Almost Family, Inc. Steve Guenthner (502) 891-1000
The Ruth Group Investor Relations Nick Laudico (646) 536-7030
nlaudico@theruthgroup.com
Almost Family Reports Fourth Quarter and Full Year 2013 Results Louisville, KY, March 11, 2014 - Almost Family, Inc. (Nasdaq: AFAM), a leading regional provider of home health nursing and personal care services, announced today its financial results for the three months and full year ended December 31, 2013.Fourth Quarter Highlights:
• Record net service revenues of $96.3 million
• Net income attributable to Almost Family, Inc. of $328,000, or $0.03 per diluted share
• Diluted EPS from continuing operations of $0.04 including $0.26 of acquisition related expenses, excluding which diluted EPS would have been $0.30
• Cash flows from operations of $7.6 million
• Visiting Nurse segment
net revenues were $74.7 million
and Personal Care segment
revenues were $21.7 million
• Results include the acquisition of SunCrest on December 6, 2013 which added $0.05 to diluted EPS from continuing operations for both the quarter and the year.
Full Year Highlights:
• Record net service revenues of $357.8 million
• Net income attributable to Almost Family, Inc. was $8.2 million, or $0.88 per diluted share
• Diluted EPS from continuing operations of $0.91 including $0.32 of acquisition related expenses, excluding which diluted EPS would have been $1.23
• Cash flows from operations of $19.8 million
• Visiting Nurse segment net revenues were $275.8 million
• Personal Care segment net revenues grew to $82.0 million.
William Yarmuth, Chief Executive Officer, commented on the year: "We are pleased with where
the Company is positioned for
the future
after another difficult
year for the
industry on the
reimbursement and
regulatory
front. Although the
recent rebasing rule
creates ongoing
challenges over the next few years, we remain confident that home health
care is key
to an
effective
health care
delivery system over
the long term. We are equally confident that the
Company is very well positioned to capitalize on the opportunities that will inevitably present
Almost Family Reports Fourth Quarter and Full Year 2013 Results
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March 11, 2014
themselves over this timeframe. Our development activities over the last half of the year, capped by our significant acquisition of SunCrest in December, demonstrate our strong belief in the future."
Yarmuth concluded: "I want to take this opportunity to welcome all of the members of the SunCrest team to our organization. We are excited about building on the strengths that they bring to our Company."
Almost Family reported fourth quarter results that included the impact of the following acquisitions, as compared to our results for the fourth quarter of 2012:
• The December 6, 2013 acquisition of SunCrest added $8.8 million to revenue ($7.8 million VN and $1.0 PC) and $0.05 to diluted EPS from continuing operations
• As previously disclosed, one-time transaction costs, severance, wind-down, lease abandonment and transition costs related to the SunCrest transaction are expected to be between $7 million and $8 million incurred over the period from closing through the end of 2014. Approximately $3.3 million ($0.26 per diluted share) of such costs have been incurred in the period from closing through December 31, 2013.
• The July 19, 2013 acquisition of Indiana Home Care Network added $2.8 million of revenue to the VN segment and $0.03 to diluted EPS from continuing operations
• The October 4, 2013 acquisition of our 61% interest in Imperium lowered diluted EPS from continuing operations by $0.01. Operating costs of $482,000 associated with Imperium are included in our corporate expenses. Imperium did not generate any material revenue in the period.
In addition to our acquisition activity, Medicare rate cuts, primarily sequestration, combined with
2014 rate cuts which affect episodes started in 2013 and ending in 2014 reduced revenue and operating income by $1.35 million and diluted EPS from continuing operations by $0.09. VN segment Medicare admissions decreased organically by 5.9%, primarily in our Florida operations where we have overlap with SunCrest operations. Due to the size, complexity and risks associated with the integration of the SunCrest acquisition, particularly in Florida, the Company urges investors to temper expectations as we proceed through the balance of our integration work over 2014. Our PC segment hours of service and revenues grew organically by 8.4% and 7.1% respectively.
Our effective tax rate for the fourth quarter of 2013 was 78.6% compared to 40.1% for the fourth quarter of 2012, due to certain deal and transaction costs that are not currently deductible and that do not result in the establishment of a deferred tax asset. We currently anticipate a normalized effective tax rate of 39.5% and have used that rate in the presentation of income and diluted EPS from continuing operations.
Almost Family Reports Fourth Quarter and Full Year 2013 Results
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March 11, 2014
Almost Family reported full year results that included the impact of the following acquisitions, as compared to our results for the full year of 2012:
• The July 19, 2013 acquisition of Indiana Home Care Network added $5.0 million of revenue to the VN segment and $0.07 to diluted EPS from continuing operations
• Because they occurred in the fourth quarter of 2013 the impact of SunCrest and Imperium for the full year was the same as for the fourth quarter
In addition to our acquisition activity, Medicare rate cuts, primarily sequestration reduced revenue and operating income by $4.4 million and diluted EPS from continuing operations by
$0.28. VN segment Medicare admissions increased organically by 0.2%. Our PC segment hours of service and revenues grew organically by 6.8% and 5.1%, respectively.
Our effective tax rate for 2013 was 41.9% compared to 39.2% for 2012, primarily due to certain deal and transaction costs that are not currently deductible and that do not result in the establishment of a deferred tax asset. We currently anticipate a normalized effective tax rate of
39.5% and have used that rate in the presentation of income and diluted EPS from continuing operations.
On July 19, 2013, we completed the acquisition of the assets of the Medicare-certified home health agencies owned by IHCN for $12.5 million. Under the IHCN umbrella we operate six home health locations, primarily in northern Indiana.
On October 4, 2013, we acquired a controlling interest in Imperium Health Management, LLC, (Imperium) a Louisville, KY based development-stage enterprise that provides strategic health management services to Accountable Care Organizations (ACO's).
On December 6, 2013, we acquired the stock of SunCrest HealthCare. The total purchase price for the stock was $75.5 million, subject to a working capital adjustment. The transaction was funded from borrowings from our senior secured revolving credit facility and cash on hand.
Almost Family Reports Fourth Quarter and Full Year 2013 Results
Page 4
March 11, 2014
Net s ervice revenues
Cos t of s ervice revenues (excluding
$ 96,341 $
85,421 $
357,812
$ 342,448
depreciation & amortization) 51,704 44,598 191,268 177,549
Gros s margin | 44,637 | 40,823 | 166,544 | 164,899 | |
General and adminis trative expens es : | |||||
Salaries and benefits | 27,315 | 24,413 | 102,367 | 96,406 | |
Other | 12,897 | 10,076 | 45,312 | 39,643 | |
Deal and trans ition cos ts | 3,337 | 80 | 4,322 | 588 | |
Total general and adminis trative expens es | 43,549 | 34,569 | 152,001 | 136,637 | |
Operating income | 1,088 | 6,254 | 14,543 | 28,262 | |
Interes t expens e, net | (127) | (17) | (169) | (104) | |
Income before income taxes | 961 | 6,237 | 14,374 | 28,158 | |
Income tax expens e | (756) | (2,501) | (6,020) | (11,047) |
Net income from continuing operations $
Dis continued operations :
(Los s ) gain from operations , net
of tax of ($12), ($19), ($89) and $108 $
205 $
(58) $
3,736 $
(31) $
8,354 $
(477) $
17,111
173
Gain on s ale, net of tax of $2 and $971 3 - 171 - (Los s ) gain on dis continued operations (55) (31) (306) 173
Net income
$ 150 $
3,705 $
8,048 $
17,284
Net los s - noncontrolling interes ts 178 - 178 - Net income attributable to Almos t
Family, Inc.
$ 328 $
3,705 $
8,226 $
17,284
Per s hare amounts -bas ic:
Average s hares outs tanding 9,308 9,280 9,279 9,285
Income from continued operations
attributable to Almos t Family, Inc. $ Dis continued operations $ Net income attributable to Almos t
Family, Inc. $
0.04 $ (0.01) $
0.03 $
0.40 $
- $
0.40 $
0.92 $ (0.03) $
0.89 $
1.84
0.02
1.86
Per s hare amounts -diluted:
Average s hares outs tanding 9,401 9,313 9,374 9,324
Income from continued operations
attributable to Almos t Family, Inc. $ Dis continued operations $ Net income attributable to Almos t
Family, Inc. $
0.04 $ (0.01) $
0.03 $
0.40 $
- $
0.40 $
0.91 $ (0.03) $
0.88 $
1.84
0.01
1.85
Almost Family Reports Fourth Quarter and Full Year 2013 Results
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March 11, 2014
CURRENT ASSETS:
As of December 31 ASSETS 2013 2012Cas h and cas h equivalents | $ 12,246 | $ 26,120 |
Accounts receivable - net | 61,651 | 49,971 |
Prepaid expens es and other current as s ets | 10,278 | 6,968 |
Deferred tax as s ets | 11,532 | 6,580 |
TOTAL CURRENT ASSETS | 95,707 | 89,639 |
PROPERTY AND EQUIPMENT - NET | 8,142 | 5,401 |
GOODWILL | 192,575 | 132,014 |
OTHER INTANGIBLE ASSETS | 55,075 | 19,967 |
OTHER ASSETS | 774 | 781 |
OTHER ASSETS, HELD FOR SALE | - | 1,457 |
TOTAL ASSETS | $ 352,273 | $ 249,259 |
CURRENT LIABILITIES:
Accounts payable | $ 11,526 | $ 4,599 |
Accrued other liabilities | 38,916 | 21,874 |
Current portion - notes payable and capital leas es | 702 | 625 |
TOTAL CURRENT LIABILITIES | 51,144 | 27,098 |
LONG-TERM LIABILITIES: | ||
Revolving credit facility | 56,000 | - |
Deferred tax liabilities | 25,580 | 16,785 |
Other liabilities | 1,856 | 1,061 |
TOTAL LONG-TERM LIABILITIES | 83,436 | 17,846 |
TOTAL LIABILITIES | 134,580 | 44,944 |
NONCONTROLLING INTEREST - REDEEMABLE | 3,639 | - |
STOCKHOLDERS' EQUITY: | ||
Preferred s tock, par value $0.05; authorized | ||
2,000 s hares ; none is s ued or outs tanding - - Common s tock, par value $0.10; authorized | ||
25,000; 9,500 and 9,421 | ||
is s ued and outs tanding | 950 | 942 |
Treas ury s tock, at cos t, 92 and 91 s hares | (2,340) | (2,320) |
Additional paid-in capital | 103,858 | 101,945 |
Noncontrolling interes t - nonredeemable | (203) | - |
Retained earnings | 111,789 | 103,748 |
TOTAL STOCKHOLDERS' EQUITY | 214,054 | 204,315 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 352,273 | $ 249,259 |
Almost Family Reports Fourth Quarter and Full Year 2013 Results
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March 11, 2014
Cash flows from op erating activities:
Year Ended December 31, 2013 2012Net income
$ 8,048 $
17,284
(Loss) gain on discontinued op erations, net of tax (306) 173
Net income from continuing op erations before noncontrolling interest 8,354 17,111
Adjustments to reconcile income to net cash p rovided by op erating activities:
Dep reciation and amortization 2,863 2,552
Provision for uncollectible accounts 5,488 2,761
Stock-based comp ensation 1,465 1,473
Deferred income taxes 2,099 3,753
Change in certain net assets and liabilities, net of the effects of acquisitions:
Accounts receivable (893) (8,708) Prep aid exp enses and other current assets 4,243 (1,129) Other assets 235 228
Accounts p ay able and accrued exp enses (4,080) (1,705) Net cash from op erating activities 19,774 16,336
Cash flows from investing activities:
Cap ital exp enditures (2,505) (2,427) Acquisitions, net of cash acquired (88,465) (536) Net cash from investing activities (90,970) (2,963)
Cash flows from financing activities:
Credit facility borrowings 56,000 - Proceeds from stock op tions exercises 11 70
Purchase of common stock in connection with share awards (20) (1,889) Tax imp act of share awards (62) -
Pay ment of sp ecial dividend - (18,562) Princip al p ay ments on notes p ay able and cap ital leases (720) (1,200) Net cash from financing activities 55,209 (21,581)
Cash flows from discontinued op erations
Op erating activities (970) 695
Investing activities 3,083 (60) Net cash from discontinued op erations 2,113 635
Net change in cash and cash equivalents (13,874) (7,573) Cash and cash equivalents at beginning of p eriod 26,120 33,693
Cash and cash equivalents at end of p eriod
$ 12,246 $
26,120
Almost Family Reports Fourth Quarter and Full Year 2013 Results
Page 7
March 11, 2014
Net s ervice revenues :
ALMOST FAMILY, INC. AND SUBSIDIARIES RESULTS OF OPERATIONS (UNAUDITED) (In thous ands ) Three Months Ended December 31,Vis iting Nurs e
$ 74,660
77.5% $
66,147
77.4% $
8,513
12.9%
Pers onal Care 21,681 22.5% 19,274 22.6% 2,407 12.5%
96,341 100.0% 85,421 100.0% 10,920 12.8%
Operating income before corporate expens es :
Vis iting Nurs e | 8,266 | 11.1% | 8,776 | 13.3% | (510) | -5.8% |
Pers onal Care | 2,398 | 11.1% | 2,446 | 12.7% | (48) | -2.0% |
10,664 | 11.1% | 11,222 | 13.1% | (558) | -5.0% | |
Deal and trans ition cos ts | 3,337 | 3.5% | 80 | 0.1% | 3,257 | 4071.3% |
Corporate expens es | 6,239 | 6.5% | 4,888 | 5.7% | 1,351 | 27.6% |
Operating income | 1,088 | 1.1% | 6,254 | 7.3% | (5,166) | -82.6% |
Interes t expens e, net | (127) | -0.1% | (17) | 0.0% | (110) | 647.1% |
Income tax expens e | (756) | -0.8% | (2,501) | -2.9% | 1,745 | -69.8% |
Net income from continuing operations | $ 205 | 0.2% | $ 3,736 | 4.4% | $ (3,531) | -94.5% |
EBITDA from continuing operations | $ 2,372 | 2.5% | $ 7,259 | 8.5% | $ (4,887) | -67.3% |
Almost Family Reports Fourth Quarter and Full Year 2013 Results
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March 11, 2014
Net s ervice revenues :
ALMOST FAMILY, INC. AND SUBSIDIARIES RESULTS OF OPERATIONS (UNAUDITED) (In thous ands ) Year Ended December 31,Vis iting Nurs e
$ 275,813
77.1%
$ 265,401
77.5% $
10,412
3.9%
Pers onal Care 81,999 22.9% 77,047 22.5% 4,952 6.4%
357,812 100.0% 342,448 100.0% 15,364 4.5%
Operating income before corporate expens es :
Vis iting Nurs e | 30,749 | 11.1% | 39,142 | 14.7% | (8,393) | -21.4% |
Pers onal Care | 10,137 | 12.4% | 10,029 | 13.0% | 108 | 1.1% |
40,886 | 11.4% | 49,171 | 14.4% | (8,285) | -16.8% | |
Deal and trans ition cos ts | 4,322 | 1.2% | 588 | 0.2% | 3,734 | 635.0% |
Corporate expens es | 22,021 | 6.2% | 20,321 | 5.9% | 1,700 | 8.4% |
Operating income | 14,543 | 4.1% | 28,262 | 8.3% | (13,719) | -48.5% |
Interes t expens e, net | (169) | 0.0% | (104) | 0.0% | (65) | 62.5% |
Income tax expens e | (6,020) | -1.7% | (11,047) | -3.2% | 5,027 | -45.5% |
Net income from continuing operations | $ 8,354 | 2.3% | $ 17,111 | 5.0% | $ (8,757) | -51.2% |
EBITDA from continuing operations | $ 18,871 | 5.3% | $ 32,287 | 9.4% | $ (13,416) | -41.6% |
Almost Family Reports Fourth Quarter and Full Year 2013 Results
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March 11, 2014
Average number of locations 131 103 28 27.2%
All payors :Patient months 61,367 53,451 7,916 14.8% Admis s ions 17,585 15,643 1,942 12.4% Billable vis its 530,051 466,947 63,104 13.5%
Medicare:Admis s ions 15,889 90% 14,203 91% 1,686 11.9%
Revenue (in thous ands ) Revenue per admis s ion
$ 68,624
$ 4,319
92%
$ 60,969
$ 4,293
92%
$ 7,655
$ 26
12.6%
0.6%
Billable vis its 450,842 85% 393,865 84% 56,977 14.5% Recertifications 9,416 7,823 1,593 20.4% Payor mix % of Admis s ions
Traditional Medicare Epis odic 88.7% 92.7% -4.0% Replacement Plans Paid Epis odically 2.8% 2.6% 0.2% Replacement Plans Paid Per Vis it 8.4% 4.7% 3.7%
Non-Medicare:Admiss ions 1,695 10% 1,440 9% 255 17.7%
Revenue (in thous ands ) Revenue per admis s ion
$ 6,036
$ 3,561
8% $
$
5,178
3,596
8% $
$
858 (35)
16.6%
-1.0%
Billable vis its 79,209 15% 73,082 16% 6,127 8.4% Recertifications 1,311 1,571 (260) -16.5% Payor mix % of Admis s ions
Medicaid & other governmental 27.9% 31.7% -3.8%
Private payors 72.1% 68.3% 3.8%
PERSONAL CARE OPERATING METRICS Three Months Ended December 31, 2013 2012 Change Amount Amount Amount %Average number of locations 62 60 2 3.3%
Admiss ions | 1,050 | 1,072 | (22) | -2.1% |
Patient months of care | 18,117 | 17,280 | 837 | 4.8% |
Billable hours | 1,208,847 | 1,079,477 | 129,370 | 12.0% |
Revenue per billable hour | $ 17.94 | $ 17.86 | $ 0.08 | 0.4% |
Almost Family Reports Fourth Quarter and Full Year 2013 Results
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March 11, 2014
Average number of locations 112 105 7 6.7%
All payors :Patient months 224,446 212,555 11,891 5.6% Admis s ions 64,843 62,319 2,524 4.1% Billable vis its 1,967,407 1,847,268 120,139 6.5%
Medicare:Admis s ions | 58,634 | 90% | 56,179 | 90% | 2,455 | 4.4% |
Revenue (in thous ands ) | $ 255,097 | 93% | $ 245,487 | 93% | $ 9,610 | 3.9% |
Revenue per admis s ion | $ 4,351 | $ 4,370 | $ (19) | -0.4% | ||
Billable vis its | 1,676,717 | 85% | 1,546,230 | 84% | 130,487 | 8.4% |
Recertifications | 33,699 | 31,098 | 2,601 | 8.4% | ||
Payor mix % of Admis s ions | ||||||
Traditional Medicare Epis odic | 91.9% | 93.7% | -1.8% | |||
Replacement Plans Paid Epis odically | 2.6% | 3.2% | -0.6% | |||
Replacement Plans Paid Per Vis it | 5.5% | 3.1% |
2013 | 2012 | Change | ||||
Amount | Amount | Amount | % | |||
Average number of locations | 61 | 60 | 1 | 1.7% | ||
Admiss ions | 4,311 | 4,319 | (8) | -0.2% | ||
Patient months of care | 70,611 | 69,304 | 1,307 | 1.9% | ||
Billable hours | 4,602,260 | 4,275,007 | 327,253 | 7.7% | ||
Revenue per billable hour | $ 17.82 | $ 18.02 | $ (0.20) | -1.1% |
Almost Family Reports Fourth Quarter and Full Year 2013 Results
Page 11
March 11, 2014
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.
EBITDA
Earnings before interest, income taxes, depreciation and amortization (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 EBITDA are significant components in understanding and evaluating financial performance and liquidity. Management routinely calculates and communicates EBITDA and believes that it is useful to investors because it is commonly used as an analytical indicator within our industry to evaluate performance, measure leverage capacity and debt service ability, and to estimate current or prospective enterprise value. EBITDA is also used in certain covenants contained in our credit agreement.
The following tables set forth a reconciliation of net income to EBITDA:
(in thous ands ) 2013 2012 2013 2012
Net income from continuing operationsAdd back:
$ 205
$ 3,736
$ 8,354
$ 17,111
Interes t expens e 127 17 169 104
Income tax expens e 756 2,501 6,020 11,047
Depreciation and amortization 858 659 2,863 2,552
Amortization of s tock-bas ed compens ation 426 346 1,465 1,473
Earnings before interes t, income taxes , depreciation and
amortization (EBITDA) from continuing operations
$ 2,372
$ 7,259
$ 18,871
$ 32,287
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, Connecticut, New Jersey, Massachusetts, Georgia, Pennsylvania, Indiana, Missouri, Illinois, Mississippi and Alabama (in order of revenue significance). Almost Family, Inc. and its subsidiaries operate a Medicare- certified segment and a personal care segment. Almost Family operates over 240 branch locations in fourteen U.S. states.
Almost Family Reports Fourth Quarter and Full Year 2013 Results
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March 11, 2014
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; 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, 2012, in particular information under the headings "Special Caution Regarding Forward-Looking Statements" and "Risk Factors." With regard to the Company's recent investment in Imperium, in particular given that it is a development stage enterprise, there can be no assurance that its operational and developmental objectives will be realized or that any savings in healthcare spending or any participation in Medicare Shared Savings Program payments will be realized. The Company undertakes no obligation to update or revise its forward-looking statements.
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