ALMOST FAMILY INC - FORM 8-K - EX-99.1 - EARNINGS RELEASE

Attached files

file	filename
8-K - FORM 8-K - ALMOST FAMILY INC	q1form-8k.htm

Exhibit 99.1

Almost Family, Inc.

Steve Guenthner

(502) 891-1000

The Ruth Group

Investor Relations

Nick Laudico

(646) 536-7030

nlaudico@theruthgroup.com

Almost Family Reports First Quarter 2014 Results

Louisville, KY, May 6, 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 ended March 31, 2014.

First Quarter Highlights:

·	Record net service revenues of $120.0 million

·	Net income attributable to Almost Family, Inc. of $1.3 million, or $0.13 per diluted share

·	Diluted EPS from continuing operations of $0.14 including $0.20 of acquisition related expenses, excluding which diluted EPS would have been $0.34

·	Visiting Nurse segment net revenues were $95.7 million and Personal Care segment revenues were $24.3 million

·	Results include a full quarter of operating results from the acquisition of SunCrest on December 6, 2013 which added $0.13 to diluted EPS from continuing operations for the quarter

Comments on First Quarter 2014 Results

William Yarmuth, Chief Executive Officer, commented on the quarter: “We are pleased with our results for the quarter. Our integration of SunCrest continues on target and we remain focused on adapting our operations to the challenges presented by the initiation of rebasing. We continue to be extremely positive about the opportunity our SunCrest operations present for the long term growth of our organization. We strongly believe home health care will play an ever increasing role in managing health care costs and we will continue to look to acquisitions in this area as a key component of our approach to building shareholder value.”

Steve Guenthner, President, added: “Consistent with the statements in our 2013 year-end release, we experienced some disruption of admission volumes in the highly competitive Florida market, where we have meaningful overlap with our acquired SunCrest branches. We will continue to work through this expected integration challenge over the balance of 2014. The Medicare rebasing adjustments to home health reimbursement will force us to address every opportunity to control costs without compromising the quality of care we provide to our patients. That is a challenge that we are currently addressing and on which we will continue to focus as we move forward.”

Almost Family Reports First Quarter 2014 Results

Page 2

May 6, 2014

Yarmuth concluded: “We want to thank our nearly 12,000 caring employees for their commitment and dedication to improving the lives of our patients, while helping us prudently and efficiently manage the costs of providing these critical patient services.”

The Company noted that rate cuts resulting from Medicare’s previously announced rebasing of home health reimbursement rates are being phased in over the four-year period from 2014 through 2017.

First Quarter Financial Results

Almost Family reported first quarter results that included a full quarter of operating results for the following acquisitions, as compared to our results for the first quarter of 2013:

·	The December 6, 2013 acquisition of SunCrest added $33.8 million to revenue ($29.9 million VN and $3.9 million PC) and $0.13 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 $3.1 million ($0.20 per diluted share) of such costs were incurred in the quarter ended March 31, 2014.

·	The July 19, 2013 acquisition of Indiana Home Care Network added $2.6 million of revenue to the VN segment and $0.01 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 $243,000 associated with Imperium are included in our corporate expenses. Imperium did not generate any material revenue in the period.

Medicare rate cuts, from sequestration for episodes ending after March 31, 2013, combined with 2014’s rebasing cuts, reduced revenue and operating income by $1.8 million and diluted EPS from continuing operations by $0.12. VN segment Medicare admissions decreased organically by 5.8%, primarily in our Florida operations where we have overlap with SunCrest operations. Our PC segment hours of service and revenues grew by 5.3% organically and 8.0% through acquisition.

Our effective tax rate for the first quarter of 2014 was 41.5% compared to 37.1% for the first quarter of 2013. The higher year to date 2014 income tax rate from continuing operations was primarily due to a benefit recognized in the first quarter of 2013 resulting from the January 2, 2013 retroactive extension of the Work Opportunity Tax Credit (WOTC). The WOTC has not yet been extended for 2014.

Discontinued Operations

In the first quarter of 2014, the Company’s VN segment exited a market in the Northeast through the closure of a branch location. In conjunction with the SunCrest acquisition, the Company acquired some operations which had been discontinued prior to acquisition. During the quarter ended June 30, 2013, the Company completed the sale of two Alabama locations, which operated in the VN segment. The operations and any related gain on sale for these operations were reclassified from continuing operations into discontinued operations for all periods presented.

Almost Family Reports First Quarter 2014 Results

Page 3

May 6, 2014

ALMOST FAMILY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In thousands, except per share data)

	Three Months Ended March 31,
	2014			2013
Net service revenues	$	120,032		$	85,453
Cost of service revenues (excluding depreciation & amortization)		65,532			45,445
Gross margin		54,500			40,008
General and administrative expenses:
Salaries and benefits		33,658			24,351
Other		15,409			10,368
Deal and transition costs		3,115			11
Total general and administrative expenses		52,182			34,730
Operating income		2,318			5,278
Interest expense, net		(347	)		(18	)
Income before income taxes		1,971			5,260
Income tax expense		(817	)		(1,950	)
Net income from continuing operations		1,154			3,310

Discontinued operations:
Loss from operations, net
of tax of ($48) and ($51)		(70	)		(63	)
Gain on sale, net of tax		-			-
Loss on discontinued operations		(70	)		(63	)
Net income		1,084			3,247
Net loss - noncontrolling interests		189			-
Net income attributable to Almost Family, Inc.	$	1,273		$	3,247

Per share amounts-basic:
Average shares outstanding		9,293			9,254
Income from continuing operations attributable to Almost Family, Inc.	$	0.14		$	0.36
Discontinued operations		(0.01	)		(0.01	)
Net income attributable to Almost Family, Inc.	$	0.13		$	0.35

Per share amounts-diluted:
Average shares outstanding		9,426			9,338
Income from continuing operations attributable to Almost Family, Inc.	$	0.14		$	0.36
Discontinued operations		(0.01	)		(0.01	)
Net income attributable to Almost Family, Inc.	$	0.13		$	0.35

Almost Family Reports First Quarter 2014 Results

Page 4

May 6, 2014

ALMOST FAMILY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)

	March 31, 2014
ASSETS	(UNAUDITED)			December 31, 2013
CURRENT ASSETS:
Cash and cash equivalents	$	8,359		$	12,246
Accounts receivable - net		62,367			61,651
Prepaid expenses and other current assets		8,708			10,278
Deferred tax assets		13,532			11,532
TOTAL CURRENT ASSETS		92,966			95,707

PROPERTY AND EQUIPMENT - NET		7,450			8,142
GOODWILL		193,208			192,575
OTHER INTANGIBLE ASSETS		55,052			55,075
OTHER ASSETS		718			774
TOTAL ASSETS	$	349,394		$	352,273

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	10,688		$	11,526
Accrued other liabilities		37,654			38,916
Current portion - notes payable and capital leases		167			702
TOTAL CURRENT LIABILITIES		48,509			51,144

LONG-TERM LIABILITIES:
Revolving credit facility		53,000			56,000
Deferred tax liabilities		27,081			25,580
Other liabilities		1,680			1,856
TOTAL LONG-TERM LIABILITIES		81,761			83,436
TOTAL LIABILITIES		130,270			134,580

NONCONTROLLING INTEREST - REDEEMABLE		3,639			3,639

STOCKHOLDERS' EQUITY:
Preferred stock, par value $0.05; authorized
2,000 shares; none issued or outstanding		-			-
Common stock, par value $0.10; authorized
25,000; 9,542 and 9,500
issued and outstanding		954			950
Treasury stock, at cost, 92 and 91 shares		(2,393	)		(2,340	)
Additional paid-in capital		104,161			103,858
Noncontrolling interest - nonredeemable		(299	)		(203	)
Retained earnings		113,062			111,789
TOTAL STOCKHOLDERS' EQUITY		215,485			214,054
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	349,394		$	352,273

Almost Family Reports First Quarter 2014 Results

Page 5

May 6, 2014

ALMOST FAMILY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
	Three Months Ended March 31,
	2014			2013
Cash flows from operating activities:
Net income	$	1,084		$	3,247
Loss on discontinued operations, net of tax		(70	)		(63	)
Net income from continuing operations		1,154			3,310
Adjustments to reconcile income to net cash provided by operating activities:
Depreciation and amortization		1,102			627
Provision for uncollectible accounts		2,144			1,036
Stock-based compensation		414			287
Deferred income taxes		(362	)		90
		4,452			5,350
Change in certain net assets and liabilities, net of the effects of acquisitions:
Accounts receivable		(2,907	)		(366	)
Prepaid expenses and other current assets		1,554			1,624
Other assets		55			52
Accounts payable and accrued expenses		(2,770	)		2,714
Net cash provided by operating activities		384			9,374

Cash flows from investing activities:
Capital expenditures		(350	)		(688	)
Acquisitions, net of cash acquired		-			-
Net cash used in investing activities		(350	)		(688	)

Cash flows from financing activities:
Credit facility repayments		(3,000	)		-
Proceeds from stock options exercises		39			-
Purchase of common stock in connection with share awards		(52	)		-
Tax impact of share awards		(54	)		-
Payment of special dividend		(35	)		-
Principal payments on notes payable and capital leases		(558	)		-
Net cash used in financing activities		(3,660	)		-

Cash flows from discontinued operations
Operating activities		(261	)		(168	)
Investing activities		-			(2	)
Net cash used in discontinued operations		(261	)		(170	)

Net change in cash and cash equivalents		(3,887	)		8,516
Cash and cash equivalents at beginning of period		12,246			26,120
Cash and cash equivalents at end of period	$	8,359		$	34,636

Almost Family Reports First Quarter 2014 Results

Page 6

May 6, 2014

ALMOST FAMILY, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
(UNAUDITED)
(In thousands)

	Three Months Ended March 31,
	2014						2013						Change
	Amount			% Rev			Amount			% Rev			Amount			%
Net service revenues:
Visiting Nurse	$	95,756			79.8	%	$	66,551			77.9	%	$	29,205			43.9	%
Personal Care		24,276			20.2	%		18,902			22.1	%		5,374			28.4	%
		120,032			100.0	%		85,453			100.0	%		34,579			40.5	%
Operating income before corporate expenses:
Visiting Nurse		9,507			9.9	%		8,337			12.5	%		1,170			14.0	%
Personal Care		2,524			10.4	%		1,998			10.6	%		526			26.3	%
		12,031			10.0	%		10,335			12.1	%		1,696			16.4	%
Deal and transition costs		3,115			2.6	%		11			0.0	%		3,104		NM
Corporate expenses		6,598			5.5	%		5,046			5.9	%		1,552			30.8	%
Operating income		2,318			1.9	%		5,278			6.2	%		(2,960	)		-56.1	%
Interest expense, net		(347	)		-0.3	%		(18	)		0.0	%		(329	)	NM
Income tax expense		(817	)		-0.7	%		(1,950	)		-2.3	%		1,133			-58.1	%
Net income from continuing operations	$	1,154			1.0	%	$	3,310			3.9	%	$	(2,156	)		-65.1	%

Adjusted EBITDA from continuing operations	$	6,949			5.8	%	$	6,203			7.3	%	$	746			12.0	%

Almost Family Reports First Quarter 2014 Results

Page 7

May 6, 2014

ALMOST FAMILY, INC. AND SUBSIDIARIES
VISITING NURSE SEGMENT OPERATING METRICS

	Three Months Ended March 31,
	2014					2013					Change
	Amount					Amount					Amount			%
Average number of locations		172					102					70			68.6	%

All payors:
Patient months		81,451					54,582					26,869			49.2	%
Admissions		25,189					16,253					8,936			55.0	%
Billable visits		656,976					469,291					187,685			40.0	%

Medicare:
Admissions		22,475		89	%		14,956		92	%		7,519			50.3	%
Revenue (in thousands)	$	88,872		93	%	$	61,738		93	%	$	27,134			44.0	%
Revenue per admission	$	3,954				$	4,128				$	(174	)		-4.2	%
Billable visits		570,864		87	%		400,783		85	%		170,081			42.4	%
Recertifications		11,880					7,960					3,920			49.2	%
Payor mix % of Admissions
Traditional Medicare Episodic		83.3	%				91.0	%				-7.7	%
Replacement Plans Paid Episodically		3.1	%				2.6	%				0.5	%
Replacement Plans Paid Per Visit		13.6	%				6.4	%				7.2	%

Non-Medicare:
Admissions		2,714		11	%		1,297		8	%		1,417			109.3	%
Revenue (in thousands)	$	6,884		7	%	$	4,814		7	%	$	2,070			43.0	%
Revenue per admission	$	2,536				$	3,712				$	(1,175	)		-31.7	%
Billable visits		86,112		13	%		68,508		15	%		17,604			25.7	%
Recertifications		1,514					1,337					177			13.2	%
Payor mix % of Admissions
Medicaid & other governmental		23.8	%				28.5	%				-4.7	%
Private payors		76.2	%				71.5	%				4.7	%


PERSONAL CARE OPERATING METRICS

	Three Months Ended March 31,
		2014					2013				Change
	Amount					Amount					Amount			%
Average number of locations		61					61					-			0.0	%

Admissions		1,436					1,089					347			31.9	%
Patient months of care		19,594					17,339					2,255			13.0	%
Billable hours		1,267,045					1,069,437					197,608			18.5	%
Revenue per billable hour	$	19.16				$	17.67				$	1.48			8.4	%

Almost Family Reports First Quarter 2014 Results

Page 8

May 6, 2014

Non-GAAP Financial Measure

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 EBITDA

Earnings before interest, income taxes, depreciation and amortization (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 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. Adjusted EBITDA is also used in certain covenants contained in our credit agreement.

The following tables set forth a reconciliation of net income to Adjusted EBITDA:

ALMOST FAMILY, INC. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA
(In thousands)

	Three Months Ended March 31,
(in thousands)	2014		2013
Net income from continuing operations	$	1,154	$	3,310
Add back:
Interest expense		347		18
Income tax expense		817		1,950
Depreciation and amortization		1,102		627
Amortization of stock-based compensation		414		287
Earnings before interest, income taxes, depreciation and amortization (EBITDA) from continuing operations		3,834		6,192
Deal and transition costs		3,115		11
Adjusted EBITDA from continuing operations	$	6,949	$	6,203

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, Indiana, Pennsylvania, Georgia, 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 230 branch locations in fourteen U.S. states.

Almost Family Reports First Quarter 2014 Results

Page 9

May 6, 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, 2013, 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.

Attached files

Stock widget

Investing forum

ALMOST FAMILY INC Reports