Almost Family Reports First Quarter 2015 Results


LOUISVILLE, Ky., May 6, 2015 (GLOBE NEWSWIRE) -- Almost Family, Inc. (Nasdaq:AFAM), a leading regional provider of home health nursing and personal care services, announced today its financial results for the period ended April 3, 2015.

First Quarter Highlights:

  • Net service revenues of approximately $128 million
  • Net income attributable to Almost Family, Inc. of $4.4 million, $0.46 per diluted share versus $0.13 in the first quarter of 2014.
  • Adjusted earnings from home health operations (1) of $4.8 million, $0.51 per diluted share versus $0.35 in the first quarter of 2014
  • Record Visiting Nurse segment net revenues of $99.5 million
  • Personal Care segment revenues of $28.8 million
  • Visiting Nurse results improved diluted EPS by $0.12

(1) See "Non-GAAP Financial Measures - Adjusted Earnings from Home Health Operations" below.

Management Comments

William Yarmuth, Chairman and Chief Executive Officer, commented:

"We continue to be extremely pleased with both the progress of our internal operations and our business development activities. We are especially pleased with our organic growth rates in both our VN and PC segments and believe these reflect a period of renewed interest and belief by referral sources and payors that home health has a bright future and a critical role to play in improving patient experiences and controlling health care costs."

Steve Guenthner, President, added:

"The recent Federal repeal of the physician SGR-cut removes an annual threat that has dissuaded some investors. The final two years of rebasing of Medicare rates and the current stability in the Federal political environment provide better reimbursement visibility and predictability than we've had for some time. The Medicaid programs in the states in which we operate are looking for new and creative ways to control their spending which mostly means keeping long-term care patients out of institutions. While these changes from time-to-time result in temporary cash flow issues, as they recently have in Tennessee and Ohio, we believe they will also continue to drive increasing use of home care, especially personal care services.

"Additionally, capital markets remain receptive to our investment thesis providing strong access to funding for acquisitions. Finally, we continue to see attractive acquisition candidates in all three of our business segments."

Yarmuth concluded: "We accomplished a great deal during the first quarter, not only in our operating results but also in making strategic investments in both WillCare and NavHealth. Additionally, we improved our access to low-cost capital through our new and larger credit facility. We are as optimistic as ever about the future of home health care and the future of our business and remain focused on continuing our growth trajectory."

First Quarter Financial Results

Improved VN segment cost controls, in particular tighter adherence to agency-level labor staffing standards, increased the efficiency of care delivery lowering labor costs on growing volumes improved diluted EPS by $0.08 as compared to the same quarter of last year. Changes in case-mix and Medicare reimbursement rates under the 2015 final rule combined to increase revenue by $0.6 million, and EPS by $0.04 as compared to the same period in 2014. PC segment results were consistent with the prior year period. Our Healthcare innovations segment loss increased slightly from the prior year on lower revenues.

Investing activities used approximately $4.4 million of cash in acquisitions and activities while operating activities used approximately $3.8 million primarily due to increased accounts receivable offsetting income generated. The Company noted that it is continuing to experience collection delays impacting days sales outstanding primarily in its personal care segment due to changes in patient enrollment and billing requirements enacted by the Medicaid managed care providers in the states of Tennessee and Ohio. The Company believes these are temporary issues that will be ameliorated over the next two quarters.

The effective tax rate for the first quarter of 2015 was 40.5% compared to 41.5% for the first quarter of 2014. The higher income tax rate in 2014 occurred primarily due to certain deal and transaction costs that were not currently deductible and that did not result in the establishment of a deferred tax asset.  

Recent Corporate Developments

  • On January 29, 2015 Almost Family announced the formal creation of a new HealthCare Innovations business segment to house and separately report on the Company's developmental activities outside its traditional home health business platform. At the same time the Company announced the investment of up to $2 million in NavHealth a development-stage enterprise that seeks to develop technology based tools and analytics to improve patient experiences and lower the overall costs of care.
     
  • On February 12, 2015 Almost Family established a new senior secured multi-bank credit facility that replaced its previous facility and provides for up to $175 million in borrowings with a maturity date of February 11, 2020.
     
  • On February 24, 2015, Almost Family announced the signing of a definitive agreement to acquire the stock of WillCare, Inc. for between $46 million and $53 million based on changes in earnings and working capital between execution of the definitive agreement and the expected close, sometime in the second half of FY2015 subject to New York approval. On March 1, 2015, Almost Family closed on the Ohio portion of the WillCare acquisition for a cash amount of $3 million.
     
  • Effective with the first quarter of 2015 the Company has adopted a 52-53 fiscal reporting calendar under which it will report its annual results going forward in four equal 13-week quarters. Every fifth year, one quarter will include 14 weeks and that year will include 53 weeks of operating results. Once fully adopted, this approach will help minimize the impact of calendar differences when comparing different historical periods. As a result of this change the first quarter of 2015 includes the 13 week and 2 day period from January 1, 2015 to April 3, 2015 which is 2 more days than each 13 week quarter to be reported in the future. For prospective comparison, the 2 days (New Year's Day and the day after) had a one-time effect of increasing revenue by $2.3 million, while lowering EPS by $0.02 due to the effect of the holiday. Had this reporting change not been made, first quarter 2015 reported revenue would have been lower by $5.4 million and EPS would have been lower by $0.02. 
 ALMOST FAMILY, INC. AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF INCOME 
 (In thousands, except per share data) 
   (UNAUDITED)   
     
   Period Ended April 3,   Three Months Ended March 31, 
  2015 2014
 Net revenues   $ 128,399  $ 120,339
 Cost of service revenues (excluding depreciation & amortization)   68,327  65,526
 Gross margin   60,072  54,813
 General and administrative expenses:     
 Salaries and benefits   36,393  33,666
 Other   15,902  15,714
 Deal, transition and other   406  3,115
 Total general and administrative expenses   52,701  52,495
 Operating income   7,371  2,318
 Interest expense, net   (360)  (347)
 Income before income taxes   7,011  1,971
 Income tax expense   (2,987)  (817)
 Net income from continuing operations   4,024  1,154
     
 Discontinued operations:     
 Loss from operations, net  of tax of $3, ($48)   5  (70)
 Net income   4,029  1,084
 Net income - noncontrolling interests   365  189
 Net income attributable to Almost Family, Inc.   $ 4,394  $ 1,273
     
 Per share amounts-basic:     
 Average shares outstanding   9,353  9,293
 Income from continuing operations attributable to Almost Family, Inc.   $ 0.47  $ 0.14
 Discontinued operations   --   (0.01)
 Net income attributable to Almost Family, Inc.   $ 0.47  $ 0.13
     
 Per share amounts-diluted:     
 Average shares outstanding   9,521  9,426
 Income from continuing operations attributable to Almost Family, Inc.   $ 0.46  $ 0.14
 Discontinued operations   --   (0.01)
 Net income attributable to Almost Family, Inc.   $ 0.46  $ 0.13
 
 ALMOST FAMILY, INC. AND SUBSIDIARIES 
 CONSOLIDATED BALANCE SHEETS 
 (In thousands) 
 
  April 3, 2015  
 ASSETS   (UNAUDITED)  December 31, 2014
 CURRENT ASSETS:     
 Cash and cash equivalents   $ 5,960  $ 6,886
 Accounts receivable - net   85,491  74,894
 Prepaid expenses and other current assets   6,869  10,420
 Deferred tax assets   12,695  12,230
 TOTAL CURRENT ASSETS   111,015  104,430
     
 PROPERTY AND EQUIPMENT - NET   5,165  5,575
 GOODWILL   195,066  192,523
 OTHER INTANGIBLE ASSETS   54,645  54,402
 OTHER ASSETS   2,514  558
 TOTAL ASSETS   $ 368,405  $ 357,488
     
 LIABILITIES AND STOCKHOLDERS' EQUITY     
 CURRENT LIABILITIES:     
 Accounts payable   $ 7,925  $ 9,257
 Accrued other liabilities   39,673  42,326
 Current portion - notes payable and capital leases   36  51
 TOTAL CURRENT LIABILITIES   47,634  51,634
     
 LONG-TERM LIABILITIES:     
 Revolving credit facility   55,099  46,447
 Deferred tax liabilities   25,102  23,510
 Other   2,993  2,705
 TOTAL LONG-TERM LIABILITIES   83,194  72,662
 TOTAL LIABILITIES   130,828  124,296
     
 NONCONTROLLING INTEREST - REDEEMABLE - HEALTHCARE INNOVATIONS   3,639  3,639
     
 STOCKHOLDERS' EQUITY:     
 Preferred stock, par value $0.05; authorized  2,000 shares; none issued or outstanding   --   -- 
 Common stock, par value $0.10; authorized  25,000; 9,617 and 9,574  issued and outstanding   961  957
 Treasury stock, at cost, 102 and 94 shares of common stock   (2,668)  (2,392)
 Additional paid-in capital   106,490  105,862
 Noncontrolling interest - nonredeemable   (586)  (420)
 Retained earnings   129,741  125,546
 TOTAL STOCKHOLDERS' EQUITY   233,938  229,553
 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 368,405  $ 357,488
 
 ALMOST FAMILY, INC. AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF CASH FLOWS 
 (UNAUDITED) 
 (In thousands) 
   Period Ended April 3,   Three Months Ended March 31, 
  2015 2014
 Cash flows of operating activities:     
 Net income   $ 4,029  $ 1,084
 Loss on discontinued operations, net of tax   5  (70)
 Net income from continuing operations   4,024  1,154
 Adjustments to reconcile income to net cash of operating activities:     
 Depreciation and amortization   918  1,102
 Provision for uncollectible accounts   1,861  2,144
 Stock-based compensation   520  414
 Deferred income taxes   1,032  (362)
   8,355  4,452
 Change in certain net assets and liabilities, net of the effects of acquisitions:     
 Accounts receivable   (11,960)  (2,839)
 Prepaid expenses and other current assets   3,713  1,554
 Other assets   (34)  55
 Accounts payable and accrued expenses   (3,883)  (3,233)
 Net cash used in operating activities   (3,809)  (11)
     
 Cash flows of investing activities:     
 Capital expenditures   (401)  (350)
 Cost basis investment   (1,000)  -- 
 Acquisitions, net of cash acquired   (3,000)  -- 
 Net cash used in investing activities   (4,401)  (350)
     
 Cash flows of financing activities:     
 Credit facility borrowings   47,813  53,000
 Credit facility repayments   (39,161)  (56,000)
 Debt issuance fees   (1,151)  -- 
 Proceeds from stock option exercises   23  39
 Purchase of common stock in connection with share awards   (276)  (52)
 Tax impact of share awards   88  (54)
 Payment of special dividend in connection with share awards   (50)  (35)
 Principal payments on notes payable and capital leases   (23)  (558)
 Net cash provided by (used in) financing activities   7,263  (3,660)
     
 Cash flows from discontinued operations     
 Operating activities   21  134
 Investing activities   --   -- 
 Net cash provided by discontinued operations   21  134
     
 Net change in cash and cash equivalents   (926)  (3,887)
 Cash and cash equivalents at beginning of period   6,886  12,246
 Cash and cash equivalents at end of period   $ 5,960  $ 8,359
 
 ALMOST FAMILY, INC. AND SUBSIDIARIES 
 RESULTS OF OPERATIONS 
 (UNAUDITED) 
 (In thousands) 
   Period Ended April 3,   Three Months Ended March 31,     
  2015 2014 Change
   Amount   % Rev   Amount   % Rev   Amount   % 
Home Health Operations            
Net service revenues:            
 Visiting Nurse   $ 99,536 77.6%  $ 93,172 77.6%  $ 6,364 6.8%
 Personal Care   28,761 22.4%  26,860 22.4%  1,901 7.1%
   128,297 100.0%  120,032 100.0%  8,265 6.9%
Operating income before corporate expenses:            
 Visiting Nurse   12,416 12.5%  8,749 9.4%  3,667 41.9%
 Personal Care   2,860 9.9%  2,639 9.8%  221 8.4%
   15,276 11.9%  11,388 9.5%  3,888 34.1%
Healthcare Innovations            
 Revenue   102    307    (205) -66.8%
 Operating loss before noncontrolling interest   (517) -506.9%  (255) -83.1%  (262) 102.7%
             
Corporate expenses  6,980 5.4%  5,700 4.7%  1,280 22.5%
Deal and transition costs  408 0.3%  3,115 2.6%  (2,707) -86.9%
Operating income  7,371 5.7%  2,318 1.9%  5,053 218.0%
Interest expense, net  (360) -0.3%  (347) -0.3%  (13) 3.7%
Income tax expense  (2,987) -2.3%  (817) -0.7%  (2,170) 265.6%
Net income from continuing operations  $ 4,024 3.1%  $ 1,154 1.0%  $ 2,870 248.7%
             
Adjusted EBITDA from home health operations  $ 9,833 7.7%  $ 7,239 6.0%  $ 2,593 35.8%
Adjusted earnings from home health operations  $ 4,820 3.8%  $ 3,289 2.7%  $ 1,531 46.5%
 
VISITING NURSE SEGMENT OPERATING METRICS
             
   Period Ended April 3,   Three Months Ended March 31,     
  2015 2014 Change
  Amount % Amount % Amount %
Average number of locations  160    172    (12) -7.0%
             
All payors:            
Patient months  80,982    79,188    1,794 2.3%
Admissions  26,279    25,106    1,173 4.7%
Billable visits  642,592    611,044    31,548 5.2%
             
Medicare:            
Admissions  23,722 90%  22,461 89%  1,261 5.6%
Revenue (in thousands)  $ 95,122 96%  $ 87,350 94%  $ 7,772 8.9%
Revenue per admission  4,010    3,889    $ 121 3.1%
Billable visits  584,438 91%  552,401 90%  32,037 5.8%
Recertifications  11,927    11,915    12 0.1%
Payor mix % of Admissions            
Traditional Medicare Episodic 84.1%   83.3%   0.8%  
 Replacement Plans Paid Episodically 4.0%   3.1%   0.9%  
 Replacement Plans Paid Per Visit 11.9%   13.6%   -1.7%  
             
Non-Medicare:            
Admissions  2,557 10%  2,645 11%  (88) -3.3%
Revenue (in thousands)  $ 4,414 4%  $ 5,822 6%  $ (1,408) -24.2%
Revenue per admission  1,726    2,201    $ (475) -21.6%
Billable visits  58,154 9%  58,643 10%  (489) -0.8%
Recertifications  427    464    (37) -8.0%
Payor mix % of Admissions            
Medicaid & other governmental 30.8%   21.3%   9.5%  
Private payors 69.2%   78.7%   -9.5%  
             
PERSONAL CARE OPERATING METRICS
             
   Period Ended April 3,   Three Months Ended March 31,     
  2015 2014 Change
  Amount % Amount % Amount %
Average number of locations  61    61    --  0.0%
             
Admissions  22,766    21,857    909 4.2%
Patient months of care  1,427    1,519    (92) -6.1%
Billable hours  1,286,884    1,287,290    (406) 0.0%
Revenue per billable hour  $ 22.35    $ 20.87    $ 1.48 7.1%
             
HEALTHCARE INNOVATIONS SUPPLEMENTAL DATA
             
   Period Ended April 3,   Three Months Ended March 31,     
  2015 2014 Change
  Amount % Amount % Amount %
Medicare enrollees under management  80,735    43,362    37,373 86.2%
ACOs under contract  11    7    4 57.1%
Net income - noncontrolling interest  (517)    (255)    (262) 102.7%
Assets  9,820    9,001    819 9.1%
Liabilities  246    296    (50) -16.9%
Non-controlling interest - redeemable  3,639    3,639    --  0.0%
Non-controlling interest - nonredeemable  (199)    (94)    (105) 111.7%

Non-GAAP Financial Measures

The information provided in some of the tables in this release includes certain non-GAAP financial measures as defined under SEC rules. In accordance with SEC rules, the Company has provided, in the supplemental information, a reconciliation of those measures to the most directly comparable GAAP measures.

Adjusted Earnings from Home Health Operations

Adjusted earnings from home health operations is not a measure of financial performance under accounting principles generally accepted in the United States of America. It should not be considered in isolation or as a substitute for net income, operating income, cash flows from operating, investing or financing activities, or any other measure calculated in accordance with generally accepted accounting principles. The presentation of adjusted earnings from home health operations provides investors with pertinent information to enable comparison of financial performance between periods by excluding certain items that the Company believes are not representative of its ongoing operations due to the nature of the items.  

The following tables set forth a reconciliation of net income attributable to Almost Family, Inc. to adjusted earnings from home health operations:

ALMOST FAMILY, INC. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EARNINGS
FROM HOME HEALTH OPERATIONS
(In thousands)
   Period Ended April 3,   Three Months Ended March 31, 
(in thousands) 2015 2014
 Net income attributable to Almost Family, Inc.   $ 4,394  $ 1,273
     
 Addbacks:     
 Deal, transition and other, net of tax   242  1,853
 Loss on discontinued operations, net of tax   (5)  70
 Adjusted earnings   4,631  3,196
 Healthcare Innovation operating loss after NCI, net of tax   189  93
 Adjusted earnings from home health operations   $ 4,820  $ 3,289
     
 Per share amounts-diluted:     
 Average shares outstanding   9,521  9,426
     
 Net income attributable to Almost Family, Inc.   $ 0.46  $ 0.13
     
 Addbacks:     
 Deal, transition and other, net of tax   0.03  0.20
 Loss on discontinued operations, net of tax   (0.00)  0.01
Adjusted earnings  0.49  0.34
 Healthcare Innovation operating loss after NCI, net of tax   0.02  0.01
Adjusted earnings from home health operations  $ 0.51  $ 0.35

Adjusted EBITDA from Home Health Operations

Adjusted earnings before interest, income tax, depreciation and amortization, amortization of stock-based compensation, deal, transition and other and healthcare innovation operating loss (Adjusted EBTIDA from Home Health Operations) is not a measure of financial performance under accounting principles generally accepted in the United States of America. It should not be considered in isolation or as a substitute for net income, operating income, cash flows from operating, investing or financing activities, or any other measure calculated in accordance with generally accepted accounting principles.  The items excluded from Adjusted EBITDA from Home Health Operations are significant components in understanding and evaluating financial performance and liquidity.  Management routinely calculates and communicates Adjusted EBITDA from Home Health Operations and believes that it is useful to investors because it provides a common analytical indicator within our industry to evaluate performance, measure leverage capacity and debt service ability, and to estimate current or prospective enterprise value.  Adjusted EBITDA is also used in certain covenants contained in our credit agreement.

The following tables set forth a reconciliation of net income from continuing operations to Adjusted EBITDA from Home Health Operations:

ALMOST FAMILY, INC. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA
FROM HOME HEALTH OPERATIONS
(In thousands)
   Period Ended April 3,   Three Months Ended March 31, 
(in thousands) 2015 2014
Net income from continuing operations  $ 4,024  $ 1,154
Add back:    
Interest expense  360  347
Income tax expense  2,987  817
Depreciation and amortization  918  1,102
Stock-based compensation from home health operations   520  414
Deal and transition costs  406  3,115
Adjusted EBITDA  9,215  6,949
Healthcare Innovation operating loss  618  290
Adjusted EBITDA from home health operations  $ 9,833  $ 7,239

About Almost Family, Inc.

Almost Family, Inc., founded in 1976, is a leading regional provider of home health nursing services, with branch locations in Florida, Ohio, Tennessee, Kentucky, Connecticut, New Jersey, Massachusetts, Indiana, Pennsylvania, Georgia, Missouri, Illinois, Mississippi and Alabama (in order of revenue significance). Almost Family, Inc. and its subsidiaries operate a Medicare-certified segment, a personal care segment and a healthcare innovations segment. Almost Family operates over 220 branch locations in fourteen U.S. states.

Forward Looking Statements

All statements, other than statements of historical facts, included in this news release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of forward-looking terminology such as "may," "will," "expect," "believe," "estimate," "project," "anticipate," "continue," or similar terms, variations of those terms or the negative of those terms. These forward-looking statements are based on the Company's current plans, expectations and projections about future events.

Because forward-looking statements involve risks and uncertainties, the Company's actual results could differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. The potential risks and uncertainties which could cause actual results to differ materially include: regulatory approvals or third-party consents may not be obtained; the impact of further changes in healthcare reimbursement systems, including the ultimate outcome of potential changes to Medicare reimbursement for home health services and to Medicaid reimbursement due to state budget shortfalls; the ability of the Company to maintain its level of operating performance and achieve its cost control objectives; changes in our relationships with referral sources; the ability of the Company to integrate acquired operations including obtaining synergies, integration objectives and anticipated timelines; government regulation; health care reform; pricing pressures from Medicare, Medicaid and other third-party payers; changes in laws and interpretations of laws relating to the healthcare industry; the ability of the Company to integrate, manage and keep secure our information systems; and the Company's self-insurance risks. For a more complete discussion regarding these and other factors which could affect the Company's financial performance, refer to the Company's various filings with the Securities and Exchange Commission, including its filing on Form 10-K for the year ended December 31, 2014, in particular information under the headings "Special Caution Regarding Forward-Looking Statements" and "Risk Factors."  With regard to the Company's investments in its HealthCare Innovations segment, there can be no assurance that its operational and developmental objectives will be realized or that any savings in healthcare spending or any future participation in Medicare Shared Savings Program payments will be realized.  The Company undertakes no obligation to update or revise its forward-looking statements.



            

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