Addus IPO Off to a Rough Start

| About: Addus HomeCare (ADUS)

Addus HomeCare (NASDAQ:ADUS), a provider of home-based personal care, skilled nursing and rehabilitative therapies, priced their IPO at $10 per share, below range. Shares were trading around $8.90 at today's close.

Business Overview (from prospectus)

We are a comprehensive provider of a broad range of social and medical services in the home. Our services include personal care and assistance with activities of daily living, skilled nursing and rehabilitative therapies, and adult day care. Our consumers are individuals with special needs who are at risk of hospitalization or institutionalization, such as the elderly, chronically ill and disabled. Our payor clients include federal, state and local governmental agencies, the Veterans Health Administration, commercial insurers and private individuals. We provide our services through over 120 locations across 16 states to over 23,000 consumers.

Offering: 5.4 million shares at $10.00 per share. Net proceeds will be used to reduce debt.

Lead Underwriters: Robert Baird, Oppenheimer & Co., Stephens Inc.

Financial Highlights:

Home & Community Segment : Our net service revenues increased by $15.9 million, or 14.4%, to $126.8 million for the six months ended June 30, 2009 compared to $110.9 million for the six months ended June 30, 2008... Net service revenues from state, local and other governmental programs accounted for 96.9% and 96.4% of home & community net service revenues for the six months ended June 30, 2008 and 2009, respectively... Cost of service revenues increased $10.5 million, or 15.8%, to $76.6 million for the six months ended June 30, 2009 compared to $66.1 million for the six months ended June 30, 2008... Gross profit, expressed as a percentage of net service revenues, increased by 0.5% to 25.2% for the six months ended June 30, 2009, from 24.7% for the six months ended June 30, 2008.


The homecare industry is highly competitive, fragmented and market specific. Each local market has its own competitive profile and no single competitor has significant market share across all of our markets. Our competition consists of home health providers, private caregivers, larger publicly held companies, privately held homecare companies, privately held single- site agencies, hospital-based agencies, not-for-profit organizations, community-based organizations and self-directed care programs. On a national level, there are very few organizations that compete for local, county and state agreements to provide all of the types of services we offer. We believe that we deliver a level of quality, diversity of services and responsiveness that smaller local providers are not always able to offer, which has helped us develop strong relationships with payors and referral sources. Our national platform has also enabled us to implement best practices across our organization and leverage economies of scale in various direct and indirect costs.

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