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Almost Family Reports Third Quarter 2016 Results

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.

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

Source:Almost Family Inc