AFAM Almost Family (delisted)

Almost Family, Inc. (NASDAQ:AFAM), a leading national provider of home health and related services, announced today its financial results for the quarter ended September 29, 2017.  Investors are encouraged to read the Company’s press release dated October 9, 2017, “Almost Family Comments on Recent Developments Including Hurricane Impact”.

Third Quarter Highlights (1):

• Net service revenues of approximately $194.3 million including the third quarter of operations of the CHS-JV, up 21.1% from the third quarter of 2016
• GAAP net income of $3.2 million(3)
• GAAP EPS of $0.23(2,3) per diluted share on 33% more shares outstanding than in the prior year
• Adjusted EPS of $0.43(1,2,3); including the impact from the Hurricanes which lowered Adjusted EPS by $0.14(3)
• Adjusted EBITDA of $14.6 (1,2) million; including the impact from the Hurricanes which lowered Adjusted EBITDA by $3.3 million(3)
• Expect to record the Company’s share of the Medicare Shared Saving Program success fees under ACO contracts for the 2016 performance year in the fourth quarter of 2017 at between $2.0 million and $2.4 million
• Clifford S. Holtz, COO of American Red Cross added to Almost Family Board of Directors

Year-to-Date Highlights (1):

• Net service revenues of approximately $596.3 million including nine months of CHS-JV operations, up 26.9% from 2016
• GAAP net income of $11.6 million(3)
• Adjusted EPS of $1.53 (1,2,3)
• Adjusted EBITDA of $49.6 (1,2,3) million
• Year to date operating cash flows of $14.8 million
• As of November 7, 2017, the Company has converted all of its home health branches to the new Homecare Homebase information system.  There will be no active patients remaining in the predecessor systems by the end of November 2017.  The Company has begun to experience meaningful operational efficiency gains, generally about 120 days after the end of each wave, and expects these gains to be partially reflected in its fourth quarter 2017 results and fully reflected in its results in its 2018 reporting year.(1) See Non-GAAP Financial Measures below(2) Note that comparability of EPS between years is partially impacted by changes in shares outstanding as explained further below(3) Impact of Hurricanes Irma and Harvey are explained further below

Management CommentsWilliam Yarmuth, Chairman and CEO, commented:  We are very pleased with the results of our quarter and recent regulatory developments.  Over the course of this year we have successfully integrated the largest acquisition in our history.  We have also nearly completed, with minimal disruption, the implementation of HomeCare HomeBase in all 110 of our home health branches that were not previously on that system.  Lastly, we are pleased to have recovered from the substantial hurricane disruption, all the while continuing to grow our business and creating value for our shareholders over the course of this year.

Steve Guenthner, President added:  On the regulatory front, we feel we, in collaboration with others in the industry, have made a meaningful breakthrough in our work with CMS and other policy makers. In its final rule, CMS deferred implementation of the Home Health Grouper Model for further consideration in collaboration with stakeholders with a goal of shifting the focus from volume of services to a more patient-centered model.  We very much look forward to working with policy makers to help shape the next phase in the evolution of the Medicare home health payment system.

Yarmuth concluded:  I would like to thank all our employees and management team for their hard work and commitment in taking on the challenges and opportunities of the first nine months and helping to propel us to some very successful results.  Additionally, I would like to welcome Cliff Holtz who recently joined our Board of Directors.  Cliff brings a wealth of experience and knowledge and is a very welcome addition to what I feel is a very high quality committed group of directors.

Impact of Hurricanes on Operating ResultsThird quarter operating results for the home health, personal care, hospice and assessment business lines were adversely impacted by Hurricanes Irma and Harvey (the “Hurricanes”).  Due to the early warnings and evacuations related to these storms, the periods of disruption started well in advance of each storm actually striking affected areas, while recovery periods were elongated.  The Hurricanes impacted operations in Florida, Georgia and Texas, which are the source of approximately one quarter of the Company’s revenue.  The hurricanes resulted in lost admissions, visits, assessments and revenue.  The Company estimates operating income was lowered by approximately $3.3 million, or $0.14 EPS, in the third quarter of 2017.  Due to the proximity of these events to the end of the third quarter, there may be some residual hurricane effect on fourth quarter results. 

Third Quarter Financial Results (See Matters Impacting Comparability and Presentation below)Home Health (HH) segment net revenues increased by 31% or $33.3 million to $141.4 million from $108.1 million in the prior year and episodic admissions grew by 35.6% to 28,148 from 20,751 as the CHS-JV acquisition more than offset the impact from the Hurricanes.  Net revenue and episodic admissions in the CHS-JV acquisition were $40.4 million and 7,665, respectively. 

Home Health segment contribution before corporate expenses increased $4.3 million, or 34.2%, to $17.0 million, from $12.7 million in the prior year period.  Home Health contribution margins as a percentage of revenue increased slightly to 12.0% from 11.7%, despite the hurricane effect partially due to synergies obtained from the Homecare Homebase conversion.  The Company estimates the hurricanes lowered third quarter 2017 revenue and contribution by $3.0 million and $2.6 million, respectively in the HH segment, resulting in a 1.6% reduction in contribution margin as a percent of revenue.

Other Home-Based Services (OHBS) segment net revenues increased $4.4 million or 10.5% to $46.4 million in 2017 from $42.0 million, primarily as a result of the 15 hospice facilities acquired in the CHS-JV transaction.  Hospice revenues were $7.8 million for the quarter.  Personal care revenues were down $3.1 million or 7.5% from prior year on lower volumes.  Additionally, mix changes combined with rate cuts and increases in wages influenced by increases in statutory minimum wage rates in certain states negatively impacted personal care margins.  Overall OHBS segment contribution before corporate expenses increased $1.1 million, or 43.1% to $3.6 million from $2.5 million for the same period last year. 

Healthcare Innovations (HCI) segment net revenues and operating income were $6.5 million and $0.8 million in 2017 as compared to $10.3 million and $5.1 million in 2016, respectively, largely due to the prior year including $4.3 million of ACO shared savings payments.  We expect to record ACO payments in the fourth quarter of 2017 ranging from $2.0 to $2.4 million. 

Corporate expenses as a percentage of revenue increased to 4.8% in 2017 from 4.3% in 2016, primarily on higher information systems costs.  Deal, transition and other costs were $4.5 million, primarily due to the ongoing conversion of the HH segment to the Homecare Homebase information system.  Such training and related costs are expected to continue through the end of 2017, but not be significant in 2018. 

The effective tax rates for the third quarter of 2017 and 2016 were 40.8% and 37.3%, respectively. 

Increased average shares outstanding from the Company’s late January sale of common shares reduced Adjusted EPS of $0.43 for the third quarter of 2017 by $0.14.  The third quarter is fully reflective of the dilutive effect of this offering.

Year to Date Financial Results (See Matters Impacting Comparability and Presentation below)Home Health segment net revenues increased by $113.1 million or 34.5% to $441.0 million from $327.9 million in the prior year and episodic admissions grew by 40.9% to 89,199 from 63,295 in 2016, primarily due to the CHS-JV acquisition.  Net revenue and episodic admissions in the CHS-JV were $125.2 million and 24,607, respectively.  Excluding the CHS-JV, episodic admissions grew by approximately 2%.

Home Health segment contribution before corporate expenses increased $14.1 million, or 32.9%, to $57.1 million, from $43.0 million in the prior year period.  Home Health contribution margins as a percentage of revenue decreased to 12.9% from 13.1% in the prior year, due to the combined impact of a 1% Medicare rate cut and an annual cost of living wage rate adjustment of 2%, both effective January 1, 2017.

Other Home-Based Services (OHBS) segment net revenues increased $16.6 million or 13.6% to $138.5 million from $121.9 million, primarily as a result of the 15 hospice facilities acquired in the CHS-JV transaction.  Hospice revenues were $22.1 million.  Personal care revenues were down $4.7 million or 3.9% from prior year on lower volumes.  Additionally, mix changes combined with rate cuts and increases in wages influenced by increases in statutory minimum wage rates in certain states negatively impacted personal care margins.  Overall OHBS segment contribution before corporate expenses increased $2.2 million or 24.1%, as compared to the same period of last year.

Healthcare Innovations (HCI) segment net revenues decreased $3.5 million to $16.9 million from $20.3 million, while operating income before corporate expenses decreased $4.3 million, largely due to prior year period including $4.3 million of ACO shared savings payments.

Corporate expenses as a percentage of revenue was unchanged from the prior year period at 4.5%.  Deal, transition and other costs were $17.1 million, due to the CHS-JV acquisition and the conversion of the HH segment to the Homecare Homebase information system.  Borrowings related to acquisitions increased interest expense to $5.8 million from $4.7 million in the prior year period.

Net cash from operating activities of $14.8 million was generated in the first nine months of 2017.  Accounts receivable days sales outstanding were 60 at the end of the third quarter of 2017, as compared to 57 days in the second quarter of 2017 and 53 days at the end of the fourth quarter of 2016.  Increases in days outstanding were largely driven by backlogs in final claims in our Home Health segment, a portion of which was due to the timing of Hurricane Irma in Florida, which delayed payments from Medicare into the fourth quarter.

The effective tax rates for 2017 and 2016 were 33.0% and 39.3%, respectively.  The Company’s lower effective income tax rate in 2017 was due to a change in accounting rules for excess tax benefits from the exercise of stock options and vesting of restricted shares as a result of the prospective adoption of Accounting Standards Update 2016-09 as of the first day of fiscal 2017.  Under previous accounting rules these benefits were recorded in “additional paid-in capital” rather than in the current period tax provision.  Future periods with option exercises or restricted stock vesting could lower or raise the Company’s tax provision in those periods.  Excluding these items, the Company expects its effective tax rate for 2017 to be 39.5%.

Increased average shares outstanding from the Company’s late January sale of common shares reduced Adjusted EPS of $1.53 for 2017 by $0.46. 

Medicare Program DevelopmentsOn November 1, 2017 the Centers for Medicare and Medicaid Services (CMS) released the final rule for FY2018 home health reimbursement.  Among other things, the rule also finalizes proposals for the Home Health Value-Based Purchasing (HHVBP) Model and the Home Health Quality Reporting Program (HH QRP).  CMS did not finalize the Home Health Groupings Model, but instead elected to “further engage with stakeholders to move towards a system that shifts the focus from volume of services to a more patient-centered model”.  The FY2018 impact table included in the final rule suggests the final rule is in line with the preliminary rule published earlier this year.   On September 25, 2017, the Company submitted a comment letter to CMS which provides an alternative course of action that we believe better protects Medicare beneficiaries and their right to access appropriate and necessary home health service.  The comment letter to CMS entitled “CY 2018 Home Health Prospective Payment System Rate Update – September 2017” can be found at http://www.almostfamily.com/pdf/AFAM_2018_HHPPS_Rule_Comments_and_Attachments.pdf.  Additionally, a series of responses to various other stakeholder requests from the Senate Finance Committee, the House Ways and Means Committee and CMS dating to 2013 and including AFAM executive testimony before the Congress can also be found at the above website. 

Matters Impacting Comparability and Presentation – CHS-JV and Segment PresentationOn the first day of fiscal 2017, the Company acquired an 80% controlling interest in the entity holding the home health and hospice assets of Community Health Systems, Inc. (NYSE:CYH) (“CHS-JV”).  Community Health Systems, Inc. ("CHS"), one of the largest publicly-traded hospital companies in the United States and a leading operator of general acute care hospitals in communities across the country, retained the remaining 20%. 

In the first quarter in 2017, the Company redefined its reporting segments to include a) Home Health (HH) formerly Visiting Nurse, b) Other Home-Based Services (OHBS) which includes all other home care services outside of Home Health services and c) the Healthcare Innovations (HCI) segment.  The OHBS segment consists of the historical personal care (“personal care”) operations plus hospice services.  Prior year segment information has been reclassified to conform to new segment definitions.  In management’s opinion, this approach provides investors clarity for the largest segment, Home Health, and best aligns with the Company’s internal decision-making processes as viewed by the chief operating decision maker.

Financing ActivitiesOn January 25, 2017, the Company completed a public offering of 3.5 million shares of its common stock for gross proceeds in excess of $150 million.  The net proceeds of $144 million were applied to the Company’s revolving credit facility, which increased credit available under the facility from approximately $78.6 million at December 30, 2016 to approximately $204.1 million after the offering.

AcquisitionsOn July 14, 2017, the Company’s CHS-JV purchased assets of a Medicare-certified home health agency and related private duty company for Island Home Care in Key West, Florida.  The purchase price was $1.2 million.  Post-acquisition operating results are reported in the Company’s HH and OHBS segments.

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.

Addition of New DirectorOn November 6, 2017 the Company added Mr. Clifford S. Holtz as the newest member of its board of directors.  Mr. Holtz currently serves as the Chief Operating Officer of the American Red Cross where he has been instrumental in that organization’s growth and development since 2011.  Prior to his Red Cross experience Mr. Holtz has enjoyed a long and successful business career in key roles at AT&T, Nortel Networks and Qwest Communications.  He is a graduate of the University of Chicago Graduate School of Business.

 

ALMOST FAMILY, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME(Unaudited)(In thousands, except per share data)
	Quarter ended						Nine months ended
	September 29, 2017			September 30, 2016			September 29, 2017			September 30, 2016
Net service revenues	$	194,302		$	160,421		$	596,347		$	470,114
Cost of service revenues (excluding depreciation & amortization)		103,777			86,074			314,097			251,998
Gross margin		90,525			74,347			282,250			218,116
General and administrative expenses:
Salaries and benefits		54,840			42,952			167,743			126,134
Other		23,631			18,029			72,252			55,974
Deal, transition & other costs		4,467			2,257			17,122			7,455
Total general and administrative expenses		82,938			63,238			257,117			189,563
Operating income		7,587			11,109			25,133			28,553
Interest expense, net		1,668			1,537			5,794			4,684
Income before noncontrolling interests and income taxes		5,919			9,572			19,339			23,869
Net income - noncontrolling interests		561			1,012			2,046			689
Income before income tax expense		5,358			8,560			17,293			23,180
Income tax expense		2,188			3,194			5,713			9,120
Net income attributable to Almost Family, Inc.	$	3,170		$	5,366		$	11,580		$	14,060
Per share amounts-basic:
Average shares outstanding		13,731			10,172			13,385			10,150
Net income attributable to Almost Family, Inc.	$	0.23		$	0.53		$	0.87		$	1.39
Per share amounts-diluted:
Average shares outstanding		13,941			10,310			13,627			10,328
Net income attributable to Almost Family, Inc.	$	0.23		$	0.52		$	0.85		$	1.36

 

ALMOST FAMILY, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(In thousands)
		(Unaudited)
		September 29, 2017				December 30, 2016
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	19,149			$	10,110
Accounts receivable - net			131,873				99,212
Prepaid expenses and other current assets			16,711				11,432
TOTAL CURRENT ASSETS			167,733				120,754
PROPERTY AND EQUIPMENT - NET			16,489				10,732
GOODWILL			390,552				305,476
OTHER INTANGIBLE ASSETS - NET			145,363				85,063
TRANSACTION DEPOSIT			—				128,930
ASSETS HELD FOR SALE			3,800				—
OTHER ASSETS			7,936				7,757
TOTAL ASSETS		$	731,873			$	658,712
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	19,218			$	12,122
Accrued other liabilities			50,693				39,728
TOTAL CURRENT LIABILITIES			69,911				51,850
LONG-TERM LIABILITIES:
Revolving credit facility			120,374				262,456
Deferred tax liabilities			26,769				21,145
Seller notes			12,761				12,500
Other liabilities			7,270				6,581
TOTAL LONG-TERM LIABILITIES			167,174				302,682
TOTAL LIABILITIES			237,085				354,532
NONCONTROLLING INTEREST - REDEEMABLE -
HEALTHCARE INNOVATIONS			2,256				2,256
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; 14,133 and 10,504 issued and outstanding			1,414				1,051
Treasury stock, at cost, 169 and 117 shares			(5,825	)			(3,258	)
Additional paid-in capital			288,329				141,233
Retained earnings			174,962				163,763
Almost Family, Inc. stockholders' equity			458,880				302,789
Noncontrolling interests - nonredeemable			33,652				(865	)
TOTAL STOCKHOLDERS’ EQUITY			492,532				301,924
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	731,873			$	658,712

 

ALMOST FAMILY, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)(In thousands)
	Nine months ended
	September 29, 2017				September 30, 2016
Cash flows from operating activities:
Net income attributable to Almost Family, Inc.	$	11,580			$	14,060
Net income attributable to noncontrolling interests		2,046				689
Income before non-controlling interests		13,626				14,749
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		4,924				2,813
Provision for uncollectible accounts		11,151				10,626
Stock-based compensation		2,094				2,013
Loan costs amortization		706				207
Deferred income taxes		5,624				6,081
		38,125				36,489
Change in certain net assets and liabilities, net of the effects of acquisitions:
Accounts receivable		(22,302	)			(12,831	)
Prepaid expenses and other current assets		(4,625	)			(4,451	)
Other assets		(875	)			(620	)
Accounts payable and accrued expenses		4,476				(3,302	)
Net cash provided by operating activities		14,799				15,285
Cash flows of investing activities:
Capital expenditures		(5,346	)			(4,364	)
Transaction deposit		128,930				-
Acquisitions, net of cash acquired		(130,069	)			(31,256	)
Net cash used in investing activities		(6,485	)			(35,620	)
Cash flows of financing activities:
Credit facility borrowings		202,934				215,430
Credit facility repayments, net		(345,016	)			(195,396	)
Debt issuance fees		-				(102	)
Proceeds from stock offering, net		143,908				-
Proceeds from stock option exercises		1,505				(9	)
Purchase of common stock in connection with share awards		(2,567	)			(484	)
Tax impact of share awards		-				257
Principal payments on notes payable and capital leases		(39	)			(56	)
Net cash provided by financing activities		725				19,640
Net change in cash and cash equivalents		9,039				(695	)
Cash and cash equivalents at beginning of period		10,110				7,522
Cash and cash equivalents at end of period	$	19,149			$	6,827

 

ALMOST FAMILY, INC. AND SUBSIDIARIESRESULTS OF OPERATIONS(Unaudited)(In thousands)
		Quarter ended
		September 29, 2017					September 30, 2016					Change
		Amount			% Rev		Amount			% Rev		Amount					%
Net service revenues:
Home Health		$	141,434		72.8	%	$	108,138		67.4	%	$		33,296			30.8	%
Other Home-Based Services			46,378		23.9	%		41,975		26.2	%			4,403			10.5	%
Healthcare Innovations			6,490		3.3	%		10,308		6.4	%			(3,818	)		(37.0	)%
			194,302		100.0	%		160,421		100.0	%			33,881			21.1	%
Operating income before corporate expenses:
Home Health			16,992		12.0	%		12,657		11.7	%			4,335			34.2	%
Other Home-Based Services			3,579		7.7	%		2,501		6.0	%			1,078			43.1	%
Healthcare Innovations			812		12.5	%		5,051		49.0	%			(4,239	)		(83.9	)%
			21,383		11.0	%		20,209		12.6	%			1,174			5.8	%
Corporate expenses			9,329		4.8	%		6,843		4.3	%			2,486			36.3	%
Deal, transition and other costs			4,467		2.3	%		2,257		1.4	%			2,210			97.9	%
Operating income			7,587		3.9	%		11,109		6.9	%			(3,522	)		(31.7	)%
Interest expense, net			1,668		0.9	%		1,537		1.0	%			131			8.5	%
Net income - noncontrolling interests			561		0.3	%		1,012		0.6	%			(451	)		NM
Net income before income taxes			5,358		2.8	%		8,560		5.3	%		$	(3,202	)		(37.4	)%
Income tax expense			2,188		1.1	%		3,194		2.0	%			(1,006	)		(31.5	)%
Net income attributable to Almost Family, Inc.		$	3,170		1.6	%	$	5,366		3.3	%	$	$	(2,196	)		(40.9	)%
Adjusted EBITDA (1)		$	14,571		7.5	%	$	15,110		9.4	%	$	$	(539	)		(3.6	)%
Adjusted net income (1)		$	5,944		3.1	%	$	6,781		4.2	%	$	$	(837	)		(12.3	)%
(1) See Non-GAAP Financial Measures below.

		Nine months ended
		September 29, 2017					September 30, 2016					Change
		Amount			% Rev		Amount			% Rev		Amount					%
Net service revenues:
Home Health		$	440,962		73.9	%	$	327,899		69.7	%	$		113,063			34.5	%
Other Home-Based Services			138,495		23.2	%		121,871		25.9	%			16,624			13.6	%
Healthcare Innovations			16,890		2.8	%		20,344		4.3	%			(3,454	)		(17.0	)%
			596,347		100.0	%		470,114		100.0	%			126,233			26.9	%
Operating (loss) income before corporate expenses:
Home Health			57,087		12.9	%		42,964		13.1	%			14,123			32.9	%
Other Home-Based Services			11,444		8.3	%		9,223		7.6	%			2,221			24.1	%
Healthcare Innovations			796		4.7	%		5,098		25.1	%			(4,302	)		(84.4	)%
			69,327		11.6	%		57,285		12.2	%			12,042			21.0	%
Corporate expenses			27,072		4.5	%		21,277		4.5	%			5,795			27.2	%
Deal, transition and other costs			17,122		2.9	%		7,455		1.6	%			9,667			129.7	%
Operating income			25,133		4.2	%		28,553		6.1	%			(3,420	)		(12.0	)%
Interest expense, net			5,794		1.0	%		4,684		1.0	%			1,110			23.7	%
Net income - noncontrolling interests			2,046		0.3	%		689		0.1	%			1,357			NM
Net income before income taxes			17,293		2.9	%		23,180		4.9	%		$	(5,887	)		(25.4	)%
Income tax expense			5,713		1.0	%		9,120		1.9	%			(3,407	)		(37.4	)%
Net income attributable to Almost Family, Inc.		$	11,580		1.9	%	$	14,060		3.0	%	$	$	(2,480	)		(17.6	)%
Adjusted EBITDA (1)		$	49,605		8.3	%	$	41,229		8.8	%	$		8,376			20.3	%
Adjusted net income (1)		$	20,870		3.5	%	$	18,570		4.0	%	$		2,300			12.4	%
(1) See Non-GAAP Financial Measures below.

 

HOME HEALTH OPERATING METRICS
		Quarter ended
		September 29, 2017					September 30, 2016					Change
		Amount			% Rev		Amount			% Rev		Amount				%
Locations			241					168					73			43.5	%
All payors:
Admissions			38,314					25,788					12,526			48.6	%
Census			30,809					23,177					7,632			32.9	%
Visits			898,786					711,998					186,788			26.2	%
Cost per visit		$	79				$	76				$	3			3.6	%
G&A expense per census		$	1,748				$	1,791				$	(43	)		(2.4	)%
Episodic:
Admissions			28,148					20,751					7,397			35.6	%
Census			23,466					18,045					5,421			30.0	%
Episodes			42,773					32,260					10,513			32.6	%
Visits			703,390					574,505					128,885			22.4	%
Revenue  (in thousands)		$	119,617		84.6	%	$	94,709		87.6	%	$	24,908			26.3	%
Revenue per episode		$	2,797				$	2,936				$	(139	)		(4.7	)%
Visits per episode			16.4					17.8					(1.4	)		(7.7	)%
Non-episodic:
Admissions			10,166					5,037					5,129			101.8	%
Census			7,343					5,132					2,211			43.1	%
Visits			195,396					137,493					57,903			42.1	%
Revenue  (in thousands)		$	21,817		15.4	%	$	13,429		12.4	%	$	8,388			62.5	%
Revenue per visit		$	112				$	98				$	14			14.3	%
Visits per admission			19.2					27.3					(8.1	)		(29.6	)%

 

HOME HEALTH OPERATING METRICS
		Nine months ended
		September 29, 2017					September 30, 2016					Change
		Amount			% Rev		Amount			% Rev		Amount				%
Locations			241					168					73			43.5	%
All payors:
Admissions			119,499					81,630					37,869			46.4	%
Census			31,243					23,237					8,006			34.5	%
Visits			2,812,594					2,183,295					629,299			28.8	%
Cost per visit		$	77				$	73				$	3			4.5	%
G&A expense per census		$	5,388				$	5,374				$	14			0.3	%
Episodic:
Admissions			89,199					63,295					25,904			40.9	%
Census			23,959					17,917					6,042			33.7	%
Episodes			133,973					97,575					36,398			37.3	%
Visits			2,216,441					1,751,313					465,128			26.6	%
Revenue  (in thousands)		$	376,670		85.4	%	$	285,446		87.1	%	$	91,224			32.0	%
Revenue per episode		$	2,812				$	2,925				$	(114	)		(3.9	)%
Visits per episode			16.5					17.9					(1.4	)		(7.8	)%
Non-episodic:
Admissions			30,300					18,335					11,965			65.3	%
Census			7,284					5,320					1,964			36.9	%
Visits			596,153					431,982					164,171			38.0	%
Revenue  (in thousands)		$	64,292		14.6	%	$	42,453		12.9	%	$	21,839			51.4	%
Revenue per visit		$	108				$	98				$	10			9.7	%
Visits per admission			19.7					23.6					(3.9	)		(16.5	)%

 

OTHER HOME-BASED SERVICES OPERATING METRICS
		Quarter ended
		September 29, 2017						September 30, 2016							Change
		Amount			% Rev			Amount				% Rev			Amount				%
Personal Care:
Locations			75						80							(5	)		(6.3	)%
Admissions			2,259						2,638							(379	)		(14.4	)%
Census			12,475						14,092							(1,617	)		(11.5	)%
Hours of service			1,783,018						1,953,224							(170,206	)		(8.7	)%
Hours per patient per week			11.0						10.7							0.3			3.1	%
Revenue  (in thousands)		$	38,572		83.2	%		$	41,688			99.3	%		$	(3,116	)		(7.5	)%
Operating income (in thousands)		$	2,228					$	2,540						$	(312	)		(12.3	)%
Revenue per hour		$	21.63					$	21.34						$	0.29			1.4	%
Cost per hour		$	13.30					$	13.39						$	(0.09	)		(0.7	)%
Hospice:
Locations			16						1							15			NM
Admissions			680						33							647			NM
Census			492						22							470			NM
Length of stay			60						40							20			50.0	%
Revenue  (in thousands)		$	7,807		16.8	%		$	287			0.7	%		$	7,520			NM
Operating income (loss) (in thousands)		$	1,351					$	(39	)					$	1,390			NM
Revenue per day		$	169					$	142						$	27			19.0	%

		Nine months ended
		September 29, 2017						September 30, 2016							Change
		Amount			% Rev			Amount				% Rev			Amount				%
Personal Care:
Locations			75						80							(5	)		(6.3	)%
Admissions			7,137						7,675							(538	)		(7.0	)%
Census			12,669						13,177							(508	)		(3.9	)%
Hours of service			5,425,767						5,659,370							(233,603	)		(4.1	)%
Hours per patient per week			11.0						11.0							(0.0	)		(0.3	)%
Revenue  (in thousands)		$	116,374		84.0	%		$	121,075			99.3	%		$	(4,701	)		(3.9	)%
Operating income (in thousands)		$	7,489					$	9,285						$	(1,796	)		(19.3	)%
Revenue per hour		$	21.45					$	21.39						$	0.05			0.3	%
Cost per hour		$	13.15					$	13.39						$	(0.24	)		(1.8	)%
Hospice:
Locations			16						1							15			NM
Admissions			2,188						82							2,106			NM
Census			482						21							461			NM
Length of stay			58						38							20			51.7	%
Revenue  (in thousands)		$	22,122		16.0	%		$	796			0.7	%		$	21,326			NM
Operating income (loss) (in thousands)		$	3,955					$	(62	)					$	4,017			NM
Revenue per day		$	168					$	141						$	27			19.0	%

 

HEALTHCARE INNOVATIONS SUPPLEMENTAL DATA
		Quarter ended
		September 29, 2017				September 30, 2016				Change
		Amount				Amount				Amount			%
ACO Management:
Medicare ACO enrollees under management			141,556				121,881			19,675			16.1	%
ACOs under contract			15				14			1			7.1	%
Revenue (in thousands)		$	767			$	4,619		$	(3,852	)		(83.4	)%
Operating (loss) income (in thousands)		$	(386	)		$	3,832		$	(4,218	)		110.1	%
Assessment Services
Assessments			24,452				21,019			3,433			16.3	%
Revenue (in thousands)		$	5,723			$	5,689		$	34			0.6	%
Operating income (in thousands)		$	1,198			$	1,219		$	(21	)		(1.7	)%

		Nine months ended
		September 29, 2017				September 30, 2016				Change
		Amount				Amount				Amount			%
ACO Management:
Medicare ACO enrollees under management			141,556				121,881			19,675			16.1	%
ACOs under contract			15				14			1			7.1	%
Revenue (in thousands)		$	1,957			$	4,955		$	(2,998	)		(60.5	)%
Operating (loss) income (in thousands)		$	(1,355	)		$	2,961		$	(4,316	)		145.8	%
Assessment Services
Assessments			61,948				56,414			5,534			9.8	%
Revenue (in thousands)		$	14,933			$	15,389		$	(456	)		(3.0	)%
Operating income (in thousands)		$	2,151			$	2,137		$	14			0.7	%

Non-GAAP Financial MeasuresThe 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 table sets forth a reconciliation of net income attributable to Almost Family, Inc. to adjusted net income:

ALMOST FAMILY, INC. AND SUBSIDIARIESRECONCILIATION OF ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE (In thousands)
		Quarter ended						Nine months ended
(in thousands)		September 29, 2017			September 30, 2016			September 29, 2017			September 30, 2016
Net income attributable to Almost Family, Inc.		$	3,170		$	5,366		$	11,580		$	14,060
Addbacks:
Deal, transition and other costs, net of tax			2,774			1,415			9,290			4,510
Adjusted net income attributable to Almost Family, Inc.		$	5,944		$	6,781		$	20,870		$	18,570
Per share amounts-diluted:
Average shares outstanding			13,941			10,310			13,627			10,328
Net income attributable to Almost Family, Inc.		$	0.23		$	0.52		$	0.85		$	1.36
Addbacks:
Deal, transition and other costs, net of tax			0.20			0.14			0.68			0.44
Adjusted net income attributable to Almost Family, Inc.		$	0.43		$	0.66		$	1.53		$	1.80

Adjusted EBITDA Adjusted earnings before interest, income and franchise taxes, 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 are significant components in understanding and evaluating financial performance and liquidity.  Management routinely calculates and communicates Adjusted EBITDA and believes that it is useful to investors because it provides a common analytical indicator within its 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 the Company’s credit agreement.

The following table sets forth a reconciliation of net income to Adjusted EBITDA:

ALMOST FAMILY, INC. AND SUBSIDIARIESRECONCILIATION OF ADJUSTED EBITDA (In thousands)
		Quarter ended						Nine months ended
(in thousands)		September 29, 2017			September 30, 2016			September 29, 2017				September 30, 2016
Net income		$	3,170		$	5,366		$	11,580			$	14,060
Add back:
Net (loss) income - noncontrolling interests			561			1,012			2,046				689
Interest expense			1,668			1,537			5,794				4,684
Income tax expense			2,188			3,194			5,713				9,120
Franchise taxes			230			182			697				454
Depreciation and amortization			1,607			950			4,559				2,754
Stock-based compensation			680			612			2,094				2,013
Deal, transition and other costs			4,467			2,257			17,122				7,455
Adjusted EBITDA		$	14,571		$	15,110		$	49,605			$	41,229

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. These forward-looking statements are based on current plans, expectations, projections, forecasts and assumptions about future events that involve risks and uncertainties that could cause actual outcomes and results to differ materially. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “could,” “would,” “estimate,” “project,” “forecast,” “intend,” “expect,” “plan,” “anticipate,” “believe,” “target,” or similar terms, variations of those terms or the negative of those terms. While forward-looking statements reflect good faith beliefs, assumptions and expectations, they are not guarantees of future performance, and the Company undertakes no obligation to update or revise its forward-looking statements. The forward-looking statements in this news release are based on a variety of assumptions that may not be realized and that are subject to significant risks and uncertainties, including 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; changes to the Medicare Shared Savings Programs; 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 acquisition transactions, including, without limitation, difficulties that result in the failure to achieve expected synergies, efficiencies and cost savings from a 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 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 30, 2016, in particular information under the headings "Special Caution Regarding Forward-Looking Statements" and “Risk Factors.”

About Almost Family, Inc.

Almost Family, Inc., founded in 1976, is a leading national provider of home healthcare services, with 332 branch locations in 26 states, including its joint venture with Community Health Systems, Inc. (CHS) (NYSE:CYH). Almost Family, Inc. and its subsidiaries operate Home Health, Other Home-Based Services and HealthCare Innovations segments.