ended Mar 31, 2021 (Thousands) | 3 Months Ended Mar 31, 2020 (Thousands) | | :----------------------------------- | :-------------------------------------- | :-------------------------------------- | | Net service revenues | $205,302 | $190,216 | | Net income | $8,894 | $8,658 | - As of March 31, 2021, the company provided services in 22 states through 208 offices, serving approximately 50,000 discrete individuals, an increase from 49,000 in the prior year94 COVID-19 Pandemic Update This section details the financial impact of COVID-19 on the company, including related expenses, deferred reimbursements, and challenges in caregiver attraction - COVID-19-related expenses for the three months ended March 31, 2021, were approximately $2.1 million, offset by $1.8 million in temporary rate increases from payors and $0.9 million from the Provider Relief Fund96 - The company deferred the recognition of $5.1 million in payments received from payors for COVID-19 reimbursement, which will be recognized as specific pandemic-related expenses are incurred or returned if not used96 - Enhanced unemployment benefits have suppressed the opportunity to attract new caregivers, and a return to low unemployment could hinder the company's ability to attract and retain sufficient caregivers97 Acquisitions This section summarizes the company's four acquisitions completed in 2020, detailing their funding and strategic expansion into new markets - The company completed four acquisitions in 2020: A Plus Health Care (July 1, $14.5 million, Montana personal care), County Homemakers (Nov 1, $15.8 million, Pennsylvania personal care), Queen City Hospice (Dec 4, $194.8 million, Ohio hospice), and SunLife Home Care (Dec 1, $1.7 million, Arizona personal care)100102103 - These acquisitions were funded through a combination of the revolving credit facility and available cash, expanding the company's presence in current and new markets100103 Revenue by Payor and Significant States This section analyzes the company's revenue trends by payor type and significant states, highlighting the shift towards managed care organizations - The company is experiencing a transition of business from government payors to managed care organizations, aligning with its emphasis on coordinated care104 | Personal Care Revenue by State | 3 Months Ended Mar 31, 2021 (%) | 3 Months Ended Mar 31, 2020 (%) | | :----------------------------------- | :------------------------------ | :------------------------------ | | Illinois | 44.5% | 44.5% | | New York | 16.7% | 19.8% | | New Mexico | 14.3% | 12.9% | | Hospice Revenue by State | 3 Months Ended Mar 31, 2021 (%) | 3 Months Ended Mar 31, 2020 (%) | | :----------------------------------- | :------------------------------ | :------------------------------ | | Ohio | 39.1% | 0.0% | | New Mexico | 25.6% | 43.7% | - The Illinois Department on Aging accounted for 20.4% of total net service revenues for the three months ended March 31, 2021, down from 23.2% in the prior year period109 Impact of Changes in Medicare and Medicaid Reimbursement This section discusses the impact of recent changes in Medicare and Medicaid reimbursement policies on the company's home health and hospice segments - Illinois in-home care rates increased by 7.1% to $23.40, effective April 1, 2021, contingent upon federal CMS approval. A proposed statewide rate increase to $24.96 is included in the fiscal year 2022 budget, effective January 1, 2022110111 - The company was not initially selected as a Lead Fiscal Intermediary in New York's Consumer Directed Personal Assistance Program (CDPAP) RFO process, potentially impacting an estimated $52 million in revenue and $4 million in operating income for the year ended December 31, 2021. The company is exploring appeals and other arrangements116 Home Health This section details changes in Medicare Home Health Prospective Payment System rates and the phasing out of Request for Anticipated Payment (RAP) payments - Effective calendar year 2021, Medicare Home Health Prospective Payment System (HHPPS) rates increased by 2.0%, reflecting a 2.3% market basket update reduced by a 0.3% multifactor productivity adjustment113 - CMS phased out Request for Anticipated Payment (RAP) payments in 2021 and will replace them with a "Notice of Admission" in 2022 to address program integrity risks114 Hospice This section outlines the increase in Medicare hospice payment rates and the updated aggregate cap for federal fiscal year 2021 - Effective October 1, 2020, CMS increased hospice payment rates by 2.4% for federal fiscal year 2021115 - The aggregate cap for Medicare reimbursement that a hospice may receive was updated to $30,683.93 for federal fiscal year 2021115 New York CDPAP This section discusses the company's non-selection as a Lead Fiscal Intermediary for New York's CDPAP and potential revenue impacts - The company was not among the initial selected entities for New York's CDPAP Lead Fiscal Intermediary contracts, potentially impacting an estimated $52 million in revenue and $4 million in operating income for FY2021116 - The New York Legislature's FY2022 budget included a provision to add one or two entities per county to those awarded Lead Fiscal Intermediary, based on original RFO scoring. The company has filed a protest against the initial award116 Components of our Statements of Income This section defines the key components of the company's income statements, including net service revenues, cost of service revenues, and general and administrative expenses - Net service revenues are generated from personal care (hourly), hospice (daily), and home health (episodic) services, with payments from government agencies, managed care organizations, commercial insurers, and private pay consumers117118 - Cost of service revenues includes direct care wages, payroll taxes, benefit-related costs, workers' compensation, general liability coverage, and employee travel reimbursements119 - General and administrative expenses cover local agency and administrative office costs, including supervisory personnel, community care supervisors, office administrative costs, and corporate support functions120 - Depreciation and amortization expenses relate to furniture, equipment, software, and finite-lived intangible assets such as customer and referral relationships, trade names, trademarks, and non-competition agreements121123 - Interest expense primarily consists of interest and unused credit line fees on the credit facility. Income tax expense is influenced by state and local taxes, excess tax benefits, and federal employment tax credits124125 Results of Operations — Consolidated This section provides a consolidated analysis of the company's financial performance, highlighting changes in revenues, gross profit, operating income, and net income | Metric | 3 Months Ended Mar 31, 2021 (Thousands) | 3 Months Ended Mar 31, 2020 (Thousands) | Change (Thousands) | % Change | | :----------------------------------- | :-------------------------------------- | :-------------------------------------- | :----------------- | :------- | | Net service revenues | $205,302 | $190,216 | $15,086 | 7.9% | | Cost of service revenues | $144,105 | $134,381 | $9,724 | 7.2% | | Gross profit | $61,197 | $55,835 | $5,362 | 9.6% | | General and administrative expenses | $45,426 | $42,287 | $3,139 | 7.4% | | Operating income | $12,170 | $10,661 | $1,509 | 14.2% | | Net income | $8,894 | $8,658 | $236 | 2.7% | - Net service revenues increased by 7.9% due to a 3.7% increase in personal care revenues per billable hour and a $10.9 million increase in hospice revenue, primarily from the acquisition of Queen City Hospice127 - Gross profit margin increased to 29.8% (from 29.4%) mainly attributed to the full-quarter effect of the relatively higher-margin hospice segment businesses acquired in 2020128 - General and administrative expenses increased by $3.1 million, primarily due to acquisitions, but decreased as a percentage of net service revenues to 22.1% (from 22.2%)128 - Interest expense increased by 33.9% to $1.2 million due to higher outstanding borrowings. The effective income tax rate rose to 19.0% (from 14.2%) due to a lower excess tax benefit130 Results of Operations – Segments This section provides a detailed breakdown of the operating results and business metrics for each of the company's three segments: Personal Care, Hospice, and Home Health, highlighting key performance drivers and changes Personal Care Segment This section analyzes the financial performance of the Personal Care segment, focusing on net service revenues, billable hours, and gross profit margin | Metric | 3 Months Ended Mar 31, 2021 (Thousands) | 3 Months Ended Mar 31, 2020 (Thousands) | | :----------------------------------- | :-------------------------------------- | :-------------------------------------- | | Net service revenues | $164,868 | $160,665 | | Gross profit | $42,029 | $41,638 | | Segment operating income | $26,746 | $26,035 | | Revenues per billable hour | $21.75 | $20.97 | | Billable hours | 7,567 | 7,674 | - Net service revenues increased by 2.6%, primarily due to a 3.7% increase in revenues per billable hour (mainly from rate increases), partially offset by a 1.4% decrease in billable hours135 - Gross profit margin decreased to 25.5% (from 25.9%) due to an increase in direct payroll as a percentage of net service revenues. General and administrative expenses decreased by $0.3 million due to acquisition synergies135136 Hospice Segment This section details the financial performance of the Hospice segment, including net service revenues, average daily census, and gross profit margin | Metric | 3 Months Ended Mar 31, 2021 (Thousands) | 3 Months Ended Mar 31, 2020 (Thousands) | | :----------------------------------- | :-------------------------------------- | :-------------------------------------- | | Net service revenues | $36,094 | $25,212 | | Gross profit | $17,498 | $12,894 | | Segment operating income | $9,035 | $6,437 | | Average daily census | 2,400 | 1,863 | | Revenue per patient day | $167.09 | $150.49 | - Net service revenues increased by 43.2%, primarily driven by the acquisition of Queen City Hospice, which led to an increase in average daily census and revenue per patient day. This was partially offset by a decrease in census in same stores due to COVID-19 public health restrictions141 - Gross profit margin decreased to 48.5% (from 51.1%) mainly due to an increase in direct employee wages, taxes, and benefit costs, partially offset by a decrease in direct service supply costs and other direct expenses related to acquisition synergies142 - General and administrative expenses increased due to acquisitions, but decreased as a percentage of net service revenues to 23.5% (from 25.6%)143 Home Health Segment This section examines the financial performance of the Home Health segment, focusing on net service revenues, gross profit margin, and visit trends | Metric | 3 Months Ended Mar 31, 2021 (Thousands) | 3 Months Ended Mar 31, 2020 (Thousands) | | :----------------------------------- | :-------------------------------------- | :-------------------------------------- | | Net service revenues | $4,340 | $4,339 | | Gross profit | $1,670 | $1,303 | | Segment operating income | $705 | $281 | | New admissions | 1,168 | 1,022 | | Visits | 27,665 | 33,710 | - Net service revenues remained flat. Gross profit margin significantly increased to 38.5% (from 30.0%) due to a decrease in direct employee wages, taxes, and benefit costs as a percentage of net service revenues, and a decrease in visits in connection with PDGM case mix148 - General and administrative expenses decreased as a percentage of net service revenues to 22.3% (from 23.6%)148 Liquidity and Capital Resources This section details the company's liquidity position, including cash on hand, operating cash flows, and credit facility availability. It also discusses the ongoing impact of the COVID-19 pandemic on state budgets and the company's financial relief measures, changes in cash flows, and accounts receivable management Overview This section provides an overview of the company's liquidity sources, including cash on hand, credit facility availability, and accounts receivable status - The company's primary sources of liquidity are cash on hand ($125.5 million at March 31, 2021) and cash from operations149 - As of March 31, 2021, the company had $112.8 million available for borrowing under its revolving credit facility and was in compliance with all financial covenants150151 - The open receivable balance from the Illinois Department on Aging increased by $11.9 million to $33.1 million as of March 31, 2021, due to an increase in days sales outstanding (DSO)149 COVID-19 This section discusses the ongoing risks of the COVID-19 pandemic on state budgets and the temporary measures assisting healthcare providers - The COVID-19 pandemic continues to pose risks to states' budgets for fiscal year 2021 and potentially beyond, impacting sales tax collections and income tax withholdings152 - New York's fiscal plan authorizes up to $11 billion in short-term bonds and implemented Medicaid rate reductions (1% effective Jan 1, 2020, and an additional 0.5% effective April 1, 2021)152 - The federal public health emergency declaration is likely to extend through 2021, with temporary measures assisting healthcare providers, including relief from Medicare conditions and relaxation of licensure requirements155 Provider Relief Fund This section details the company's receipt and utilization of grants from the Provider Relief Fund for COVID-19 related expenses - The company received $13.7 million in grants from the Provider Relief Fund in November 2020, utilizing $0.9 million for COVID-19 related expenses in Q1 2021156 - Queen City Hospice intends to administer $1.9 million in retention payments to caregivers in Q2 2021 using these funds156 Medicare Accelerated and Advance Payment Program – Queen City Hospice This section outlines Queen City Hospice's receipt and full repayment of advance payments under the Medicare Accelerated and Advance Payment Program - Queen City Hospice received $10.8 million in advance payments in April 2020 and fully repaid these funds in March 2021 following the acquisition157 Payroll tax deferral This section details the company's deferral of employer Social Security payroll taxes under the CARES Act and its repayment schedule - The company deferred approximately $7.1 million in employer Social Security payroll taxes in 2020 under the CARES Act and expects to repay this amount in 2021158 Medicare sequester This section discusses the impact of the temporary lifting of the Medicare sequester and potential future spending reductions under the ARPA - Temporary lifting of the Medicare sequester increased home health net service revenues by $0.1 million and hospice net service revenues by $0.7 million for the three months ended March 31, 2021159 - The American Rescue Plan Act of 2021 (ARPA) may trigger additional Medicare spending reductions of up to 4% in fiscal year 2022 due to the Pay-As-You-Go Act of 2010 (PAYGO Act)159 Amended and Restated Senior Secured Credit Facility This section describes the company's credit facility, including loan amounts, maturity date, interest rates, collateral, and financial covenants - The credit facility totals $300.0 million in revolving loans and a $19.6 million delayed draw term loan, with a maturity date of May 8, 2023160167 - Interest rates are variable, based on an applicable margin plus a base rate or LIBOR. The facility is collateralized by the company's assets and contains customary financial and negative covenants, including a Total Net Leverage Ratio not exceeding 3.75:1.00162163164 - As of March 31, 2021, the company had $178.5 million in revolving loans and $17.9 million in term loans outstanding, with $112.8 million available for borrowing169 Cash Flows This section analyzes the company's cash flow activities from operations, investing, and financing, highlighting key drivers of changes | Cash Flow Activity | 3 Months Ended Mar 31, 2021 (Thousands) | 3 Months Ended Mar 31, 2020 (Thousands) | | :----------------------------------- | :-------------------------------------- | :-------------------------------------- | | Net cash (used in) provided by operating activities | $(18,366) | $20,442 | | Net cash used in investing activities | $(1,021) | $(2,834) | | Net cash (used in) provided by financing activities | $(144) | $1,141 | - The decrease in operating cash flow was due to payroll timing, the repayment of $10.8 million in government stimulus funds, and an $11.9 million increase in accounts receivable from the Illinois Department of Aging165 - Net cash used in investing activities decreased due to lower property and equipment purchases. Net cash used in financing activities was primarily from cash received from the exercise of stock options166169 Outstanding Accounts Receivable This section details the company's gross accounts receivable and the Days Sales Outstanding (DSO) for the Illinois Department on Aging | Metric | March 31, 2021 (Thousands) | December 31, 2020 (Thousands) | | :----------------------------------- | :------------------------- | :---------------------------- | | Gross accounts receivable | $139,500 | $133,400 | | Accounts receivable (Illinois Dept. on Aging) | $33,100 | $21,200 | | Metric | March 31, 2021 | December 31, 2020 | | :----------------------------------- | :------------- | :---------------- | | Days Sales Outstanding (DSO) | 61 days | 61 days | | DSO (Illinois Dept. on Aging) | 72 days | 46 days | - The Days Sales Outstanding (DSO) for the Illinois Department on Aging increased from 46 days at December 31, 2020, to 72 days at March 31, 2021, indicating potential payment consistency issues172 Off-Balance Sheet Arrangements This section confirms the absence of any off-balance sheet guarantees or arrangements with unconsolidated entities as of March 31, 2021 - As of March 31, 2021, the company did not have any off-balance sheet guarantees or arrangements with unconsolidated entities175 Critical Accounting Policies and Estimates This section states that there have been no material changes to the company's critical accounting policies and estimates - There have been no material changes to the critical accounting policies and estimates previously disclosed in the Annual Report on Form 10-K for the period ended December 31, 2020176 Recently Issued Accounting Pronouncements This section refers to Note 2 for further discussion on recently issued accounting pronouncements - Refer to Note 2 to the Notes to Condensed Consolidated Financial Statements (Unaudited) for further discussion on recently issued accounting pronouncements177 Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discusses the company's exposure to market risks, primarily related to interest rate fluctuations on its variable-rate long-term debt - The company is exposed to market risk associated with changes in interest rates on its variable rate long-term debt, with approximately $196.3 million outstanding borrowings on its credit facility as of March 31, 2021178 - A 100 basis point increase in variable interest rates would decrease net income by $0.4 million, or $0.02 per diluted share, for the three months ended March 31, 2021178 - The company does not currently have any derivative or hedging arrangements, or other known exposures, to changes in interest rates178 Item 4. Controls and Procedures This section details the evaluation of the company's disclosure controls and procedures and reports on any changes in internal controls over financial reporting Evaluation of Disclosure Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures as evaluated by management and executive officers - Management, with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the company's disclosure controls and procedures and concluded they were effective as of March 31, 2021179180 Changes in Internal Controls Over Financial Reporting This section reports no material changes in internal control over financial reporting during the fiscal quarter ended March 31, 2021 - There were no changes in internal control over financial reporting identified during the fiscal quarter ended March 31, 2021, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting181 PART II. OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, equity sales, defaults, mine safety, and exhibits Item 1. Legal Proceedings This section addresses legal and administrative proceedings the company is involved in - Management believes that the outcome of pending legal and/or administrative proceedings will not have a material effect on the company's financial position and results of operations183 Item 1A. Risk Factors This section refers to the comprehensive discussion of risk factors affecting the company's business - There have been no material changes to the risk factors previously disclosed under the caption "Risk Factors" in the Annual Report on Form 10-K for the year ended December 31, 2020184 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports on any unregistered sales of equity securities and the use of proceeds - There were no unregistered sales of equity securities and no use of proceeds to report184 Item 3. Defaults Upon Senior Securities This section reports on any defaults upon senior securities - There were no defaults upon senior securities to report184 Item 4. Mine Safety Disclosures This section reports on mine safety disclosures - There were no mine safety disclosures to report184 Item 5. Other Information This section includes other information not covered elsewhere - There was no other information to report185 Item 6. Exhibits This section lists the exhibits filed as part of the Form 10-Q, including corporate documents, certifications, and XBRL data - The exhibits include the Amended and Restated Certificate of Incorporation, Bylaws, Common Stock Certificate, CEO and CFO certifications (Sections 302 and 906 of Sarbanes-Oxley Act), and Inline XBRL documents186187188