ALMOST FAMILY INC
LOUISVILLE, Ky., Feb. 26, 2018 (GLOBE NEWSWIRE) -- Almost Family, Inc. (NASDAQ:AFAM), a leading provider of home health and related services, announced today its financial results for the quarter and year ended December 29, 2017.
Fourth Quarter Highlights (1):
- Net service revenues of approximately $200 million
- GAAP net income of $8.8 million and GAAP EPS of $0.63(2) per diluted share includes the favorable impact of the 2017 Tax Cuts and Jobs Act of approximately $9.5 million, offset by increases in LHC merger and other deal, transition and other costs of approximately $12.3 million
- Adjusted EPS of $0.58(1,2)
- Adjusted EBITDA of $18.4 (1) million
- Operating cash flows of $15.8 million
Full Year Highlights (1):
- Net service revenues of approximately $800 million
- GAAP net income of $20.4 million and GAAP EPS of $1.48(2) per diluted share which includes the unfavorable impact of deal, transition and other costs, partially offset by the favorable impact of 2017 Tax Cuts and Jobs Act.
- Adjusted EPS of $2.10 (1,2)
- Adjusted EBITDA of $68.0 (1) million, including an estimated $3.3 million unfavorable impact from the hurricanes in the third quarter of 2017
- Operating cash flows of $30.5 million
(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
LHC Group and Almost Family Merger of Equals
On November 15, 2017, Almost Family entered into an agreement with LHC Group ("LHC") providing for a “merger of equals” business combination between our Company and LHC. Following approval by both companies’ shareholders, the merger will be an all-stock transaction with an exchange ratio of 0.9150 of LHC shares to be exchanged for each outstanding share of Almost Family stock. The combined company is expected to have an expanded geographic service territory of 36 states, 781 locations and 76 joint venture partnerships including 336 hospitals. The combined company will be listed under the LHC name with common shares to be traded on the NASDAQ under ticker symbol LHCG. On February 22, 2018, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 with respect to this transaction expired, satisfying one of the important conditions to closing. The transaction is expected to close near the end of the first quarter of 2018 following both companies’ March 29, 2018 special stockholder meetings to approve the proposed transaction.
Management Comments
William Yarmuth, Chairman and CEO, commented: “We’re very pleased to close out fiscal 2017 with strong operating results and numerous accomplishments culminating with our planned merger with LHC Group. Successfully integrating our CHS-JV acquisition and completing the transition of the balance of our home health operations, so that we’re now fully on the Homecare Homebase software platform, bode very well for our future.
“As we leave 2017 and enter into 2018, combining the best of both our long track records of success and patient-focused cultures, as one family, we’ll continue our mission of making lives better through home care. I am extremely proud of the work we've done, the progress we've made, and the meaningful contribution the Almost Family side of the house will now be able to make to the future success of the combined organization. I look forward to working with the rest of the management team in the continued evolution of these companies -- able to accomplish much more together than either of us could possibly achieve alone.”
Fourth Quarter Financial Results (See Matters Impacting Comparability and Presentation below)
Home Health (HH) segment net revenues increased by 35.5% or $38.0 million to $145.1 million from $107.1 million in the prior year and episodic admissions grew by 39.0% to 29,336 from 21,106. Net revenue and episodic admissions in the CHS-JV acquisition were $42.5 million and 8,107, respectively. Excluding the CHS-JV, episodic admissions grew by approximately 1%.
Home Health segment contribution before corporate expenses increased $4.9 million, or 36.0%, to $18.5 million from $13.6 million in the prior year with contribution margins as a percentage of revenue remaining consistent at 12.7%.
Other Home-Based Services (OHBS) segment net revenues increased $5.6 million or 13.7% to $46.3 million in 2017 from $40.7 million, primarily as a result of the 15 hospice facilities acquired in the CHS-JV transaction. Hospice revenues were $7.7 million for the quarter. Personal care revenues were down $1.7 million or 4.3% 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 decreased $1.2 million, or 27.6% to $3.1 million from $4.3 million for the same period last year, primarily as a result of the prior year including an abnormally low bad debt provision.
Healthcare Innovations (HCI) segment net revenues increased $3.6 million or 62.8% in 2017 to $9.3 million in 2017 as compared to $5.7 million in 2016. The Company’s ACO enablement operations recorded shared savings incentive revenue of $2.3 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 revenues grew $0.8 million, or 14.8% as assessment volumes grew by 34%. As a result, operating income for the HCI segment increased $2.7 million to $3.3 million, up from $0.6 million in the prior year.
Corporate expenses as a percentage of revenue decreased to 4.2% in 2017 from 4.7% in 2016. Deal, transition and other costs were $12.3 million, primarily due to LHC merger transaction costs including approximately $4.0 million for external transaction services and $2.5 million for performance based management incentive programs. Other deal, transition and other cost drivers primarily relate to the final full quarter of implementation and training costs for our HH segment conversion to the Homecare Homebase information system.
We recorded a tax benefit of $7.8 million in the fourth quarter of 2017 due to a favorable $9.5 million impact from the 2017 Tax Cuts and Jobs Act (Tax Act) partially offset by a negative $1.3 million impact from certain non-deductible, LHC merger related costs. Excluding the impact of these items in 2017, our tax expense and effective tax rate would have been $0.4 million and 39.5% for the quarter.
The Tax Act was signed into law on December 22, 2017, is effective for our fiscal 2018 and will reduce our U.S. corporate tax rate from 35% to 21% in 2018. The Tax Act also resulted in the current year revaluation of our Deferred tax liabilities at the lower tax rate causing a one-time benefit of approximately $9.5 million. We expect our effective tax rate to approximate 26.5% in 2018.
Increased average shares outstanding from the Company’s late January 2017 sale of common shares reduced Adjusted EPS for the fourth quarter of 2017 by $0.18 as compared to 2016. The fourth quarter is fully reflective of the dilutive effect of this offering.
Full Year Financial Results (See Matters Impacting Comparability and Presentation below)
Home Health segment net revenues increased by $151 million or 34.7% to $586 million from $435 million in the prior year and episodic admissions grew by 40.4% to 118,535 from 84,401 in 2016, primarily due to the CHS-JV acquisition. Net revenue and episodic admissions in the CHS-JV were $167.7 million and 32,714, respectively. Excluding the CHS-JV, episodic admissions grew by approximately 2%, which was reduced by the impact of the Hurricanes. Volume growth was partially offset by a net effective 1% Medicare rate cut and the impact of the Hurricanes.
HH segment contribution before corporate expenses increased $19.0 million, or 33.6%, to $75.6 million from $56.6 million in the prior year period. Home Health contribution margins as a percentage of revenue decreased slightly to 12.9% from 13.0% 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.
OHBS segment net revenues increased $22.2 million or 13.7% to $184.8 million from $162.6 million, primarily as a result of the 15 hospice facilities acquired in the CHS-JV transaction. Hospice revenues were $29.8 million. Personal care revenues were down $6.4 million or 4.0% 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 $1.0 million or 7.7%, as compared to the same period of last year.
HCI segment net revenues increased slightly to $26.1 million in 2017 from $26.0 million in 2016. Increases in both ACO Management membership fees and Assessment Services revenue largely offset a $1.9 million reduction in ACO shared savings payments revenue in 2017 versus the prior year. As such, HCI operating income before corporate expenses decreased $1.6 million to $4.0 million in 2017.
Each of our operating segments experienced prolonged disruption during the third quarter of 2017 as a result of Hurricanes Irma and Harvey (the “Hurricanes”), with our Home Health segment operations in Florida the most severely affected. The Hurricanes reduced operating income by approximately $3.3 million, largely on lost volume.
Corporate expenses as a percentage of revenue decreased 0.1% to 4.5% in 2017. Deal, transition and other costs were $29.4 million, largely driven by transaction costs of the LHC merger and the CHS-JV acquisition, in addition to the conversion of the HH segment to the Homecare Homebase information system. Unused fees associated with our larger credit facility and higher loan cost amortization increased interest expense to $7.4 million from $6.3 million in the prior year.
Net cash from operating activities of $30.5 million was generated in 2017. Accounts receivable days sales outstanding were 57 at the end of the fourth quarter of 2017, as compared to 64 days in the third quarter of 2017 and 57 at the end of the fourth quarter of 2016. The decline in days outstanding from prior quarter was driven by the prior quarter including delays related to our conversion to Homecare Homebase and legacy system run-out.
We recorded a net tax benefit of $2.1 million in our fiscal 2017 period due to a positive $9.5 million impact from the 2017 Tax Cuts and Jobs Act (Tax Act); excluding this Tax Act impact our tax expense and effective tax rate would have been $7.4 million and 40.5%, respectively. The 2016 full-year effective tax rate was 38.4%. The increase from 2016 was largely due to an increase in the ratio of permanent items to pre-tax income driven largely by merger related differences. We currently estimate that our effective tax rate will approximate 26.5% in 2018.
Increased average shares outstanding from the Company’s late January 2017 sale of common shares reduced Adjusted EPS for 2017 by $0.63.
Matters Impacting Comparability and Presentation
On 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.
In the first quarter in 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.
Other Developments
Medicare Legislation
The Bipartisan Budget Act of 2018, enacted in February 2018, has the following provisions impacting health care services provided at home:
- Restores the 3% home health rate add-on for patients who reside in rural geographies, effective January 1, 2018. The add-on rate will be phased downward over a five year period following a formula specified in the legislation.
- Mandates the development of a new case mix model for home health services using a 30 day payment period, through a transparent process including the home health industry and Congressional committees of Medicare jurisdiction. The law requires any new case mix model to be implemented in 2020 in a budget neutral manner.
- Face-to-face documentation improvements allowing the home health medical record in its entirety to be used to support the physician’s attestation of medical necessity.
- A study to be conducted by the GAO (Government Accounting Office) on Medicare improvements to address the needs of the chronically ill including the provision of services provided at home, including interdisciplinary care management, tele-health and tele-monitoring for managed care plans, requiring states to better integrate Medicare and Medicaid services for the dually eligible and extension of the Independence at Home Demonstration Program.
- A specific home health market basket annual inflationary update percentage of 1.5% for FY2020, leaving intact the full market basket update (generally expected to be between 2% and 3%) for FY2019.
Wage Inflation
Effective with the start of FY2018 the Company implemented a 2% cost of living wage increase for eligible employees.
ALMOST FAMILY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
| Quarter ended | Year ended | |||||||||||||
| December 29, 2017 | December 30, 2016 | December 29, 2017 | December 30, 2016 | |||||||||||
| Net service revenues | $ | 200,618 | $ | 153,427 | $ | 796,965 | $ | 623,541 | ||||||
| Cost of service revenues (excluding depreciation & amortization) | 105,297 | 83,475 | 419,394 | 335,472 | ||||||||||
| Gross margin | 95,321 | 69,952 | 377,571 | 288,069 | ||||||||||
| General and administrative expenses: | ||||||||||||||
| Salaries and benefits | 55,273 | 42,222 | 223,016 | 168,356 | ||||||||||
| Other | 23,680 | 16,458 | 95,932 | 72,430 | ||||||||||
| Deal, transition & other costs | 12,283 | 4,387 | 29,405 | 11,842 | ||||||||||
| Total general and administrative expenses | 91,236 | 63,067 | 348,353 | 252,628 | ||||||||||
| Operating income | 4,085 | 6,885 | 29,218 | 35,441 | ||||||||||
| Interest expense, net | 1,597 | 1,599 | 7,391 | 6,285 | ||||||||||
| Income before noncontrolling interests and income taxes | 2,488 | 5,286 | 21,827 | 29,156 | ||||||||||
| Net income - noncontrolling interests | 1,477 | (170 | ) | 3,523 | 519 | |||||||||
| Income before income tax expense | 1,011 | 5,456 | 18,304 | 28,637 | ||||||||||
| Income tax (benefit) expense | (7,823 | ) | 1,864 | (2,110 | ) | 10,984 | ||||||||
| Net income attributable to Almost Family, Inc. | $ | 8,834 | $ | 3,592 | $ | 20,414 | $ | 17,653 | ||||||
| Per share amounts-basic: | ||||||||||||||
| Average shares outstanding | 13,809 | 10,162 | 13,539 | 10,153 | ||||||||||
| Net income attributable to Almost Family, Inc. | $ | 0.64 | $ | 0.35 | $ | 1.51 | $ | 1.74 | ||||||
| Per share amounts-diluted: | ||||||||||||||
| Average shares outstanding | 14,014 | 10,330 | 13,757 | 10,346 | ||||||||||
| Net income attributable to Almost Family, Inc. | $ | 0.63 | $ | 0.35 | $ | 1.48 | $ | 1.71 | ||||||
ALMOST FAMILY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
| Unaudited | |||||||||
| December 29, 2017 | December 30, 2016 | ||||||||
| ASSETS | |||||||||
| CURRENT ASSETS: | |||||||||
| Cash and cash equivalents | $ | 11,310 | $ | 10,110 | |||||
| Accounts receivable - net | 125,860 | 99,212 | |||||||
| Prepaid expenses and other current assets | 14,514 | 11,432 | |||||||
| TOTAL CURRENT ASSETS | 151,684 | 120,754 | |||||||
| PROPERTY AND EQUIPMENT - NET | 15,246 | 10,732 | |||||||
| GOODWILL | 390,754 | 305,476 | |||||||
| OTHER INTANGIBLE ASSETS - NET | 145,522 | 85,063 | |||||||
| TRANSACTION DEPOSIT | — | 128,930 | |||||||
| ASSETS HELD FOR SALE | 3,800 | — | |||||||
| OTHER ASSETS | 10,812 | 7,757 | |||||||
| TOTAL ASSETS | $ | 717,818 | $ | 658,712 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
| CURRENT LIABILITIES: | |||||||||
| Accounts payable | $ | 22,049 | $ | 12,122 | |||||
| Accrued other liabilities | 50,182 | 39,728 | |||||||
| Current portion - Seller Notes | 4,961 | — | |||||||
| TOTAL CURRENT LIABILITIES | 77,192 | 51,850 | |||||||
| LONG-TERM LIABILITIES: | |||||||||
| Revolving credit facility | 100,254 | 262,456 | |||||||
| Deferred tax liabilities | 18,595 | 21,145 | |||||||
| Seller notes, net of current portion | 7,800 | 12,500 | |||||||
| Other liabilities | 7,424 | 6,581 | |||||||
| TOTAL LONG-TERM LIABILITIES | 134,073 | 302,682 | |||||||
| TOTAL LIABILITIES | 211,265 | 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; 14,243 and 10,504 issued and outstanding | 1,425 | 1,051 | |||||||
| Treasury stock, at cost, 251 and 117 shares | (10,453 | ) | (3,258 | ) | |||||
| Additional paid-in capital | 294,448 | 141,233 | |||||||
| Retained earnings | 184,309 | 163,763 | |||||||
| Almost Family, Inc. stockholders' equity | 469,729 | 302,789 | |||||||
| Noncontrolling interests - nonredeemable | 34,568 | (865 | ) | ||||||
| TOTAL STOCKHOLDERS’ EQUITY | 504,297 | 301,924 | |||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 717,818 | $ | 658,712 | |||||
ALMOST FAMILY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
| Year ended | |||||||
| December 29, 2017 | December 30, 2016 | ||||||
| Cash flows from operating activities: | |||||||
| Net income attributable to Almost Family, Inc. | $ | 20,414 | $ | 17,653 | |||
| Net income attributable to noncontrolling interests | 3,523 | 519 | |||||
| Income before noncontrolling interests | 23,937 | 18,172 | |||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 5,916 | 4,445 | |||||
| Provision for uncollectible accounts | 14,526 | 11,708 | |||||
| Stock-based compensation | 5,468 | 2,760 | |||||
| Loan costs amortization | 954 | 336 | |||||
| Deferred income taxes | (2,550 | ) | 8,725 | ||||
| 48,251 | 46,146 | ||||||
| Change in certain net assets and liabilities, net of the effects of acquisitions: | |||||||
| Accounts receivable | (19,664 | ) | (18,701 | ) | |||
| Prepaid expenses and other current assets | (2,242 | ) | (377 | ) | |||
| Other assets | (3,966 | ) | (1,215 | ) | |||
| Accounts payable and accrued expenses | 8,151 | (1,410 | ) | ||||
| Net cash provided by operating activities | 30,530 | 24,443 | |||||
| Cash flows of investing activities: | |||||||
| Capital expenditures | (6,112 | ) | (6,206 | ) | |||
| Transaction deposit | 128,930 | (128,930 | ) | ||||
| Acquisitions, net of cash acquired | (130,808 | ) | (31,486 | ) | |||
| Net cash used in investing activities | (7,990 | ) | (166,622 | ) | |||
| Cash flows of financing activities: | |||||||
| Credit facility borrowings | 245,471 | 389,328 | |||||
| Credit facility repayments, net | (407,673 | ) | (240,662 | ) | |||
| Debt issuance fees | (25 | ) | (3,900 | ) | |||
| Distribution of capital | (128 | ) | - | ||||
| Proceeds from stock offering, net | 143,905 | - | |||||
| Proceeds from stock option exercises | 4,344 | 230 | |||||
| Purchase of common stock in connection with share awards | (7,195 | ) | (527 | ) | |||
| Tax impact of share awards | - | 353 | |||||
| Principal payments on notes payable and capital leases | (39 | ) | (55 | ) | |||
| Net cash (used in) provided by financing activities | (21,340 | ) | 144,767 | ||||
| Net change in cash and cash equivalents | 1,200 | 2,588 | |||||
| Cash and cash equivalents at beginning of period | 10,110 | 7,522 | |||||
| Cash and cash equivalents at end of period | $ | 11,310 | $ | 10,110 | |||
ALMOST FAMILY, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
(Unaudited)
(In thousands)
| Quarter ended | |||||||||||||||||||||||
| December 29, 2017 | December 30, 2016 | Change | |||||||||||||||||||||
| Amount | % Rev | Amount | % Rev | Amount | % | ||||||||||||||||||
| Net service revenues: | |||||||||||||||||||||||
| Home Health | $ | 145,108 | 72.3 % | $ | 107,068 | 69.8 % | $ | 38,040 | 35.5 % | ||||||||||||||
| Other Home-Based Services | 46,257 | 23.1 % | 40,675 | 26.5 % | 5,582 | 13.7 % | |||||||||||||||||
| Healthcare Innovations | 9,253 | 4.6 % | 5,684 | 3.7 % | 3,569 | 62.8 % | |||||||||||||||||
| 200,618 | 100.0 % | 153,427 | 100.0 % | 47,191 | 30.8 % | ||||||||||||||||||
| Operating income before corporate expenses: | |||||||||||||||||||||||
| Home Health | 18,500 | 12.7 % | 13,599 | 12.7 % | 4,901 | 36.0 % | |||||||||||||||||
| Other Home-Based Services | 3,111 | 6.7 % | 4,296 | 10.6 % | (1,185) | (27.6 )% | |||||||||||||||||
| Healthcare Innovations | 3,250 | 35.1 % | 559 | 9.8 % | 2,691 | NM | |||||||||||||||||
| 24,861 | 12.4 % | 18,454 | 12.0 % | 6,407 | 34.7 % | ||||||||||||||||||
| Corporate expenses | 8,493 | 4.2 % | 7,182 | 4.7 % | 1,311 | 18.3 % | |||||||||||||||||
| Deal, transition and other costs | 12,283 | 6.1 % | 4,387 | 2.9 % | 7,896 | 180.0 % | |||||||||||||||||
| Operating income | 4,085 | 2.0 % | 6,885 | 4.5 % | (2,800) | (40.7 )% | |||||||||||||||||
| Interest expense, net | 1,597 | 0.8 % | 1,599 | 1.0 % | (2) | (0.1 )% | |||||||||||||||||
| Net income - noncontrolling interests | 1,477 | 0.7 % | (170) | (0.1)% | 1,647 | NM | |||||||||||||||||
| Net income before income taxes | 1,011 | 0.5 % | 5,456 | 3.6 % | (4,445) | (81.5 )% | |||||||||||||||||
| Income tax (benefit) expense | (7,823) | (3.9)% | 1,864 | 1.2 % | (9,687) | NM | |||||||||||||||||
| Net income attributable to Almost Family, Inc. | $ | 8,834 | 4.4 % | $ | 3,592 | 2.3 % | $ | 5,242 | 145.9 % | ||||||||||||||
| Adjusted EBITDA (1) | $ | 18,361 | 9.2 % | $ | 13,344 | 8.7 % | $ | 5,017 | 37.6 % | ||||||||||||||
| Adjusted net income (1) | $ | 8,044 | 4.0 % | $ | 6,274 | 4.1 % | $ | 1,770 | 28.2 % | ||||||||||||||
| (1) See Non-GAAP Financial Measures below. | |||||||||||||||||||||||
| Year ended | |||||||||||||||||||||
| December 29, 2017 | December 30, 2016 | Change | |||||||||||||||||||
| Amount | % Rev | Amount | % Rev | Amount | % | ||||||||||||||||
| Net service revenues: | |||||||||||||||||||||
| Home Health | $ | 586,070 | 73.5 % | $ | 434,968 | 69.8% | $ | 151,102 | 34.7 % | ||||||||||||
| Other Home-Based Services | 184,752 | 23.2 % | 162,546 | 26.1% | 22,206 | 13.7 % | |||||||||||||||
| Healthcare Innovations | 26,143 | 3.3 % | 26,027 | 4.2% | 116 | 0.4 % | |||||||||||||||
| 796,965 | 100.0 % | 623,541 | 100.0% | 173,424 | 27.8 % | ||||||||||||||||
| Operating income before corporate expenses: | |||||||||||||||||||||
| Home Health | 75,587 | 12.9 % | 56,564 | 13.0% | 19,023 | 33.6 % | |||||||||||||||
| Other Home-Based Services | 14,555 | 7.9 % | 13,519 | 8.3% | 1,036 | 7.7 % | |||||||||||||||
| Healthcare Innovations | 4,046 | 15.5 % | 5,657 | 21.7% | (1,611) | (28.5 )% | |||||||||||||||
| 94,188 | 11.8 % | 75,740 | 12.1% | 18,448 | 24.4 % | ||||||||||||||||
| Corporate expenses | 35,565 | 4.5 % | 28,457 | 4.6% | 7,108 | 25.0 % | |||||||||||||||
| Deal, transition and other costs | 29,405 | 3.7 % | 11,842 | 1.9% | 17,563 | 148.3 % | |||||||||||||||
| Operating income | 29,218 | 3.7 % | 35,441 | 5.7% | (6,223) | (17.6 )% | |||||||||||||||
| Interest expense, net | 7,391 | 0.9 % | 6,285 | 1.0% | 1,106 | 17.6 % | |||||||||||||||
| Net income - noncontrolling interests | 3,523 | 0.4 % | 519 | 0.1% | 3,004 | NM | |||||||||||||||
| Net income before income taxes | 18,304 | 2.3 % | 28,637 | 4.6% | (10,333) | (36.1 )% | |||||||||||||||
| Income tax (benefit) expense | (2,110) | (0.3 )% | 10,984 | 1.8% | (13,094) | NM | |||||||||||||||
| Net income attributable to Almost Family, Inc. | $ | 20,414 | 2.6 % | $ | 17,653 | 2.8% | $ | 2,761 | 15.6 % | ||||||||||||
| Adjusted EBITDA (1) | $ | 67,965 | 8.5 % | $ | 54,552 | 8.7% | $ | 13,413 | 24.6 % | ||||||||||||
| Adjusted net income (1) | $ | 28,864 | 3.6 % | $ | 24,640 | 4.0% | $ | 4,224 | 17.1 % | ||||||||||||
| (1) See Non-GAAP Financial Measures below. | |||||||||||||||||||||
HOME HEALTH OPERATING METRICS
| Quarter ended | ||||||||||||||||||
| December 29, 2017 | December 30, 2016 | Change | ||||||||||||||||
| Amount | % Rev | Amount | % Rev | Amount | % | |||||||||||||
| Locations | 242 | 168 | 74 | 44.0 % | ||||||||||||||
| All payors: | ||||||||||||||||||
| Admissions | 39,580 | 25,946 | 13,634 | 52.5 % | ||||||||||||||
| Census | 31,166 | 22,210 | 8,956 | 40.3 % | ||||||||||||||
| Visits | 916,968 | 686,982 | 229,986 | 33.5 % | ||||||||||||||
| Cost per visit | $ | 78 | $ | 77 | $ | 2 | 2.0 % | |||||||||||
| G&A expense per census | $ | 1,761 | $ | 1,836 | $ | (75) | (4.1 )% | |||||||||||
| Episodic: | ||||||||||||||||||
| Admissions | 29,336 | 21,106 | 8,230 | 39.0 % | ||||||||||||||
| Census | 23,617 | 17,827 | 5,790 | 32.5 % | ||||||||||||||
| Episodes | 44,567 | 32,428 | 12,139 | 37.4 % | ||||||||||||||
| Visits | 716,603 | 566,227 | 150,376 | 26.6 % | ||||||||||||||
| Revenue (in thousands) | $ | 121,420 | 83.7% | $ | 94,255 | 88.0% | $ | 27,165 | 28.8 % | |||||||||
| Revenue per episode | $ | 2,724 | 2,907 | $ | (182) | (6.3 )% | ||||||||||||
| Visits per episode | 16.1 | 17.5 | (1.4) | (7.9 )% | ||||||||||||||
| Non-episodic: | ||||||||||||||||||
| Admissions | 10,244 | 4,840 | 5,404 | 111.7 % | ||||||||||||||
| Census | 7,549 | 4,383 | 3,166 | 72.2 % | ||||||||||||||
| Visits | 200,365 | 120,755 | 79,610 | 65.9 % | ||||||||||||||
| Revenue (in thousands) | $ | 23,688 | 16.3% | $ | 12,813 | 12.0% | $ | 10,875 | 84.9 % | |||||||||
| Revenue per visit | $ | 118 | $ | 106 | $ | 12 | 11.4 % | |||||||||||
| Visits per admission | 19.6 | 24.9 | (5.4) | (21.6 )% | ||||||||||||||
HOME HEALTH OPERATING METRICS
| Year ended | ||||||||||||||||||
| December 29, 2017 | December 30, 2016 | Change | ||||||||||||||||
| Amount | % Rev | Amount | % Rev | Amount | % | |||||||||||||
| Locations | 242 | 168 | 74 | 44.0 % | ||||||||||||||
| All payors: | ||||||||||||||||||
| Admissions | 159,079 | 107,576 | 51,503 | 47.9 % | ||||||||||||||
| Census | 31,224 | 22,980 | 8,244 | 35.9 % | ||||||||||||||
| Visits | 3,729,562 | 2,870,277 | 859,285 | 29.9 % | ||||||||||||||
| Cost per visit | $ | 77 | $ | 74 | $ | 3 | 3.9 % | |||||||||||
| G&A expense per census | $ | 7,149 | $ | 7,209 | $ | (60) | (0.8 )% | |||||||||||
| Episodic: | ||||||||||||||||||
| Admissions | 118,535 | 84,401 | 34,134 | 40.4 % | ||||||||||||||
| Census | 23,874 | 17,894 | 5,980 | 33.4 % | ||||||||||||||
| Episodes | 178,540 | 130,003 | 48,537 | 37.3 % | ||||||||||||||
| Visits | 2,933,044 | 2,317,540 | 615,504 | 26.6 % | ||||||||||||||
| Revenue (in thousands) | $ | 498,075 | 85.0% | $ | 379,701 | 87.3% | $ | 118,374 | 31.2 % | |||||||||
| Revenue per episode | $ | 2,790 | 2,921 | $ | (131) | (4.5 )% | ||||||||||||
| Visits per episode | 16.4 | 17.8 | (1.4) | (7.8 )% | ||||||||||||||
| Non-episodic: | ||||||||||||||||||
| Admissions | 40,544 | 23,175 | 17,369 | 74.9 % | ||||||||||||||
| Census | 7,350 | 5,086 | 2,264 | 44.5 % | ||||||||||||||
| Visits | 796,518 | 552,737 | 243,781 | 44.1 % | ||||||||||||||
| Revenue (in thousands) | $ | 87,995 | 15.0% | $ | 55,267 | 12.7% | $ | 32,728 | 59.2 % | |||||||||
| Revenue per visit | $ | 110 | $ | 100 | $ | 10 | 10.5 % | |||||||||||
| Visits per admission | 19.6 | 23.9 | (4.2) | (17.6 )% | ||||||||||||||
OTHER HOME-BASED SERVICES OPERATING METRICS
| Quarter ended | ||||||||||||||||||||
| December 29, 2017 | December 30, 2016 | Change | ||||||||||||||||||
| Amount | % Rev | Amount | % Rev | Amount | % | |||||||||||||||
| Personal Care: | ||||||||||||||||||||
| Locations | 75 | 76 | (1) | (1.3 )% | ||||||||||||||||
| Admissions | 2,283 | 1,996 | 287 | 14.4 % | ||||||||||||||||
| Census | 12,406 | 13,333 | (927) | (7.0 )% | ||||||||||||||||
| Hours of service | 1,771,444 | 1,878,853 | (107,409) | (5.7 )% | ||||||||||||||||
| Hours per patient per week | 11.0 | 10.8 | 0.1 | 1.3 % | ||||||||||||||||
| Revenue (in thousands) | $ | 38,563 | 83.4% | $ | 40,292 | 99.1% | $ | (1,729) | (4.3 )% | |||||||||||
| Operating income (in thousands) | $ | 2,613 | $ | 4,224 | $ | (1,611) | (38.1 )% | |||||||||||||
| Revenue per hour | $ | 21.77 | $ | 21.44 | $ | 0.32 | 1.5 % | |||||||||||||
| Cost per hour | $ | 13.33 | $ | 13.15 | $ | 0.18 | 1.4 % | |||||||||||||
| Hospice: | ||||||||||||||||||||
| Locations | 16 | 1 | 15 | NM | ||||||||||||||||
| Admissions | 691 | 15 | 676 | NM | ||||||||||||||||
| Census | 491 | 30 | 461 | NM | ||||||||||||||||
| Length of stay | 65 | 54 | 11 | 19.7 % | ||||||||||||||||
| Revenue (in thousands) | $ | 7,693 | 16.6% | $ | 383 | 0.9% | $ | 7,310 | NM | |||||||||||
| Operating income (in thousands) | $ | 498 | $ | 72 | $ | 426 | NM | |||||||||||||
| Revenue per day | $ | 172 | $ | 141 | $ | 31 | 22.1 % | |||||||||||||
| Year ended | ||||||||||||||||||||
| December 29, 2017 | December 30, 2016 | Change | ||||||||||||||||||
| Amount | % Rev | Amount | % Rev | Amount | % | |||||||||||||||
| Personal Care: | ||||||||||||||||||||
| Locations | 75 | 76 | (1) | (1.3 )% | ||||||||||||||||
| Admissions | 9,420 | 9,671 | (251) | (2.6 )% | ||||||||||||||||
| Census | 12,603 | 13,216 | (613) | (4.6 )% | ||||||||||||||||
| Hours of service | 7,197,211 | 7,538,223 | (341,012) | (4.5 )% | ||||||||||||||||
| Hours per patient per week | 11.0 | 11.0 | 0.0 | 0.1 % | ||||||||||||||||
| Revenue (in thousands) | $ | 154,937 | 83.9% | $ | 161,367 | 99.3% | $ | (6,430) | (4.0 )% | |||||||||||
| Operating income (in thousands) | $ | 10,102 | $ | 13,509 | $ | (3,407) | (25.2 )% | |||||||||||||
| Revenue per hour | $ | 21.53 | $ | 21.41 | $ | 0.12 | 0.6 % | |||||||||||||
| Cost per hour | $ | 13.19 | $ | 13.15 | $ | 0.04 | 0.3 % | |||||||||||||
| Hospice: | ||||||||||||||||||||
| Locations | 16 | 1 | 15 | NM | ||||||||||||||||
| Admissions | 2,879 | 97 | 2,782 | NM | ||||||||||||||||
| Census | 482 | 23 | 459 | NM | ||||||||||||||||
| Length of stay | 61 | 42 | 19 | NM | ||||||||||||||||
| Revenue (in thousands) | $ | 29,815 | 16.1% | $ | 1,179 | 0.7% | $ | 28,636 | NM | |||||||||||
| Operating income (in thousands) | $ | 4,453 | $ | 10 | $ | 4,443 | NM | |||||||||||||
| Revenue per day | $ | 170 | $ | 141 | $ | 29 | 20.3 % | |||||||||||||
HEALTHCARE INNOVATIONS SUPPLEMENTAL DATA
| Quarter ended | |||||||||||||
| December 29, 2017 | December 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) | $ | 3,119 | $ | 339 | $ | 2,780 | NM | ||||||
| Operating (loss) income (in thousands) | $ | 1,834 | $ | (247 | ) | $ | 2,081 | NM | |||||
| Assessment Services | |||||||||||||
| Assessments | 26,000 | 19,400 | 6,600 | 34.0 | % | ||||||||
| Revenue (in thousands) | $ | 6,134 | $ | 5,345 | $ | 789 | 14.8 | % | |||||
| Operating income (in thousands) | $ | 1,416 | $ | 806 | $ | 610 | 75.7 | % | |||||
| Year ended | ||||||||||||||
| December 29, 2017 | December 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) | $ | 5,076 | $ | 5,294 | $ | (218) | (4.1 )% | |||||||
| Operating (loss) income (in thousands) | $ | 479 | $ | 2,714 | $ | (2,235) | NM | |||||||
| Assessment Services | ||||||||||||||
| Assessments | 87,948 | 75,814 | 12,134 | 16.0 % | ||||||||||
| Revenue (in thousands) | $ | 21,067 | $ | 20,733 | $ | 334 | 1.6 % | |||||||
| Operating income (in thousands) | $ | 3,567 | $ | 2,943 | $ | 624 | 21.2 % | |||||||
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 table sets 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)
| Quarter ended | Year ended | ||||||||||||||||
| December 29, 2017 | December 30, 2016 | December 29, 2017 | December 30, 2016 | ||||||||||||||
| Net income attributable to Almost Family, Inc. | $ | 8,834 | $ | 3,592 | $ | 20,414 | $ | 17,653 | |||||||||
| Addbacks: | |||||||||||||||||
| Deal, transition and other costs | 12,283 | 4,387 | 29,405 | 11,842 | |||||||||||||
| Taxes | (13,073 | ) | (1,705 | ) | (20,955 | ) | (4,855 | ) | |||||||||
| Deal, transition and other costs, net of tax | (790 | ) | 2,682 | 8,450 | 6,987 | ||||||||||||
| Adjusted net income attributable to Almost Family, Inc. | $ | 8,044 | $ | 6,274 | $ | 28,864 | $ | 24,640 | |||||||||
| Per share amounts-diluted: | |||||||||||||||||
| Average shares outstanding | 14,014 | 10,330 | 13,757 | 10,346 | |||||||||||||
| Merger transaction related | 38 | - | 38 | - | |||||||||||||
| Adjusted average shares outstanding | 13,976 | 10,330 | 13,719 | 10,346 | |||||||||||||
| Net income attributable to Almost Family, Inc. | $ | 0.63 | $ | 0.35 | $ | 1.49 | $ | 1.71 | |||||||||
| Addbacks: | |||||||||||||||||
| Deal, transition and other costs, net of tax | (0.06 | ) | 0.26 | 0.62 | 0.68 | ||||||||||||
| Adjusted net income attributable to Almost Family, Inc. | $ | 0.58 | $ | 0.61 | $ | 2.10 | $ | 2.38 | |||||||||
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 SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA
(In thousands)
| Quarter ended | Year ended | ||||||||||||||||
| December 29, 2017 | December 30, 2016 | December 29, 2017 | December 30, 2016 | ||||||||||||||
| Net income | $ | 8,834 | $ | 3,592 | $ | 20,414 | $ | 17,653 | |||||||||
| Add back: | |||||||||||||||||
| Net (loss) income - noncontrolling interests | 1,477 | (170 | ) | 3,523 | 519 | ||||||||||||
| Interest expense | 1,597 | 1,599 | 7,391 | 6,285 | |||||||||||||
| Income tax (benefit) expense | (7,823 | ) | 1,864 | (2,110 | ) | 10,984 | |||||||||||
| Franchise taxes | 257 | 171 | 954 | 625 | |||||||||||||
| Depreciation and amortization | 879 | 1,154 | 5,438 | 3,909 | |||||||||||||
| Stock-based compensation | 857 | 747 | 2,950 | 2,735 | |||||||||||||
| Deal, transition and other costs | 12,283 | 4,387 | 29,405 | 11,842 | |||||||||||||
| Adjusted EBITDA | $ | 18,361 | $ | 13,344 | $ | 67,965 | $ | 54,552 | |||||||||
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.” This press release is for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to buy and securities or a solicitation of any vote or approval.
About Almost Family, Inc.
Almost Family, Inc., founded in 1976, is a leading provider of home healthcare services, with over 330 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.
Almost Family, Inc.
Steve Guenthner
(502) 891-1000
