Almost Family Reports Third Quarter 2015 Results

LOUISVILLE, Ky., Nov. 4, 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 from July 4, 2015 to October 2, 2015.

Third Quarter Highlights:

  • Record Net service revenues of approximately $131.2 million
  • Net income attributable to Almost Family, Inc. of $7.8 million, $0.79 per diluted share versus $0.40 in the third quarter of 2014, primarily due to one-time settlement of legal and other matters
  • Adjusted earnings from home health operations (1) of $5.1 million, $0.51 per diluted share versus $0.49 in the third quarter of 2014
  • Adjusted EBITDA from home health operations (1) of $10.1 million
  • Operating cash flow of $8.3 million
  • Results include the acquisition of WillCare on August 29, 2015, which added $0.05 to diluted EPS from continuing operations for the quarter
  • Record Healthcare Innovations segment revenue of $2.0 million and operating income of $0.5 million as Imperium’s Medicare Shared Savings Payment success fee income was partially offset by operating losses in Ingenios

(1) See Non-GAAP Financial Measures starting on page 11

Management Comments

William Yarmuth, Chairman and Chief Executive Officer, commented: “We are extremely pleased to be announcing our third quarter earnings this morning along with the news of acquiring Home Care by Black Stone. This marks our fourth acquisition announcement of 2015 and we are very happy to welcome the Black Stone employees to our family of caregivers. With regard to earnings we are also pleased with our progress in the quarter which includes closing on the New York and Connecticut portions of the WillCare acquisition on August 29, 2015 and our second year of successful operation under the Medicare Shared Savings Program for ACO’s. Revenues in the quarter were at an all-time record level and our quarterly adjusted earnings per share were the second-highest in our history eclipsed only by our earnings in the seasonally-higher second quarter of 2015.”

Steve Guenthner, President commented:  “With today’s news, we mark two new ‘second-time’ events in our development. With Home Care by Black Stone included, Ohio is now the second state, Florida being the first, in which our revenues will exceed the $100 million mark. Additionally, with the year not yet over, 2015 already ranks as our second most acquisitive year with four separate transactions announced, almost $100 million of capital deployed and over $120 million in revenues from acquired operations.”

Regarding CMS final regulations for 2016 Guenthner added: “We were pleased to see directionally positive movement from the proposed rule to the final rule. While we continue to question some of the implementation details in the Value Based Purchasing model, now that it is in the final rule, we plan to work hard to demonstrate the quality of our care and our ability to perform under the program. We strongly support CMS and other regulators’ efforts to define desired provider objectives, such as improving patient outcomes, and to incentivize providers to compete to achieve those objectives. We look forward to continue to work with them in this regard.”

Yarmuth concluded:  “Stating the somewhat obvious, we are very optimistic about the future of home care in the health care delivery system and about the prospects for Almost Family in particular. We have been very acquisitive year to date in 2015 and we plan to continue be very active both as a consolidator in home health and an innovator in related business opportunities.

Third Quarter Financial Results

The WillCare acquisition contributed $3.5 million in revenue and $0.6 million in contribution to the VN results. VN segment net revenues increased to $98.3 million from $95.1 million in the prior year as WillCare related revenues were partially offset by lower organic revenues. Total Medicare admissions grew by 1.6% to 21,876 from 21,531, resulting from a 2.6% increase from acquired operations partially offset by a 1.0% decrease in organic admissions. Within the organic change in Medicare admissions, those reimbursed episodically increased about 1% while those reimbursed on a per-visit basis declined 13%.   VN segment contribution of $12.1 million or 12.3% of revenue remained consistent with the first half of 2015 and increased 7.8% over the same period of last year.

The WillCare acquisition contributed $3.4 million in revenue and $0.6 million in contribution to the PC segment results. PC segment net revenues increased 7.7% to a record $30.8 million in 2015 from $28.6 million in 2014, as acquired WillCare revenues were partially offset by a decline in organic revenues primarily related to changes in Ohio. PC segment contribution decreased 2.2% as compared to the same period of last year, primarily due to reimbursement and mix changes and increased worker’s compensation claims during the current period. 

Deal, transition and other costs for 2015 include a one-time benefit of $4.2 million related to legal settlements, which was partially offset by a $1.8 million provision for the Chapter 7 bankruptcy filing of a specific payer and $1.1 million of deal, transition and closure costs primarily related to the 2015 acquisitions. Deal and transition costs of $1.7 million in the third quarter of 2014 primarily related to the completion of the transition of our 2013 acquisitions. 

Net cash from operating activities of $8.3 million was generated in the three months ended October 2, 2015. The Company noted that it has reduced days sales outstanding in accounts receivable and expects to continue to make progress in this area.

The effective tax rate for the third quarter of 2015 was 21.0% compared to 42.4% for the third quarter of 2014. The lower effective tax rate for the 2015 period was primarily related to the tax treatment of a legal settlement in the third quarter of 2015. Excluding the non-taxable settlement our effective tax rate for 2015 is approximately 40.5%.

Year to Date Financial Results

VN segment net revenues increased $10.6 million, to $295.6 million from $285.1 million in the prior year. VN segment net revenues were a record high for the nine-month period. Medicare admissions grew by 3.2% to 67,965 from 65,868. VN segment contribution of $36.9 million or 12.5% of revenue increased 15.0% over $32.1 million in the same period of last year. The WillCare acquisition contributed $3.5 million in revenue and $0.6 million in contribution to the VN results.

PC segment net revenues increased $5.4 million or 6.5% to a record $89.1 million in 2015 from $83.6 million in 2014. PC segment contribution increased 2.7% to a record $9.6 million as compared to $9.3 million in the same period of last year. The WillCare acquisition contributed $4.7 million in revenue and $0.7 million in contribution to the PC segment results.

Net cash from operating activities of $13.4 million was generated in the nine months ended October 2, 2015. Investing activities used $58.4 million of cash in acquisitions, investments and capital expenditures.

The effective tax rate for the nine months of 2015 was 32.9% compared to 40.5% for the nine months of 2014. The lower effective tax rate for the 2015 period was primarily related to the tax treatment of a legal settlement in the third quarter of 2015.

Year to Date Corporate Developments

  • On September 29, 2015, we announced the acquisition of a Medicare-certified home health agency in Bayonne, NJ which is expected to close before the end of 2015.
  • On July 23, 2015 we acquired the stock of Ingenios Health provider of in-home clinical assessments.
  • On August 29, 2015 the Company completed the final acquisition of WillCare.
  • On November 4, 2015, the Company acquired Home Care by Black Stone.
  • FY 2015 acquisitions are expected to add over $125 million to our annual revenue run-rate.
  • Effective with the first quarter of 2015 the Company 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 the change in the fiscal reporting calendar, the quarter ended October 2, 2015 included one fewer day of results than they would have had if the change had not been made, while the year to date period January 1, 2015 through October 2, 2015 included 2 more days of results than they would have had if the change not been made. Due to the fiscal reporting calendar change, the Independence Day holiday observed on July 3, 2015 was reported in the second quarter of 2015, while being included in the third quarter of 2014. Excluding the Independence Day holiday from the current quarter increased diluted EPS by $0.03 in the current period.

Medicare Home Health Rule for 2016 

On October 29, 2015, the Centers for Medicare and Medicaid Services (CMS) issued its CY2016 Home Health Prospective Payment System Rate Update. CMS is implementing a 0.13% increase in the National, Standardized 60-Day Episode Payment Amount consisting of a 2.9% “market basket” increase minus a 0.6% productivity adjustment, a 2.71% ($80.95 per episode) rebasing cut, a 0.97% case mix creep cut and an increase of 1.87% to maintain budget neutrality with respect to recalibration of the home health case mix model for CY2016. The impact of recalibration of the case-mix model on the Company results in CY2016 will depend upon the Company’s actual patient mix in that period.  CMS is also implementing a “Value Based Purchasing” (VBP) demonstration in 9 states (including Florida, Tennessee and Massachusetts where the Company has significant operations) under which certain 2016 agency specific performance measures would be used to establish individual agency reimbursement rates for 2018. Investors are encouraged to read the rule in its entirety at http://federalregister.gov/a/2015-27931.

ALMOST FAMILY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(UNAUDITED)
         
   Three month period ended   Nine month period ended 
  October 2,
2015
September 30,
2014
October 2,
2015
September 30,
2014
 Net revenues   $ 131,232  $ 125,541  $ 386,997  $ 371,072
 Cost of service revenues (excluding depreciation & amortization)   69,471  66,521  204,142  197,604
 Gross margin   61,761  59,020  182,855  173,468
 General and administrative expenses:         
 Salaries and benefits   36,748  34,959  108,973  104,500
 Other   15,687  15,036  47,990  46,260
 Deal, transition and other   (1,309)  1,655  (695)  6,012
 Total general and administrative expenses   51,126  51,650  156,268  156,772
 Operating income   10,635  7,370  26,587  16,696
 Interest expense, net   (494)  (401)  (1,247)  (1,078)
 Income before income taxes   10,141  6,969  25,340  15,618
 Income tax expense   (2,078)  (2,810)  (8,458)  (6,245)
         
 Net income from continuing operations   8,063  4,159  16,882  9,373
 Discontinued operations:         
 Loss from operations, net of tax of ($1), ($26), ($6) and ($116)   (2)  (39)  (9)  (173)
 Net income   8,061  4,120  16,873  9,200
 Net (loss) income – noncontrolling interests   (262)  (338)  330  (185)
 Net income attributable to Almost Family, Inc.   $ 7,799  $ 3,782  $ 17,203  $ 9,015
         
 Per share amounts-basic:         
 Average shares outstanding   9,604  9,347  9,432  9,326
 Income from continuing operations attributable to Almost Family, Inc.   $ 0.81  $ 0.41  $ 1.82  $ 0.99
 Discontinued operations   —   —   —   (0.02)
 Net income attributable to Almost Family, Inc.   $ 0.81  $ 0.41  $ 1.82  $ 0.97
         
 Per share amounts-diluted:         
 Average shares outstanding   9,822  9,443  9,649  9,444
 Income from continuing operations attributable to Almost Family, Inc.   $ 0.79  $ 0.40  $ 1.78  $ 0.97
 Discontinued operations   —   —   —   (0.02)
 Net income attributable to Almost Family, Inc.   $ 0.79  $ 0.40  $ 1.78  $ 0.95
 
 ALMOST FAMILY, INC. AND SUBSIDIARIES 
 CONSOLIDATED BALANCE SHEETS 
 (In thousands) 
 
     
 ASSETS   October 2, 2015
(UNAUDITED) 
December 31, 2014
 CURRENT ASSETS:     
 Cash and cash equivalents   $ 6,368  $ 6,886
 Accounts receivable – net   85,269  74,602
 Prepaid expenses and other current assets   16,260  10,420
 Deferred tax assets   6,510  12,230
 TOTAL CURRENT ASSETS   114,407  104,138
     
 PROPERTY AND EQUIPMENT – NET   5,344  5,575
 GOODWILL   241,568  192,523
 OTHER INTANGIBLE ASSETS   61,664  54,402
 OTHER ASSETS   2,857  850
 TOTAL ASSETS   $ 425,840  $ 357,488
     
 LIABILITIES AND STOCKHOLDERS’ EQUITY     
 CURRENT LIABILITIES:     
 Accounts payable   $ 13,602  $ 9,257
 Accrued other liabilities   39,142  42,326
 Current portion – notes payable and capital leases   —   51
 TOTAL CURRENT LIABILITIES   52,744  51,634
     
 LONG-TERM LIABILITIES:     
 Revolving credit facility   92,297  46,447
 Deferred tax liabilities   14,097  23,510
 Other   3,721  2,705
 TOTAL LONG-TERM LIABILITIES   110,115  72,662
 TOTAL LIABILITIES   162,859  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; 9,925 and 9,574  issued and outstanding   992  957
 Treasury stock, at cost, 103 and 94 shares of common stock   (2,731)  (2,392)
 Additional paid-in capital   119,023  105,862
 Noncontrolling interest – nonredeemable   (737)  (420)
 Retained earnings   142,795  125,546
 TOTAL STOCKHOLDERS’ EQUITY   259,342  229,553
 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 425,840  $ 357,488
 
 ALMOST FAMILY, INC. AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF CASH FLOWS 
 (UNAUDITED) 
 (In thousands) 
   Nine month period ended 
  October 2, 2015 September 30, 2014
 Cash flows of operating activities:     
 Net income   $ 16,873  $ 9,200
 Loss on discontinued operations, net of tax   (9)  (173)
 Net income from continuing operations   16,882  9,373
     
 Adjustments to reconcile net income to net cash provided by (used in) operating activities:     
 Depreciation and amortization   2,626  3,165
 Provision for uncollectible accounts   9,298  6,745
 Stock-based compensation   1,455  1,337
 Deferred income taxes   3,108  1,569
   33,369  22,189
 Change in certain net assets and liabilities, net of the effects of acquisitions:     
 Accounts receivable   (12,580)  (22,167)
 Prepaid expenses and other current assets   (4,875)  378
 Other assets   (46)  (213)
 Accounts payable and accrued expenses   (2,507)  (1,066)
 Net cash provided by (used in) operating activities   13,361  (879)
     
 Cash flows of investing activities:     
 Capital expenditures   (1,753)  (871)
 Cost basis investment   (1,000)  — 
 Acquisitions, net of cash acquired   (55,701)  (964)
 Net cash used in investing activities   (58,454)  (1,835)
     
 Cash flows of financing activities:     
 Credit facility borrowings   163,904  25,542
 Credit facility repayments   (118,053)  (29,017)
 Debt issuance fees   (1,161)  — 
 Proceeds from stock option exercises   141  39
 Purchase of common stock in connection with share awards   (338)  (52)
 Tax impact of share awards   227  (39)
 Payment of special dividend in connection with share awards   (50)  (35)
 Principal payments on notes payable and capital leases   (54)  (654)
 Net cash provided by (used in) financing activities   44,616  (4,216)
     
 Cash flows from discontinued operations     
 Operating activities   (41)  40
 Investing activities   —   2
 Net cash provided by discontinued operations   (41)  42
     
 Net change in cash and cash equivalents   (518)  (6,888)
 Cash and cash equivalents at beginning of period   6,886  12,246
 Cash and cash equivalents at end of period   $ 6,368  $ 5,358
 
 ALMOST FAMILY, INC. AND SUBSIDIARIES 
 RESULTS OF OPERATIONS 
 (UNAUDITED) 
 (In thousands) 
 
   Three months ended     
  October 2, 2015  September 30, 2014 Change
   Amount   % Rev   Amount   % Rev   Amount   % 
Home Health Operations            
Net service revenues:            
Visiting Nurse   $ 98,344 76.1%  $ 95,116 76.9%  $ 3,228 3.4%
Personal Care   30,837 23.9%  28,627 23.1%  2,210 7.7%
   129,181 100.0%  123,743 100.0%  5,438 4.4%
Operating income before corporate expenses:            
Visiting Nurse   12,052 12.3%  11,175 11.7%  877 7.8%
Personal Care   3,067 9.9%  3,136 11.0%  (69) -2.2%
   15,119 11.7%  14,311 11.6%  808 5.6%
Healthcare Innovations            
Revenue   2,051  100.0%  1,798  100.0%  253 14.1%
Operating gain (loss) before noncontrolling interest   485 23.6%  1,077 59.9%  (592) -55.0%
             
Corporate expenses  6,278 4.8%  6,363 5.1%  (85) -1.3%
Deal and transition costs  (1,309) -1.0%  1,655 1.3%  (2,964) -179.1%
Operating income  10,635 8.1%  7,370 5.9%  3,265 44.3%
Interest expense, net  (494) -0.4%  (401) -0.3%  (93) 23.2%
Income tax expense  (2,078) -1.6%  (2,810) -2.2%  732 -26.0%
             
Net income from continuing operations  $ 8,063 6.1%  $ 4,159 3.3%  $ 3,904 93.9%
             
Adjusted EBITDA from home health operations (1)  $ 10,110 7.7%  $ 9,129 7.3%  $ 981 10.7%
Adjusted earnings from home health operations (1)  $ 5,052 3.8%  $ 4,412 3.5%  $ 640 14.5%
             
 (1) See Non-GAAP Financial Measures starting on page 11.         
 
 ALMOST FAMILY, INC. AND SUBSIDIARIES 
 RESULTS OF OPERATIONS 
 (UNAUDITED) 
 (In thousands) 
 
   Nine month period ended     
  October 2, 2015  September 30, 2014 Change
   Amount   % Rev   Amount   % Rev   Amount   % 
Home Health Operations            
Net service revenues:            
Visiting Nurse   $ 295,627 76.8%  $ 285,064 77.3%  $ 10,563 3.7%
Personal Care   89,086 23.2%  83,647 22.7%  5,439 6.5%
   384,713 100.0%  368,711 100.0%  16,002 4.3%
Operating income before corporate expenses:            
Visiting Nurse   36,935 12.5%  32,120 11.3%  4,815 15.0%
Personal Care   9,570 10.7%  9,316 11.1%  254 2.7%
   46,505 12.1%  41,436 11.2%  5,069 12.2%
Healthcare Innovations            
Revenue   2,284  100.0%  2,361  100.0%  (77) -3.3%
Operating (loss) gain before noncontrolling interest   (434) -19.0%  394 16.7%  (828) -210.2%
             
Corporate expenses  20,179 5.2%  19,122 5.2%  1,057 5.5%
Deal and transition costs  (695) -0.2%  6,012 1.6%  (6,707) -111.6%
Operating income  26,587 6.9%  16,696 4.5%  9,891 59.2%
Interest expense, net  (1,247) -0.3%  (1,078) -0.3%  (169) 15.7%
Income tax expense  (8,458) -2.2%  (6,245) -1.7%  (2,213) 35.4%
             
Net income from continuing operations  $ 16,882 4.4%  $ 9,373 2.5%  $ 7,509 80.1%
             
Adjusted EBITDA from home health operations (1)  $ 30,551 7.9%  $ 26,634 7.2%  $ 3,917 14.7%
Adjusted earnings from home health operations (1)  $ 15,165 3.9%  $ 12,621 3.4%  $ 2,544 20.2%
             
 (1) See Non-GAAP Financial Measures starting on page 11.         
 
VISITING NURSE SEGMENT OPERATING METRICS
             
   Three months ended     
  October 2, 2015  September 30, 2014 Change
  Amount % Amount % Amount %
Average number of locations  164    159    5 3.1%
             
All payors:            
Patient months  80,940    79,598    1,342 1.7%
Admissions  24,759    24,371    388 1.6%
Billable visits  645,589    627,517    18,072 2.9%
             
Medicare:            
Admissions  21,876 88%  21,531 88%  345 1.6%
Revenue (in thousands)  $ 92,033 94%  $ 90,709 95%  $ 1,324 1.5%
Revenue per admission  $ 4,207    $ 4,213    $ (6) -0.1%
Billable visits  580,709 90%  564,626 90%  16,083 2.8%
Recertifications  11,966    11,907    59 0.5%
Payor mix % of Admissions            
Traditional Medicare Episodic 84.6%   84.0%   0.6%  
 Replacement Plans Paid Episodically 4.1%   3.8%   0.3%  
 Replacement Plans Paid Per Visit 11.3%   12.3%   -1.0%  
             
Non-Medicare:            
Admissions  2,883 12%  2,840 12%  43 1.5%
Revenue (in thousands)  $ 6,311 6%  $ 4,407 5%  $ 1,904 43.2%
Revenue per admission  $ 2,189    $ 1,552    $ 637 41.1%
Billable visits  64,880 10%  62,891 10%  1,989 3.2%
Recertifications  774    432    342 79.2%
Payor mix % of Admissions            
Medicaid & other governmental 30.6%   24.1%   6.5%  
Private payors 69.4%   75.9%   -6.5%  
             
PERSONAL CARE OPERATING METRICS
             
   Three months ended     
  October 2, 2015  September 30, 2014 Change
  Amount % Amount % Amount %
Average number of locations  66    61    5 8.2%
             
Admissions  1,725    1,667    58 3.5%
Patient months of care  25,419    22,663    2,756 12.2%
Billable hours  1,384,466    1,352,720    31,746 2.3%
Revenue per billable hour  $ 22.27    $ 21.16    $ 1.11 5.2%
 
VISITING NURSE SEGMENT OPERATING METRICS
             
   Nine month period ended     
  October 2, 2015  September 30, 2014 Change
  Amount % Amount % Amount %
Average number of locations  162    169    (7) -4.1%
             
All payors:            
Patient months  242,989    239,198    3,791 1.6%
Admissions  75,958    74,022    1,936 2.6%
Billable visits  1,926,660    1,875,922    50,738 2.7%
             
Medicare:            
Admissions  67,965 89%  65,868 89%  2,097 3.2%
Revenue (in thousands)  $ 280,827 95%  $ 273,441 96%  $ 7,386 2.7%
Revenue per admission  $ 4,132    $ 4,151    $ (19) -0.5%
Billable visits  1,742,505 90%  1,693,028 90%  49,477 2.9%
Recertifications  35,277    35,962    (685) -1.9%
Payor mix % of Admissions            
Traditional Medicare Episodic 84.4%   83.9%   0.5%  
 Replacement Plans Paid Episodically 4.0%   3.4%   0.6%  
 Replacement Plans Paid Per Visit 11.6%   12.7%   -1.1%  
             
Non-Medicare:            
Admissions  7,993 11%  8,154 11%  (161) -2.0%
Revenue (in thousands)  $ 14,800 5%  $ 11,623 4%  $ 3,177 27.3%
Revenue per admission  $ 1,852    $ 1,425    $ 426 29.9%
Billable visits  184,155 10%  182,894 10%  1,261 0.7%
Recertifications  1,681    1,366    315 23.1%
Payor mix % of Admissions            
Medicaid & other governmental 30.7%   22.5%   8.2%  
Private payors 69.3%   77.5%   -8.2%  
             
PERSONAL CARE OPERATING METRICS
             
   Nine month period ended     
  October 2, 2015  September 30, 2014 Change
  Amount % Amount % Amount %
Average number of locations  64    61    3 4.9%
             
Admissions  4,803    4,839    (36) -0.7%
Patient months of care  71,907    67,022    4,885 7.3%
Billable hours  3,989,328    3,988,514    814 0.0%
Revenue per billable hour  $ 22.33    $ 20.97    $ 1.36 6.5%
 
HEALTHCARE INNOVATIONS SUPPLEMENTAL DATA
         
   Three months ended     
  October 2, 2015  September 30, 2014 Change
  Amount Amount Amount %
Medicare enrollees under management  83,133  43,972  39,161 89.1%
ACOs under contract  11  7  4 57.1%
Net income – noncontrolling interest  $ 485  $ 1,077  (592) -55.0%
Assets  11,070  9,859  1,211 12.3%
Liabilities  1,124  417  707 169.5%
Non-controlling interest – redeemable  3,639  3,639  —  0.0%
Non-controlling interest – nonredeemable  417  415  2 0.5%
         
   Nine month period ended     
  October 2, 2015  September 30, 2014 Change
  Amount Amount Amount %
Medicare enrollees under management  83,133  43,972  39,161 89.1%
ACOs under contract  11  7  4 57.1%
Net (loss) income – noncontrolling interest  $ (434)  $ 394  (828) -210.2%
Assets  11,070  9,859  1,211 12.3%
Liabilities  1,124  417  707 169.5%
Non-controlling interest – redeemable  3,639  3,639  —  0.0%
Non-controlling interest – nonredeemable  63  152  (89) -58.6%

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)
 
   Three month period ended   Nine month period ended 
(in thousands) October 2,
2015
September 30,
2014
October 2,
2015
September 30,
2014
 Net income attributable to Almost Family, Inc.   $ 7,799  $ 3,782  $ 17,203  $ 9,015
         
Addbacks:         
Deal, transition and other, net of tax   (2,702)  985  (2,336)  3,577
Loss on discontinued operations, net of tax   2  39  9  173
Adjusted earnings   5,099  4,806  14,876  12,765
Healthcare Innovations operating (gain) loss after NCI, net of tax   (47)  (394)  289  (144)
Adjusted earnings from home health operations  $ 5,052  $ 4,412  $ 15,165  $ 12,621
         
Per share amounts-diluted:         
Average shares outstanding   9,822  9,443  9,649  9,444
         
Net income attributable to Almost Family, Inc.   $ 0.79  $ 0.40  $ 1.78  $ 0.95
         
Addbacks:         
Deal, transition and other, net of tax   (0.27)  0.13  (0.25)  0.40
Loss on discontinued operations, net of tax   0.00  0.00  0.00  0.02
Adjusted earnings  0.52  0.53  1.53  1.37
Healthcare Innovations operating (gain) loss after NCI, net of tax   (0.01)  (0.04)  0.03  (0.02)
Adjusted earnings from home health operations  $ 0.51  $ 0.49  $ 1.56  $ 1.35

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 Innovations 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)
 
   Three month period ended   Nine month period ended 
(in thousands) October 2,
2015
September 30,
2014
October 2,
2015
September 30,
2014
Net income from continuing operations  $ 8,063  $ 4,159  $ 16,882  $ 9,373
Add back:        
Interest expense  494  401  1,247  1,078
Income tax expense  2,078  2,810  8,458  6,245
Depreciation and amortization  846  1,012  2,626  3,165
Stock-based compensation from home health operations   450  465  1,455  1,337
Deal and transition costs  (1,309)  1,655  (695)  6,012
Adjusted EBITDA  10,622  10,502  29,973  27,210
Healthcare Innovations operating (gain) loss  (512)  (1,373)  578  (576)
         
Adjusted EBITDA from home health operations  $ 10,110  $ 9,129  $ 30,551  $ 26,634

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, New York, 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 230 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; 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 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 investment in Ingenios, in particular given that it is a development-stage enterprise, there can be no assurance that it’s operational and developmental objectives will be realized or that the Company’s investment in Ingenios will be realized in future returns. The Company undertakes no obligation to update or revise its forward-looking statements.

CONTACT: Almost Family, Inc.
         Steve Guenthner
         (502) 891-1000

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