Mark Heaney - Chief Executive Officer Maxine Hochhauser - Chief Operating Officer Darby Anderson - Chief Business Development, Strategy Officer Don Klink - Chief Financial Officer.

Analysts:.

Good morning and welcome to the Addus HomeCare Corporation, Second Quarter 2015 Earnings Conference Call. Today’s call is being recorded. This presentation will contain forward-looking statements within the meanings of the Federal Securities Laws.

Statements regarding future events and developments, the company's future performance, as well as management's expectations, beliefs, intentions, plans, estimates or projections relating to the future are forward-looking statements within the meaning of these laws.

These forward-looking statements are subject to a number of risks and uncertainties, including factors outlined from time to time in the company's most recent Form 10-K or Form 10-Q, earnings announcement and other reports filed with the Securities and Exchange Commission and available at the SEC's website.

The company undertakes no obligation to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise. I would now like to turn the call over to the company's Chief Executive Officer, Mr. Mark Heaney. Please go ahead, sir..

Thank you, Scott. Good morning everyone and thank you very much for joining us for Addus HomeCare's Investor call for the second quarter of 2015.

I'm joined today by Maxine Hochhauser, our Chief Operating Officer, Darby Anderson, our Chief Business Development and Strategy Officer and Don Klink, our Chief Financial Officer who will be participating in today’s call for the first time since joining Addus. So, thank you Don for coming on broad.

Let me also welcome our Management staff listening in to today's call as I do every quarter. I want to recognize our people for the outstanding care they provide to our consumers. As we’ll discuss today, Addus is a growing company with significant potential for long term expansion.

We simply wouldn’t be in this position without the dedication and empathy our team displays every day. To help our consumers stay in their homes, which is exactly where they want to be. Without the services our staff provides, our consumers would progress along the healthcare continuum, through much more expenses setting and care level.

Our teams make a tangible difference in our consumers’ lives and the quality and consistently of the care they provide is the foundation upon which we pursue our growth opportunities. Fundamental to the investment thesis is that what we do is important and that it is done is important also.

Turning to the second quarter, we are pleased with our financial results for the quarter. We produced double digit growth in revenues, adjusted-EBITDA and earnings per diluted share. Our gross margin expended. We produced these results despite the lower than normal pace of referrals in our largest market, the State of Illinois.

As we have reported, the pace of referrals have slowed during the States continuing transition to managed care. We experienced a welcomed improvement in the pace of the Illinois referrals during the second quarter, building on the initial improvement we saw in the month of March.

Our 1.6% sequentially growth for the second quarter represents a clear rebound from the 0.2% sequentially decline for the first quarter and is consistent with the 1.5% sequential increase we had in the fourth quarter. We expect further improvement in this rate over time, but with little forward visibility about the rate of improvement.

We expect the pace of referrals to continue to be, to use the world lumpy. We also incurred higher G&A costs of $0.02 per diluted share for the quarter related to the ongoing installation of our new human resource and payroll information system. We believe this system positions us to handle anticipated growth while increasing efficiency and accuracy.

In fact the higher costs for the quarter related to increase in the functionality of the system and the associated training intended increase, the return on this investment. We are focused on improving our bottom line results for the second half of 2015.

As we’ve discussed in the news release, we are exiting underperforming locations that are not providing us an approximate return on our investment. While revenue in the second half will be lower by $4.5 million to $5 million related to these locations, we expect this action to actually improve our profitability.

We are continuing to work on initiatives to increase organic growth with both MCOs and our traditional payers. We are also working with our more recent acquisitions to improve their volume.

We continue to evaluate potential strategic acquisitions with an expanding pipeline of possible transactions focused on the states where we want to expand our reach or in states shifting to managed care. We expect to complete the acquisition of New York based South Shore Health Services later this year or early next.

We expect this transaction to be accretive and to provide Addus an attractive platform in a large and important managed care state with a high quality company that produced 2014 revenue of approximately $47 million. Through acquisitions like South Shore, we are fully actively positioned in the company to expand its managed care business.

In selecting home care partners, we expect MCOs to favor providers with scale and market presence, which these transactions provide.

In addition, we expect MCOs will select partners that are leveraging technology to enhance their care, their efficiency and their ability to integrate into the MCOs tech platforms in support of increasingly complex regulatory compliance outcomes reimbursement and other information needs.

We continue to make progress in expanding our tech capabilities through our Addus Mobile Portal or AMP, which is intended to connect the homebound consumer with the rest of the health system or a planned case manager, while at the same time making us a more efficient provider.

AMP gives eyes and ears to the plant, so that they can use real time data to make swift, informed health management decisions about their consumers. We believe these capabilities are highly aligned with the MCOs needs, especially in a pay for value system in which the MCOs are at risk for clinical and financial outcomes.

At the corporate level we continue to develop our context which not only provides critical 24/7 support to our field operation, but also centralizes a number of functions previously performed in our branch offices within a more efficient and tightly managed environment.

As a result of these and other investments, as well as our increasing scale and market presence, we believe the Addus is the best positioned homecare company to partner with and serve the new MCO customers, thus driving growth and shareholder value. Again, thank you for being with us today.

Let me turn the call over to Don who will discuss our second quarter results..

Thanks Mark and good morning. For the second quarter of 2015 the company’s net service revenues increased 11.5% to almost $86 million from $77 million for the second quarter of 2014. This growth was driven by an 8.8% year-over-year increase in average billable expenses.

Out of this total 8.8% increase, 6.4% is represented by same store and 2.4% is acquisition related. We also benefited from the increases of 1.6% in the average billable hours per census and almost a 1% in increased revenues per billable hour.

All our acquisitions except for Priority Home Health acquired in the first quarter of this year are now part of the same store base and same store revenues grew 10.5% for the second quarter on a year-over-year basis. Gross margin rose 90 basis points to 27.6% for this quarter, which reflects the impact of our acquired company’s margin profile.

G&A increased 30 basis points as a percentage of revenue, primarily due to the higher systems cost Mark discussed earlier. Our tax rate of 34% for the quarter rose 310 basis points from the second quarter of 2014. This is due to the 2015 worker opportunity tax credit not having yet been renewed. We did see an increased profit margins for the quarter.

As a result we provided adjusted net income per diluted share for the latest quarter of $0.30 up 15.4% from last year. Our adjusted results exclude acquisition related transaction expenses for both years and the benefit from workers opportunity tax credit of the second quarter last year.

Adjusted EBITDA increased 16.1% for the quarter to $6.9 million, while margin increased 30 basis points from the second quarter last year to 8%. Cash flow from operations increased almost $36 million from $12.3 million for the second quarter last year and from $900,000 operating cash used for the first quarter of 2015.

The increased cash flow this quarter primarily reflected increased collections from the state of Illinois, which we anticipate continuing to be variable in the future.

As a result of the substantial increase in collections our cash at quarter’s end increased to $42 million from $19.5 million at the same point last year and $7.4 million at the end of the first quarter of this year.

Addus remains well position to fund its growth strategies with no bank debt and $40 million of availability under our revolving credit facility. This concludes our comments. Operator, would you please open the floor for any questions. .

Operator:.

That was a tough question-and-answer period and we hope we did real well on that one. So thank you very much, and of course thank you all for listening in today and thanks for your support. We’ll talk to you again in 90 days, when we talk to report on the third quarter. So thank you all very much. .

Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program you may now disconnect. Have a good day everyone..