Almost Family Reports Third Quarter 2016 Results

Louisville, Kentucky, UNITED STATES


LOUISVILLE, Ky., Nov. 01, 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 September 30, 2016.

Third Quarter Highlights (1):

  • Record net service revenues of approximately $160.4 million with record revenues in our PC and HCI segments
  • GAAP EPS of $0.52 per diluted share, down $0.27 from a year ago, Adjusted EPS of $0.66, up $0.14 from a year ago
  • GAAP net income of $5.4 million, down $2.4 million from a year ago, Adjusted net income of $6.8 million, up $1.7 million from a year ago
  • Record Adjusted EBITDA of $14.8 million, up 39% from a year ago
  • Healthcare Innovations (HCI) segment recorded Medicare Shared Savings payment success fees from multiple ACOs, while performing over 21,000 in-home assessments and having nearly 122,000 ACO beneficiaries and 15 Accountable Care Organizations under contract
  • Unusually high health insurance claims and a significant rate cut in Connecticut’s Medicaid-sponsored behavioral health program reduced diluted EPS by $0.06 and $0.05, respectively
  • A change in the Company’s expected effective tax rate recognized in the current quarter increased diluted EPS by $0.02
  • Year to date operating cash flow of $15.3 million
  • On October 14, 2016, we signed a definitive agreement to acquire a controlling interest in the entity holding the home health and hospice assets of Community Health Systems, Inc.

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

Management Comments
William Yarmuth, Chairman and Chief Executive Officer, commented:  “We’re very pleased with the progress in our core home health business in the quarter where we continue to generate meaningful organic growth, while also working through the integration of our 2015 and 2016 acquisitions.  In addition, we’re especially pleased to report outstanding record results in our healthcare innovations segment which is drawing increased attention as it makes significant strides in its earnings and developments.  At the same time all of this has been accomplished, we also just recently announced entering into the nation’s largest public company hospital-home health joint venture, enabling us, in a very strategic way, to continue our strong growth trajectory.”

Steve Guenthner, President added:  “Although it was somewhat masked by the acquisitions of certain agencies where we did not acquire accounts receivable, we had especially strong operating cash flows in the third quarter reducing days outstanding to 53, the lowest level in quite some time.  Additionally, we were pleased to see the somewhat favorable final rule for Medicare reimbursement in 2017, continuing the comparatively favorable tone of regulators toward home health.”

Yarmuth concluded:  “As we move through the balance of 2016 and into 2017 our key focus will be the successful integration of our new strategic home health partnership with CHS, continuing our work on organic volume growth and improving the financial results of all our business units.”

The Company noted that the third quarter typically marks the seasonally low-water point of its home health business in terms of admissions and the high point for HCI results due to the timing of accounting recognition for success fees under the Medicare Shared Savings Program for Accountable Care Organizations. 

Third Quarter Financial Results
VN segment net revenues increased $10.1 million to $108.4 million from $98.3 million in the prior year and total Medicare admissions grew by 5.3% to 23,030 from 21,876 primarily due to home health agencies acquired in late 2015 and the first half of 2016.  VN segment contribution increased $0.5 million, or 4.5%, to $12.6 million, from $12.1 million in the prior year period.  Contribution margin as a percentage of revenue decreased from 12.3% to 11.6%.  VN results in the current quarter were impacted by unusually high health insurance claims experience of about $1 million which lowered diluted EPS by $0.06.  On a same-store basis, Medicare admissions outside of Florida grew by 3.2%, while Florida was marginally positive.  The Company is continuing its efforts to improve the performance of its Florida business which 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 $10.9 million or 35.2% to a record $41.7 million in 2016 from $30.8 million in 2015 primarily due to acquisitions.  PC segment contribution decreased $0.5 million as compared to the same period of last year, primarily due to a 20% rate cut in the State of Connecticut’s Medicaid-sponsored behavioral health program which generated approximately $2.6 million of revenue in the current quarter as compared to $3.3 million in the same quarter last year on similar volumes.  The Company is currently evaluating the on-going viability of this program under current reimbursement and regulations.

Healthcare Innovations (HCI) segment net revenues increased $8.3 million to a record $10.3 million, in 2016 from $2.1 million in 2015.  The Company’s ACO-enablement operations recorded shared savings incentive revenue of $4.3 million from multiple ACOs participating in the Medicare Shared Savings Program.  ACOs managed by the Company saved the Medicare program a total of $25 million in the measurement period.  The Company’s assessment business acquired in transactions in January 2016 and July 2015 contributed the balance of the revenues.  As a result, operating income for the HCI segment was a record $5.1 million, or $0.15 per share attributable to Almost Family.

Corporate expenses as a percentage of revenue declined to 4.4%, from 4.8% in the prior year period.  Deal, transition and other costs grew to $2.3 million for 2016, primarily as a result of costs related to 2016 and 2015 acquisition, while the prior year included a one-time $4.2 million benefit related to legal settlements.  Borrowings related to acquisitions increased interest expense to $1.4 million, from $0.6 million in the prior year period.

Net cash from operating activities of $4.9 million was generated in the third quarter of 2016.  Home Health accounts receivable days sales outstanding were 53 at the end of the third quarter of 2016 as compared to 58 at the end of the third quarter of 2015.  The Company noted that its late June 2016 acquisition of certain home health agencies from ResCare did not include accounts receivable.  Building normal accounts receivable reduced operating cash flows by about $6 million in the third quarter of 2016.

The effective tax rate for the third quarter of 2016 and 2015 was 37.3% and 21.0%, respectively.  During the quarter, the Company lowered its estimated effective tax rate from 40.5% to 39.5% due to lower permanently non-deductible expenses in relation to taxable income.

Year to Date Financial Results
VN segment net revenues increased $33.0 million to a record $328.7 million from $295.6 million in the prior year period and total Medicare admissions grew by 2.4% to 70,021 from 68,380 primarily due to home health agencies acquired in late 2015 and 2016.  VN segment contribution increased $5.9 million, or 16.1%, to $42.9 million, from $37.0 million in the same period last year.  Contribution margin as a percentage of revenue increased to 13.1% from 12.5%.  On a same-store basis, Medicare admissions outside of Florida grew organically by 3% while Florida was down 4%.

PC segment net revenues increased $32.0 million or 35.9% to a record $121.1 million in 2016 from $89.1 million in 2015 primarily due to acquisitions.  PC segment contribution decreased 3.2% or $0.3 million due to rate cuts in certain skilled elements of the Connecticut and Ohio Medicaid programs more than offset earnings from acquisitions.

HCI segment net revenues increased $18.0 million to a record $20.3 million, in 2016 from $2.3 million in 2015, as acquired LTS and Ingenios assessment business revenues were $15.4 million with the remainder due to higher shared savings revenue as multiple Imperium served ACOs received Medicare shared savings payments.  LTS was acquired in January 2016 and Ingenios was acquired in July 2015.  The HCI segment contribution thus improved $5.5 million, as the segment was profitable for year to date 2016.

Corporate expenses as a percentage of revenue declined to 4.6%, from 5.2% in the prior year period.  Deal, transition and other costs grew to $7.5 million for 2016, primarily as a result of costs related to 2016 and 2015 acquisitions, while the prior year included a one-time $4.2 million benefit related to legal settlements.  Borrowings related to acquisitions increased interest expense to $4.3 million, from $1.5 million in the same period 2015.

Net cash from operating activities of $15.3 million was generated in 2016, up $2.0 million from the $13.3 million generated in the same period 2015. 

The effective tax rate for 2016 and 2015 was 39.3% and 32.9%, 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.

Acquisition of the Home Health and Hospice Assets of Community Health Systems, Inc.
On October 14, 2016, the Company signed a definitive agreement to acquire a controlling interest in the entity holding the home health and hospice assets of Community Health Systems, Inc. for $128.0 million, subject to a working capital adjustment. Financing for the transaction has been fully committed by JPMorgan. The transaction is expected to be completed during the fourth quarter, subject to regulatory approvals and the satisfaction of customary closing conditions. The Company expects the transaction will add approximately $200 million in revenue, all of which will be classified in the Company’s VN segment. The transaction will expand the Company’s geographic service territory to a total of 26 states.

Medicare Program Developments
On October 31, 2016 the Centers for Medicare and Medicaid Services (CMS) released the final rule for FY2017 home health reimbursement.  The impact table included in the final rule suggests the final rule is slightly more favorable than the preliminary rule published earlier this year.

 
ALMOST FAMILY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(UNAUDITED)
        
 Three months ended Nine months ended
 September 30, 2016 October 2, 2015 September 30, 2016 October 2, 2015
Net service revenues$160,421  $131,232  $470,114  $386,997 
Cost of service revenues (excluding depreciation & amortization) 86,074   69,475   251,998   204,134 
Gross margin 74,347   61,757   218,116   182,863 
General and administrative expenses:       
Salaries and benefits 42,952   36,767   126,134   108,993 
Other 18,167   15,598   56,323   47,772 
Deal and transition costs 2,257   (1,306)  7,455   (696)
Total general and administrative expenses 63,376   51,059   189,912   156,069 
Operating income 10,971   10,698   28,204   26,794 
Interest expense, net (1,399)  (559)  (4,335)  (1,463)
Income before income taxes 9,572   10,139   23,869   25,331 
Income tax expense (3,194)  (2,078)  (9,120)  (8,458)
Net income 6,378   8,061   14,749   16,873 
Net loss - noncontrolling interests (1,012)  (262)  (689)  330 
Net income attributable to Almost Family, Inc.$5,366  $7,799  $14,060  $17,203 
        
Per share amounts-basic:       
Average shares outstanding 10,172   9,604   10,150   9,432 
        
Net income attributable to Almost Family, Inc.$0.53  $0.81  $1.39  $1.82 
        
Per share amounts-diluted:       
Average shares outstanding 10,310   9,822   10,328   9,649 
        
Net income attributable to Almost Family, Inc.$0.52  $0.79  $1.36  $1.78 
        


ALMOST FAMILY, INC. AND SUBSIDIARIES 
CONSOLIDATED BALANCE SHEETS 
(In thousands) 
  
  September 30, 2016     
  (UNAUDITED) January 1, 2016 
ASSETS       
CURRENT ASSETS:       
Cash and cash equivalents $ 6,827  $ 7,522  
Accounts receivable - net   95,616    92,909  
Prepaid expenses and other current assets   14,090    9,033  
TOTAL CURRENT ASSETS   116,533    109,464  
PROPERTY AND EQUIPMENT - NET   9,753    10,000  
GOODWILL   320,794    277,061  
OTHER INTANGIBLE ASSETS   69,909    64,629  
OTHER ASSETS   4,143    3,615  
TOTAL ASSETS $ 521,132  $ 464,769  
        
LIABILITIES AND STOCKHOLDERS’ EQUITY        
CURRENT LIABILITIES:       
Accounts payable $ 14,007  $ 11,297  
Accrued other liabilities   36,054    40,742  
TOTAL CURRENT LIABILITIES   50,061    52,039  
        
LONG-TERM LIABILITIES:       
Revolving credit facility    133,824     113,790  
Deferred tax liabilities    18,494     13,094  
Seller notes    12,500     6,556  
Other liabilities    6,335     5,390  
TOTAL LONG-TERM LIABILITIES    171,153     138,830  
TOTAL LIABILITIES    221,214     190,869  
        
NONCONTROLLING INTEREST - REDEEMABLE -       
HEALTHCARE INNOVATIONS    2,256     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; 10,489 and 10,125 issued and outstanding    1,050     1,013  
Treasury stock, at cost, 116 and 103 shares    (3,214)    (2,731) 
Additional paid-in capital    140,351     127,253  
Noncontrolling interest - nonredeemable    (766)    (730) 
Retained earnings    160,241     145,456  
TOTAL STOCKHOLDERS’ EQUITY    297,662     270,261  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $  521,132  $  464,769  
            


ALMOST FAMILY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
 
 Nine Months Ended
 September 30, 2016 October 2, 2015
Cash flows of operating activities:   
Net income$14,749  $16,873 
Adjustments to reconcile net income to net cash provided by
operating activities:
   
Depreciation and amortization  3,020    2,625 
Provision for uncollectible accounts  10,626    9,322 
Stock-based compensation  2,013    1,455 
Deferred income taxes  6,081    3,108 
   36,489    33,383 
Change in certain net assets and liabilities, net of the effects of acquisitions:   
Accounts receivable  (12,831)   (13,444)
Prepaid expenses and other current assets  (4,451)   (4,038)
Other assets  (620)   (46)
Accounts payable and accrued expenses  (3,302)   (2,535)
Net cash provided by operating activities  15,285    13,320 
    
Cash flows of investing activities:   
Capital expenditures  (4,364)   (1,753)
Cost basis investment  -    (1,000)
Acquisitions, net of cash acquired  (31,256)   (55,701)
Net cash used in investing activities  (35,620)   (58,454)
    
Cash flows of financing activities:   
Credit facility borrowings  215,430    163,904 
Credit facility repayments  (195,396)   (118,053)
Debt issuance fees  (102)   (1,161)
Proceeds from stock option exercises  (9)   141 
Purchase of common stock in connection with share awards  (484)   (338)
Tax impact of share awards  257    227 
Payment of special dividend in connection with share awards  -    (50)
Principal payments on notes payable and capital leases  (56)   (54)
Net cash provided by financing activities  19,640    44,616 
    
Net change in cash and cash equivalents  (695)   (518)
Cash and cash equivalents at beginning of period  7,522    6,886 
Cash and cash equivalents at end of period$6,827  $6,368 
    


ALMOST FAMILY, INC. AND SUBSIDIARIES 
RESULTS OF OPERATIONS 
(UNAUDITED) 
(In thousands) 
  
  Three Months Ended      
  September 30, 2016 October 2, 2015 Change 
  Amount % Rev Amount % Rev Amount % 
Home Health Operations                
Net service revenues:                
Visiting Nurse $  108,425   72.2% $  98,344   76.1% $ 10,081   10.3% 
Personal Care    41,688   27.8%    30,837   23.9%   10,851   35.2% 
     150,113   100.0%    129,181   100.0%   20,932   16.2% 
Operating income before corporate expenses:                
Visiting Nurse    12,618   11.6%    12,074   12.3%   544   4.5% 
Personal Care    2,540   6.1%    3,067   9.9%   (527)  -17.2% 
     15,158   10.1%    15,141   11.7%   17   0.1% 
Healthcare Innovations Operations                
Revenue    10,308   100.0%    2,051   100.0%   8,257   402.6% 
Operating income    5,051   49.0%    485   23.6%   4,566   941.4% 
                 
Corporate expenses    6,981   4.4%    6,234   4.8%   747   12.0% 
Deal, transition and other costs    2,257   1.4%   (1,306)  -1.0%   3,563   -272.8% 
Operating income    10,971   6.8%    10,698   8.2%   273   2.6% 
Interest expense, net    (1,399)  -0.9%    (559)  -0.4%   (840)  150.3% 
Income tax expense    (3,194)  -2.0%    (2,078)  -1.6%   (1,116)  53.7% 
Net income $  6,378   4.0% $  8,061   6.1% $  (1,683)  -20.9% 
                 
Adjusted EBITDA (1) $  14,804   9.2% $  10,623   8.1% $  4,181   39.4% 
Adjusted net income (1) $  7,793   4.9% $  5,361   4.1% $  2,432   45.4% 

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

                 
  Nine Months Ended      
  September 30, 2016 October 2, 2015 Change 
  Amount % Rev Amount % Rev Amount % 
Home Health Operations                
Net service revenues:                
Visiting Nurse $  328,697   73.1% $  295,627   76.8% $ 33,070   11.2% 
Personal Care    121,074   26.9%    89,086   23.2%   31,988   35.9% 
     449,771   100.0%    384,713   100.0%   65,058   16.9% 
Operating income before corporate expenses:                
Visiting Nurse    42,905   13.1%    36,956   12.5%   5,949   16.1% 
Personal Care    9,273   7.7%    9,580   10.8%   (307)  -3.2% 
     52,178   11.6%    46,536   12.1%   5,642   12.1% 
Healthcare Innovations Operations                
Revenue    20,343   100.0%    2,284   100.0%   18,059   790.7% 
Operating income (loss)    5,098   25.1%    (434)  -19.0%   5,532   NM  
                 
Corporate expenses    21,617   4.6%    20,004   5.2%   1,613   8.1% 
Deal, transition and other costs    7,455   1.6%    (696)  -0.2%   8,151   -1171.1% 
Operating income    28,204   6.0%    26,794   6.9%   1,410   5.3% 
Interest expense, net    (4,335)  -0.9%    (1,463)  -0.4%   (2,872)  196.3% 
Income tax expense    (9,120)  -1.9%    (8,458)  -2.2%   (662)  7.8% 
Net income $  14,749   3.1% $  16,873   4.4% $ (2,124)  -12.6% 
                 
Adjusted EBITDA (1) $  40,486   8.6% $  29,962   7.7% $  10,524   35.1% 
Adjusted net income (1) $  19,259   4.1% $  14,536   3.8% $  4,723   32.5% 

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

  
  
VISITING NURSE SEGMENT OPERATING METRICS 
  
  Three Months Ended      
  September 30, 2016 October 2, 2015 Change 
  Amount % Amount % Amount % 
Average number of locations    169       164       5   3.0% 
                 
All payors:                
Patient months    88,396       80,940       7,456   9.2% 
Admissions    25,788       24,759       1,029   4.2% 
Billable visits    711,998       645,589       66,409   10.3% 
                 
Medicare:                
Admissions    23,030   89%    21,876   88%    1,154   5.3% 
Revenue (in thousands) $  101,383   94% $  92,033   94% $  9,350   10.2% 
Revenue per admission $  4,402    $  4,207    $  195   4.6% 
Billable visits    630,089   88%    580,709   90%    49,380   8.5% 
Recertifications    12,639       11,966       673   5.6% 
Payor mix % of Admissions                
Traditional Medicare Episodic   84.0%     84.6%     -0.6%   
 Replacement Plans Paid Episodically   5.9%     4.1%     1.8%   
 Replacement Plans Paid Per Visit   10.1%     11.3%     -1.2%   
                 
Non-Medicare:                
Admissions    2,758   11%    2,883   12%  $(125)  -4.3% 
Revenue (in thousands) $  7,042   6% $  6,311   6% $  731   11.6% 
Revenue per admission $  2,553    $  2,189    $  364   16.6% 
Billable visits    81,909   12%    64,880   10%    17,029   26.2% 
Recertifications    1,233       774       459   59.3% 
Payor mix % of Admissions                
Medicaid & other governmental   25.9%     30.6%     -4.7%   
Private payors   74.1%     69.4%     4.7%   
                       


PERSONAL CARE SEGMENT OPERATING METRICS 
  
  Three Months Ended      
  September 30, 2016 October 2, 2015 Change 
  Amount   Amount   Amount % 
Average number of locations   80     66      14   21.2% 
                 
Admissions   2,638     1,725      913   52.9% 
Patient months of care   43,562     25,419      18,143   71.4% 
Billable hours   1,919,931     1,384,466      535,465   38.7% 
Revenue per billable hour $ 21.71   $ 22.27   $  (0.56)  -2.5% 


                 
VISITING NURSE SEGMENT OPERATING METRICS 
                 
  Nine Months Ended      
  September 30, 2016
 October 2, 2015 Change 
  Amount % Amount % Amount % 
Average number of locations    165       162      3   1.9% 
                 
All payors:                
Patient months    270,880       242,989       27,891   11.5% 
Admissions    81,574       75,958       5,616   7.4% 
Billable visits    2,174,980       1,926,660       248,320   12.9% 
                 
Medicare:                
Admissions    70,021   86%    68,380   90%    1,641   2.4% 
Revenue (in thousands) $  308,055   94% $  280,827   95% $  27,228   9.7% 
Revenue per admission $  4,399    $  4,107    $ 293   7.1% 
Billable visits    1,921,796   88%    1,745,856   91%    175,940   10.1% 
Recertifications    37,777       35,473       2,304   6.5% 
Payor mix % of Admissions                
Traditional Medicare Episodic   82.5%     83.9%     -1.4%   
 Replacement Plans Paid Episodically   5.2%     4.0%     1.2%   
 Replacement Plans Paid Per Visit   12.3%     12.1%     0.2%   
                 
Non-Medicare:                
Admissions    11,553   14%    7,578   10%    3,975   52.5% 
Revenue (in thousands) $  20,642   6% $  14,800   5% $  5,842   39.5% 
Revenue per admission $  1,787    $  1,953    $  (166)  -8.5% 
Billable visits    253,184   12%    180,804   9%    72,380   40.0% 
Recertifications    3,517       1,485       2,032   136.8% 
Payor mix % of Admissions                
Medicaid & other governmental   41.1%     32.4%     8.7%   
Private payors   58.9%     67.6%     -8.7%   
                       


PERSONAL CARE OPERATING METRICS 
                 
  Nine Months Ended      
  September 30, 2016 October 2, 2015 Change 
  Amount   Amount   Amount % 
Average number of locations   74     64      10   15.6% 
                 
Admissions   7,675     4,803      2,872   59.8% 
Patient months of care   122,380     71,907      50,473   70.2% 
Billable hours   5,575,254     3,989,328      1,585,926   39.8% 
Revenue per billable hour $21.72   $22.33   $ (0.61)  -2.8% 
                     


HEALTHCARE INNOVATIONS SUPPLEMENTAL DATA 
  
  Three Months Ended      
  September 30, 2016 October 2, 2015  Change 
  Amount Amount  Amount % 
In-home Assessments  21,019  1,962   19,057   NM  
             
Medicare ACO enrollees under management  121,881  83,133   38,748   46.6% 
ACOs under contract  15  11   4   36.4% 
Assets $64,556  11,070 $ 53,486   NM  
Liabilities $23,118  1,124 $ 21,994   NM  
Non-controlling interest - redeemable $2,256  3,639 $ (1,383)  -38.0% 
Non-controlling interest - nonredeemable $1,060  417 $ 643   154.2% 


             
  Nine Months Ended      
  September 30, 2016 October 2, 2015  Change 
  Amount Amount  Amount % 
In-home Assessments   79,017   1,962   77,055  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 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 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 Months Ended Nine Months Ended 
(in thousands) September 30, 2016 October 2, 2015 September 30, 2016 October 2, 2015 
Net income $  6,378  $  8,061  $  14,749  $  16,873  
              
Addbacks:             
Deal, transition and other, net of tax    1,415     (2,700)    4,510     (2,337) 
Adjusted net income    7,793     5,361     19,259     14,536  
Non-controlling interest    (1,012)    (262)    (689)    330  
Adjusted net income attributable to Almost Family, Inc. $  6,781  $  5,099    18,570  $  14,866  
              
Per share amounts-diluted:             
Average shares outstanding    10,310     9,822     10,328     9,649  
              
Net income $  0.62  $  0.82  $  1.43  $  1.75  
              
Addbacks:             
Deal, transition and other, net of tax    0.14     (0.27    0.44     (0.24) 
Adjusted earnings per share    0.76     0.55     1.86     1.51  
Non-controlling interest    (0.10)    (0.03)    (0.07)    0.03  
Adjusted net income attributable to Almost Family, Inc. $  0.66  $  0.52  $  1.80  $  1.54  
              

Adjusted EBITDA
Adjusted earnings before interest, income tax, depreciation and amortization, amortization of stock-based compensation, deal, transition and other (Adjusted EBTIDA) 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 Months Ended Nine Months Ended 
(in thousands) September 30, 2016 October 2, 2015 September 30, 2016  October 2, 2015 
Net income $ 6,378 $  8,061  $ 14,749  $  16,873  
Add back:              
Interest expense   1,399    559    4,335     1,463  
Income tax expense   3,194    2,078    9,120     8,458  
Depreciation and amortization   964    781    2,814     2,409  
Stock-based compensation   612    450    2,013     1,455  
Deal and transition costs   2,257    (1,306)   7,455     (696) 
Adjusted EBITDA $ 14,804 $  10,623  $ 40,486  $  29,962  
               

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 and prior to the acquisition of Community Health Systems, Inc. home health and hospice operations).  Almost Family, Inc. and its subsidiaries operate a Medicare-certified segment, a personal care segment and a healthcare innovations segment.  Almost Family operates over 250 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.  Statements about the Company’s or CHS Home Health’s past financial results do not, and are not meant to, predict future results.  The Company can provide no assurance that such results and performance will continue.

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: the satisfaction of the conditions precedent to the consummation of the proposed transaction, including, without limitation, the receipt of regulatory approvals or third party consents on the terms desired or anticipated; the Company’s ability to obtain financing on the anticipated terms and schedule; disruptions of the Company’s and CHS Home Health’s current plans, operations and relationships caused by the announcement and pendency of the proposed transaction; 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; unanticipated difficulties or expenditures relating to the proposed transaction, including, without limitation, difficulties that result in the failure to achieve expected synergies, efficiencies and cost savings from the proposed transaction within the expected time period (if at all); 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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