Almost Family Reports Second Quarter 2016 Results

Louisville, Kentucky, UNITED STATES


LOUISVILLE, Ky., Aug. 03, 2016 (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 quarter ended July 1, 2016.

Second Quarter Highlights (1):

  • Record net service revenues of approximately $156.0 million with record revenues in all three segments
  • GAAP EPS of $0.46 per diluted share, down $0.06 from a year ago, Adjusted EPS of $0.61, up $0.07 from a year ago 
  • GAAP net income of $4.8 million, down $0.2 million from a year ago, Adjusted net income of $6.3 million, up $1.2 million from a year ago
  • Record Adjusted EBITDA of $13.8 million, up 34% from a year ago
  • Healthcare Innovations (HCI) segment contributed $0.03 in earnings per share, while performing nearly 20,000 in-home assessments and having nearly 122,000 ACO beneficiaries and 15 Accountable Care Organizations under contract
  • Year to date operating cash flow of $10.4 million
  • On June 18, 2016, we completed the previously announced acquisition of certain home health agencies in Wisconsin, Connecticut and Kentucky

___________

(1) See Non-GAAP Financial Measures starting on page 12.

Management Comments
William Yarmuth, Chairman and Chief Executive Officer, commented:  “We are pleased with our quarterly results as we produced record revenues and solid performance while continuing with the integration of recent significant acquisition activity.  This is the first quarter in which our HCI segment has generated positive earnings without an ACO shared savings payment.  In only two years since its inception, the HCI segment has established a meaningful business presence with an expectation of on-going profitability.  Over the balance of 2016 we will continue to integrate our recent acquisitions, focus on the operation and growth of our existing operations and seek additional acquisition opportunities.”

Steve Guenthner, President added:  “We remain optimistic about the future and comparatively favorable capital market and regulatory conditions.  The recently released 2017 preliminary rule on Medicare home health reimbursement marks the last of four years of rebasing of home health rates.  We feel CMS’ recently announced pre-claim review process, which may initially be somewhat burdensome, if properly implemented should serve to reduce real and perceived payment error rates and help build a relationship of trust between the Program and providers that is critical to home health achieving its real potential in the health care delivery system.  We support CMS’ program integrity efforts and will continue to work with them to find the best approaches to implementation.”

Yarmuth concluded:  “The knowledge we are gaining from our HCI investments and their overall role in various models to control costs through well managed care only reinforces our overarching thesis that home health care is essential to the future of and will play an ever growing part in our health care delivery system. We will build on this, and our accomplishments to date, as we seek to maintain our growth trajectory.  I want to thank our 14,000+ employees for their continued commitment to our important mission-based work and express my confidence in our ability to continue to be a leader in the industry.”

Second Quarter Financial Results
VN segment net revenues increased $12.9 million to a record $110.7 million from $97.7 million in the prior year and total Medicare admissions grew by 5% to 23,920 from 22,782 primarily due to home health agencies acquired in late 2015 and early 2016.  VN segment contribution increased $2.8 million, or 22.7%, to $15.3 million, from $12.5 million in the prior year period.  Contribution margin as a percentage of revenue increased to 13.8% from 12.8%.  On a same-store basis, Medicare admissions outside of Florida grew by 3.1%.  The Company is continuing its efforts to improve the performance of its Florida business, however, with its growth and acquisition activity outside of the state, the impact of Florida performance on the Company’s operating results is lessening.  Florida operations currently account for approximately one-fourth of VN segment revenues as compared to one-third a year ago and one-half three years ago.

PC segment net revenues increased $10.2 million or 34.6% to a record $39.7 million in 2016 from $29.5 million in 2015 primarily due to acquisitions.  PC segment contribution decreased $0.6 million as compared to the same period of last year, primarily due to rate reductions in certain skilled elements of the Ohio Medicaid program as well as higher provision for bad debts in two Medicaid managed care states.

HCI segment net revenues increased $5.5 million to a record $5.6 million, in 2016 from $0.1 million in 2015.  The HCI segment earned $0.03 EPS in its first quarter of profitability without an ACO-related shared savings payment.  The HCI segment is expected to be profitable for the balance of 2016.

Corporate expenses as a percentage of revenue declined to 4.5%, from 5.4% in the prior year period.  Deal, transition and other costs grew to $2.6 million for 2016, primarily as a result of costs related to 2016 and 2015 acquisitions.  Borrowings related to acquisitions increased interest expense to $1.6 million, from $0.5 million in the prior year period.

Net cash from operating activities of $4.9 million was generated in the second quarter of 2016.  Home Health accounts receivable days sales outstanding were 56 at the end of the second quarter of 2016 as compared to 59 at the end of the second quarter of 2015.

The effective tax rate for the second quarter of 2016 and 2015 was 40.5% and 40.3%, respectively. 

Year to Date Financial Results
VN segment net revenues increased $23.0 million to a record $220.3 million from $197.3 million in the prior year period and total Medicare admissions grew by 1.3% to 47,105 from 46,504 primarily due to home health agencies acquired in late 2015 and 2016.  VN segment contribution increased $5.4 million, or 21.7%, to $30.3 million, from $24.9 million in the first half of last year.  Contribution margin as a percentage of revenue increased to 13.7% from 12.6%.  On a same-store basis, Medicare admissions outside of Florida grew organically by 2.8%.  Within Florida, same store Medicare admissions in Florida in the first half of 2016 were 7.6% below the first half of 2015 which represented a high-water mark for Florida Medicare admissions. 

PC segment net revenues increased $21.1 million or 36.3% to a record $79.4 million in 2016 from $58.2 million in 2015 primarily due to acquisitions.  PC segment contribution increased 3.4% or $0.2 million as compared to the first half of last year.

HCI segment net revenues increased $9.8 million to a record $10.0 million in 2016 from $0.2 million in 2015.  The HCI segment contribution improved $1.0 million over the first half of 2015.

Corporate expenses as a percentage of revenue declined to 4.7%, from 5.4% in the prior year period.  Deal, transition and other costs grew to $5.2 million for 2016, primarily as a result of costs related to 2016 and 2015 acquisitions.  Borrowings related to acquisitions increased interest expense to $2.9 million, from $0.9 million in the first half of 2015.

Net cash from operating activities of $10.4 million was generated in the first half of 2016, more than double the $5.1 million generated in the first half of 2015. 

The effective tax rate for the second quarter of 2016 and 2015 was 40.5% and 40.4%, respectively. 

The Company noted that it will continue to pursue quality acquisitions of in-home health care service providers consistent with its stated strategy and the types of services its segments currently provide.

Medicare Program Developments
On June 27, 2016, the Centers for Medicare and Medicaid Services (CMS) issued its proposed rule for 2017.  CMS is proposing a 1.0% rate cut consisting of a 2.8% market basket update minus a 0.5% productivity adjustment, a 2.3% rebasing cut, and a 0.97% case mix adjustment.  The proposed rule, which also proposes certain refinements to the Home Health Value-based Purchasing Model is currently open for comment.  The final rule is expected to be released in late October 2016.

On June 8, 2016, CMS announced the “Pre-Claim Review Demonstration of Home Health Services” which seeks to demonstrate that a review of selected documentation prior to payment of claims can decrease “improper payments because of insufficient documentation”.  According to the CMS announcement, the pre-claim review demonstration will help educate HHAs on what documentation is required and encourage them to submit the correct documentation, while still allowing the HHA to begin providing services and receive initial payments prior to the pre-claim review decision.  The pre-claim review demonstration will begin in Illinois no earlier than August 1, 2016 and the remaining states of Florida, Texas, Michigan and Massachusetts will phase in over 2016 and 2017.  The Company is currently unable to predict what impact, if any, this demonstration program may have on its results of operations or financial position.

 
ALMOST FAMILY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(UNAUDITED)
 
 Three month period ended Six months ended
 July 1, 2016 July 3, 2015 July 1, 2016 July 3, 2015
Net service revenues$155,996  $127,366  $309,694  $255,765 
Cost of service revenues (excluding depreciation & amortization)  83,692    66,343    165,924    134,659 
Gross margin  72,304    61,023    143,770    121,106 
General and administrative expenses:       
Salaries and benefits  41,502    35,832    83,182    72,225 
Other  18,715    16,356    38,156    32,175 
Deal and transition costs  2,589    203    5,198    609 
Total general and administrative expenses  62,806    52,391    126,536    105,009 
Operating income  9,498    8,632    17,234    16,097 
Interest expense, net  (1,604)   (457)   (2,936)   (905)
Income before income taxes  7,894    8,175    14,298    15,192 
Income tax expense  (3,250)   (3,393)   (5,927)   (6,381)
Net income  4,644    4,782    8,371    8,811 
Net loss - noncontrolling interests  133    228    323    592 
Net income attributable to Almost Family, Inc.$4,777  $5,010  $8,694  $9,403 
        
Per share amounts-basic:       
Average shares outstanding  10,158    9,393    10,125    9,377 
        
Net income attributable to Almost Family, Inc.$0.47  $0.53  $0.86  $1.00 
        
Per share amounts-diluted:       
Average shares outstanding  10,322    9,569    10,311    9,554 
        
Net income attributable to Almost Family, Inc.$0.46  $0.52  $0.84  $0.98 
                

 

ALMOST FAMILY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
 
  
  July 1, 2016    
  (UNAUDITED) January 1, 2016 
ASSETS       
CURRENT ASSETS:       
Cash and cash equivalents $ 5,914  $ 7,522  
Accounts receivable - net   95,623    92,909  
Prepaid expenses and other current assets   9,853    9,033  
TOTAL CURRENT ASSETS   111,390    109,464  
PROPERTY AND EQUIPMENT - NET   8,626    10,000  
GOODWILL   321,539    277,061  
OTHER INTANGIBLE ASSETS   69,811    64,629  
OTHER ASSETS   4,086    3,615  
TOTAL ASSETS $ 515,452  $ 464,769  
        
LIABILITIES AND STOCKHOLDERS’ EQUITY        
CURRENT LIABILITIES:       
Accounts payable $ 13,937  $ 12,297  
Accrued other liabilities   39,280    42,524  
TOTAL CURRENT LIABILITIES   53,217    54,821  
        
LONG-TERM LIABILITIES:       
Revolving credit facility    135,175     113,790  
Deferred tax liabilities    17,094     13,094  
Seller notes    12,500     6,556  
Other liabilities    3,330     2,608  
TOTAL LONG-TERM LIABILITIES    168,099     136,048  
TOTAL LIABILITIES    221,316     190,869  
        
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; 10,490 and 10,125 issued and outstanding    1,049     1,013  
Treasury stock, at cost, 116 and 103 shares    (3,214)    (2,731) 
Additional paid-in capital    139,565     127,253  
Noncontrolling interest - nonredeemable    (718)    (730) 
Retained earnings    153,815     145,456  
TOTAL STOCKHOLDERS’ EQUITY    290,497     270,261  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $  515,452  $  464,769  
            

 

ALMOST FAMILY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
 
 Six months ended
 July 1, 2016 July 3, 2015
Cash flows of operating activities:   
Net income$8,371  $8,811 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization  1,984    1,780 
Provision for uncollectible accounts  7,859    4,821 
Stock-based compensation  1,402    1,005 
Deferred income taxes  4,236    1,639 
   23,852    18,056 
Change in certain net assets and liabilities, net of the effects of acquisitions:   
Accounts receivable  (10,081)   (12,522)
Prepaid expenses and other current assets  (511)   3,538 
Other assets  (492)   46 
Accounts payable and accrued expenses  (2,363)   (4,062)
Net cash provided by operating activities  10,405    5,056 
    
Cash flows of investing activities:   
Capital expenditures  (2,275)   (1,147)
Cost basis investment  -    (1,000)
Acquisitions, net of cash acquired  (30,754)   (3,000)
Net cash used in investing activities  (33,029)   (5,147)
    
Cash flows of financing activities:   
Credit facility borrowings  145,538    87,747 
Credit facility repayments  (124,153)   (86,743)
Debt issuance fees  (102)   (1,161)
Proceeds from stock option exercises  16    68 
Purchase of common stock in connection with share awards  (484)   (338)
Tax impact of share awards  256    210 
Payment of special dividend in connection with share awards  -    (50)
Principal payments on notes payable and capital leases  (55)   (30)
Net cash provided by (used in) financing activities  21,016    (297)
    
Net change in cash and cash equivalents  (1,608)   (388)
Cash and cash equivalents at beginning of period  7,522    6,886 
Cash and cash equivalents at end of period$5,914  $6,498 
        

 

ALMOST FAMILY, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
(UNAUDITED)
(In thousands)
 
  
  Three months ended      
  July 1, 2016 July 3, 2015 Change 
  Amount % Rev Amount % Rev Amount % 
Home Health Operations                
Net service revenues:                
Visiting Nurse $  110,658   73.6% $  97,748   76.8% $ 12,910   13.2% 
Personal Care    39,694   26.4%    29,488   23.2%   10,206   34.6% 
     150,352   100.0%    127,236   100.0%   23,116   18.2% 
Operating income before corporate expenses:                
Visiting Nurse    15,310   13.8%    12,482   12.8%   2,828   22.7% 
Personal Care    3,008   7.6%    3,604   12.2%   (596)  -16.5% 
     18,318   12.2%    16,086   12.6%   2,232   13.9% 
Healthcare Innovations Operations                
Revenue    5,644   100.0%    130   100.0%   5,514   4241.5% 
Operating income (loss)    720   12.8%    (402)  -309.2%   1,122   279.1% 
                 
Corporate expenses    6,951   4.5%    6,849   5.4%   102   1.5% 
Deal, transition and other costs    2,589   1.7%   203   0.2%   2,386   1175.4% 
Operating income    9,498   6.1%    8,632   6.8%   866   10.0% 
Interest expense, net    (1,604)  -1.0%    (457)  -0.4%   (1,147)  251.0% 
Income tax expense    (3,250)  -2.1%    (3,393)  -2.7%   143   -4.2% 
Net income $  4,644   3.0% $  4,782   3.8% $  (138)  -2.9% 
                 
Adjusted EBITDA (1) $  13,768   8.8% $  10,345   8.1% $  3,423   33.1% 
Adjusted net income (1) $  6,317   4.0% $  5,131   4.0% $  1,187   23.1% 
__________________ 
(1) See Non-GAAP Financial Measures starting on page 12. 

 

  Six months ended      
  July 1, 2016 July 3, 2015 Change 
  Amount % Rev Amount % Rev Amount % 
Home Health Operations                
Net service revenues:                
Visiting Nurse $  220,271   73.5% $  197,283   77.2% $ 22,988   11.7% 
Personal Care    79,387   26.5%    58,249   22.8%   21,138   36.3% 
     299,658   100.0%    255,532   100.0%   44,126   17.3% 
Operating income before corporate expenses:                
Visiting Nurse    30,287   13.7%    24,883   12.6%   5,404   21.7% 
Personal Care    6,732   8.5%    6,513   11.2%   219   3.4% 
     37,019   12.4%    31,396   12.3%   5,623   17.9% 
Healthcare Innovations Operations                
Revenue    10,036   100.0%    233   100.0%   9,803   4207.3% 
Operating income (loss)    47   0.5%    (919)  -394.4%   966  NM 
                 
Corporate expenses    14,634   4.7%    13,771   5.4%   863   6.3% 
Deal, transition and other costs    5,198   1.7%    609   0.2%   4,589   753.5% 
Operating income    17,234   5.6%    16,097   6.3%   1,137   7.1% 
Interest expense, net    (2,936)  -0.9%    (905)  -0.4%   (2,031)  224.4% 
Income tax expense    (5,927)  -1.9%    (6,381)  -2.5%   454   -7.1% 
Net income $  8,371   2.7% $  8,811   3.4% $ (440)  -5.0% 
                 
Adjusted EBITDA (1) $  26,006   8.4% $  19,931   7.8% $  6,075   30.5% 
Adjusted net income (1) $  11,787   3.8% $  9,765   3.8% $  2,021   20.7% 
__________________ 
(2) See Non-GAAP Financial Measures starting on page 12. 


VISITING NURSE SEGMENT OPERATING METRICS 
  
  Three months ended      
  July 1, 2016 July 3, 2015 Change 
  Amount % Amount % Amount % 
Average number of locations    163       162       1   0.6% 
                 
All payors:                
Patient months    90,737       81,067       9,670   11.9% 
Admissions    27,410       24,920       2,490   10.0% 
Billable visits    735,138       638,479       96,659   15.1% 
                 
Medicare:                
Admissions    23,920   87%    22,782   91%    1,138   5.0% 
Revenue (in thousands) $  103,514   94% $  93,673   96% $  9,841   10.5% 
Revenue per admission $  4,328    $  4,112    $  216   5.2% 
Billable visits    647,490   88%    580,709   91%    66,781   11.5% 
Recertifications    12,579       11,580       999   8.6% 
Payor mix % of Admissions                
Traditional Medicare Episodic   83.2%     82.9%     0.3%   
Replacement Plans Paid Episodically   4.8%     3.9%     0.9%   
Replacement Plans Paid Per Visit   12.0%     13.2%     -1.2%   
                 
Non-Medicare:                
Admissions    3,490   13%    2,138   9%    1,352   63.2% 
Revenue (in thousands) $  7,144   6% $  4,075   4% $  3,069   75.3% 
Revenue per admission $  2,047    $  1,906    $  141   7.4% 
Billable visits    87,648   12%    57,770   9%    29,878   51.7% 
Recertifications    1,153       480       673   140.2% 
Payor mix % of Admissions                
Medicaid & other governmental   25.8%     36.8%     -11.0%   
Private payors   74.2%     63.2%     11.0%   


PERSONAL CARE SEGMENT OPERATING METRICS 
  
  Three months ended      
  July 1, 2016 July 3, 2015 Change 
  Amount Amount Amount % 
Average number of locations   71   62    9   14.5% 
             
Admissions   2,591   1,651    940   56.9% 
Patient months of care   39,758   23,722    16,036   67.6% 
Billable hours   1,833,784   1,317,978    515,806   39.1% 
Revenue per billable hour $ 21.65 $ 22.37 $  (0.73)  -3.3% 

      

VISITING NURSE SEGMENT OPERATING METRICS 
                 
  Six months ended      
  July 1, 2016   July 3, 2015 Change 
  Amount % Amount % Amount % 
Average number of locations    163       162      1   0.6% 
                 
All payors:                
Patient months    182,695       162,049       20,646   12.7% 
Admissions    55,911       51,199       4,712   9.2% 
Billable visits    1,467,380       1,281,071       186,309   14.5% 
                 
Medicare:                
Admissions    47,105   84%    46,504   91%    601   1.3% 
Revenue (in thousands) $  206,672   94% $  188,794   96% $  17,878   9.5% 
Revenue per admission $  4,387    $  4,060    $ 328   8.1% 
Billable visits    1,295,836   88%    1,165,147   91%    130,689   11.2% 
Recertifications    25,170       23,507       1,663   7.1% 
Payor mix % of Admissions                
Traditional Medicare Episodic   81.8%     83.5%     -1.7%   
Replacement Plans Paid Episodically   4.9%     4.0%     0.9%   
Replacement Plans Paid Per Visit   13.3%     12.5%     0.8%   
                 
Non-Medicare:                
Admissions    8,806   16%    4,695   9%    4,111   87.6% 
Revenue (in thousands) $  13,599   6% $  8,489   4% $  5,110   60.2% 
Revenue per admission $  1,544    $  1,808    $  (264)  -14.6% 
Billable visits    171,544   12%    115,924   9%    55,620   48.0% 
Recertifications    2,284       907       1,377   151.8% 
Payor mix % of Admissions                
Medicaid & other governmental   45.9%     33.5%     12.4%   
Private payors   54.1%     66.5%     -12.4%   


PERSONAL CARE OPERATING METRICS 
                 
  Six months ended      
  July 1, 2016 July 3, 2015 Change 
  Amount % Amount % Amount % 
Average number of locations   71     62      9   14.5% 
                 
Admissions   5,037     3,078      1,959   63.6% 
Patient months of care   78,818     46,488      32,330   69.5% 
Billable hours   3,655,323     2,604,862      1,050,461   40.3% 
Revenue per billable hour $21.72   $22.36   $ (0.64)  -2.9% 


HEALTHCARE INNOVATIONS SUPPLEMENTAL DATA 
  
  Three months ended      
  July 1, 2016 July 3, 2015  Change 
  Amount Amount  Amount % 
In-home Assessments    19,820     -     19,820  NM 
             
Medicare ACO enrollees under management    121,881     83,133     38,748   46.6% 
ACOs under contract    15     11     4   36.4% 
Assets $  62,050  $  9,428  $  52,622   558.1% 
Liabilities $  28,395  $  226  $  28,169   12464.2% 
Non-controlling interest - redeemable $  3,639  $  3,639  $  -   0.0% 
Non-controlling interest - nonredeemable $  (184) $  (155) $  (29)  18.7% 


  Six months ended      
  July 1, 2016 July 3, 2015  Change 
  Amount Amount  Amount % 
In-home Assessments   36,766   -   36,766 NM 
             
Medicare enrollees under management   121,881   83,133   38,748  46.6% 
ACOs under contract   15   11   4  36.4% 
               

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 Net Income and Adjusted Earnings Per Share
Adjusted net income and adjusted earnings per share are not measures of financial performance under accounting principles generally accepted in the United States of America.  They 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 net income and adjusted earnings per share 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 net income:

  
ALMOST FAMILY, INC. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE
 (In thousands)
 
  
  Three month period ended Six months ended 
(in thousands) July 1, 2016 July 3, 2015 July 1, 2016 July 3, 2015 
Net income attributable to Almost Family, Inc. $ 4,777 $  5,010  $  8,694  $  9,403  
              
Addbacks:             
Deal, transition and other, net of tax   1,540    121     3,093     362  
Adjusted net income $ 6,317 $  5,131  $  11,787  $  9,765  
              
Per share amounts-diluted:             
Average shares outstanding   10,322    9,569     10,311     9,554  
              
Net income attributable to Almost Family, Inc. $ 0.46 $  0.52  $  0.84  $  0.98  
              
Addbacks:             
Deal, transition and other, net of tax   0.15    0.02     0.30     0.04  
Adjusted earnings per share $ 0.61 $  0.54  $  1.14  $  1.02  
                    
Adjusted earnings per share:                   
Home health operations $ 0.58 $  0.55  $  1.16  $  1.06  
Healthcare Innovations   0.03    (0.01)    (0.02)    (0.04) 
Total $ 0.61 $  0.54  $  1.14  $  1.02  
                    

Adjusted EBITDA 
Adjusted earnings before interest, income tax, depreciation and amortization, amortization of stock-based compensation, deal, transition and other (Adjusted EBITDA) 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 Operations are significant components in understanding and evaluating financial performance and liquidity.  Management routinely calculates and communicates Adjusted EBITDA 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
 (In thousands)
 
  
  Three month period ended Six months ended 
(in thousands) July 1, 2016 July 3, 2015 July 1, 2016  July 3, 2015 
Net income $ 4,777 $  5,010  $ 8,694  $  9,403  
Add back:              
Interest expense   1,604    457    2,936     905  
Income tax expense   3,250    3,393    5,927     6,381  
Depreciation and amortization   864    797    1,849     1,628  
Stock-based compensation   684    485    1,402     1,005  
Deal and transition costs   2,589    203    5,198     609  
Adjusted EBITDA $ 13,768 $  10,345  $ 26,006  $  19,931  
               
Adjusted EBITDA:              
Home health operations $ 12,147 $  10,818  $ 24,714  $  21,021  
Healthcare Innovations   1,621    (473)   1,292     (1,090) 
Total $ 13,768 $  10,345  $ 26,006  $  19,931  
                   

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, New York, Connecticut, Kentucky, New Jersey, Massachusetts, Pennsylvania, Georgia, Wisconsin, Indiana, 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 240 branch locations in sixteen 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; changes in the marketplace and regulatory environment for Health Risk Assessments 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 fiscal year ended January 1, 2016, in particular information under the headings "Special Caution Regarding Forward-Looking Statements" and “Risk Factors.” With regard to the Company’s investment in development-stage enterprises in its Healthcare Innovations segment, there can be no assurance that its operational and developmental objectives will be realized or that the Company’s investments will result in future returns.  The Company undertakes no obligation to update or revise its forward-looking statements.


        

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