Almost Family Reports Second Quarter 2012 Results

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Aug 08, 2012, 07:30 ET

LOUISVILLE, Ky., Aug. 8, 2012 /PRNewswire/ -- 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 and six month periods ended June 30, 2012.

Second Quarter Highlights:

Net service revenues of $87 million for the quarter
Net income was $4.5 million, or $0.49 per diluted share
Diluted EPS includes $0.01 for transaction related costs, excluding which diluted EPS would have been $0.50
Visiting Nurse segment net revenues were $68 million, on 2% admission growth overall, including 4% in Florida
Personal Care segment net revenues grew to $19 million from a combination of the Cambridge acquisition and 5% organic volume growth

Comments on Results

William Yarmuth, Chief Executive Officer, commented on the results: "We're pleased with our results for the quarter as we continue to adjust our operations to meaningful Medicare rate cuts and an apparent slowing in the Medicare home health market. During the first half of 2012, our staff and management have been intensely focused on improving our operational performance. I'm pleased with the extent to which we've improved our results. Our charge for the second half of 2012 is to leverage the progress achieved in both segments, while turning a more substantial part of our focus toward improving the organic growth of our business."

Second Quarter Financial Results

Almost Family reported second quarter results that included: i) the favorable impact of our Cambridge Home Health Care Holdings, Inc. (Cambridge) acquisition, which closed in early August of 2011, ii) the unfavorable impact of higher than normal workers compensation costs which lowered EPS by $0.04 and iii) the unfavorable impact of the 2012 Medicare reimbursement rate cut in the Visiting Nurse (VN) segment. The Medicare rate changes reduced revenue and operating income by $2.8 million and earnings per diluted share by $0.18.

Net service revenues for the second quarter grew to $86.9 million, a 6% increase from $81.7 million reported in the second quarter of 2011, as a result of the Cambridge acquisition, partially offset by the VN segment's Medicare rate cut.

Net income for the second quarter of 2012 was $4.5 million, or $0.49 per diluted share, down from second quarter of 2011 net income of $5.0 million, or $0.53 per diluted share.

Diluted EPS for the quarter was increased by $0.07 as compared to the second quarter of 2011 as a result of the Cambridge acquisition. Unallocated corporate overhead included approximately $0.2 million of transitional expenses related to the Cambridge home office which is expected to wind down during the remainder of 2012. Diluted EPS for the quarter includes a $0.01 for transaction related costs, similar costs in the prior year quarter totaled $0.02. Our effective tax rate for the quarter declined to 39.5% from 40.2% in the prior year quarter, primarily due to a lower state tax rate from the Cambridge acquisition.

Second Quarter Segment Results

VN Segment second quarter results include the unfavorable impact of the Medicare rate cuts. As a result, VN segment second quarter net service revenues declined 5% to $67.6 million, from $71.2 million in the second quarter of 2011, while operating income before corporate expenses for the second quarter of 2012 declined to $10.8 million from $11.8 million reported for the second quarter of 2011. Total admissions grew 2%, substantially all organic, which was partially offset by a 0.6% decline in re-certifications. Organic VN admission growth in Florida was 4%.

Primarily as a result of our Cambridge acquisition, Personal Care (PC) segment net service revenues grew 83% or $8.8 million in the second quarter of 2012 to a record $19.3 million from $10.5 million in the second quarter of 2011, while operating income before unallocated corporate expenses increased 85%, or $1.1 million to $2.3 million in the second quarter of 2012.

Six Month Period Ended June 30, 2012

Almost Family reported six month results that included: i) the favorable impact of our Cambridge Home Health Care Holdings, Inc. (Cambridge) acquisition, which closed in early August of 2011 and ii) the unfavorable impact of the 2012 Medicare reimbursement rate cut in the Visiting Nurse (VN) segment. The Medicare rate changes reduced revenue and operating income by $5.7 million and earnings per diluted share by $0.37.

Net income for the six month period of 2012 was $9.5 million, or $1.02 per diluted share, down from the six month period of 2011 net income of $10.7 million, or $1.14 per diluted share. Fees and expenses related to governmental inquiries did not impact the 2012 six month period, while lowering the 2011 six month period EPS by approximately $0.05. Deal costs lowered year to date 2012 and 2011 EPS by approximately $0.01 and $0.03, respectively.

Six Month Period Segment Results

Net service revenues in the VN segment for the six month period declined to $138.3 million, a 3.9% decrease from $143.9 million in the six month period of 2011, after the effect of the previously mentioned Medicare rate cut which was partially offset by volume growth. Total admissions grew 4%, of which 2% was organic.

Operating income before corporate expenses in the VN segment for the six month period of 2012 was $21.8 million, a $3.0 million decrease from $24.9 million reported for the six month period of 2011, primarily as a result of the impact of the Medicare rate cut.

Primarily as a result of our Cambridge acquisition, net service revenues in the PC segment for the six month period of 2012 grew 89% or $18.1 million to $38.5 million from $20.4 million in the six month period of 2011. Operating income before unallocated corporate expenses in the PC segment increased 76% to $4.7 million from $2.7 million in the six month period of 2011.

Conference Call

A conference call to review the results will begin at 11:00 a.m. ET on August 8, 2012, and will be hosted by William Yarmuth, Chief Executive Officer, and Steve Guenthner, President and Principal Financial Officer. To participate in the conference call, please dial 1-877-407-4018 (USA) or 1-201-689-8471 (International). In addition, a dial-up replay of the conference call will be available beginning August 8, 2012 at 2:00 p.m. ET and ending on August 22, 2012. The replay telephone number is 1-877-870-5176 (USA) or 1-858-384-5517 (International). Passcode 398221. A live Web cast of the call will also be available from the Investor Relations section of the corporate Web site at http://www.almostfamily.com. A Web cast replay can be accessed on the corporate Web site beginning August 8, 2012 at approximately 2:00 p.m. ET and will remain available until September 8, 2012.

Almost Family, Inc.

Steve Guenthner

(502) 891-1000

The Ruth Group

Investor Relations

Nick Laudico/Zack Kubow

(646) 536-7030/7020

[email protected]

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

	Three Months Ended June 30,				Six months Ended June 30,
	2012		2011		2012		2011
Net service revenues	$	86,892	$	81,721	$	176,842	$	164,314
Cost of service revenues (excluding depreciation & amortization)		45,338		39,615		91,106		78,580
Gross margin		41,554		42,106		85,736		85,734
General and administrative expenses:
Salaries and benefits		24,547		23,606		49,828		47,945
Other		9,456		10,172		20,360		19,859
Total general and administrative expenses		34,003		33,778		70,188		67,804
Operating income		7,551		8,328		15,548		17,930
Interest expense, net		(32)		(44)		(70)		(99)
Income before income taxes		7,519		8,284		15,478		17,831
Income tax expense		(2,970)		(3,334)		(5,998)		(7,177)
Net income	$	4,549	$	4,950	$	9,480	$	10,654

Per share amounts-basic:
Average shares outstanding		9,255		9,284		9,265		9,249
Net income	$	0.49	$	0.53	$	1.02	$	1.15

Per share amounts-diluted:
Average shares outstanding		9,315		9,377		9,328		9,360
Net income	$	0.49	$	0.53	$	1.02	$	1.14

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

	June 30, 2012		December 31, 2011
ASSETS	(UNAUDITED)
CURRENT ASSETS:
Cash and cash equivalents	$	37,609	$	33,693
Accounts receivable - net		47,897		45,166
Prepaid expenses and other current assets		6,463		6,437
Deferred tax assets		7,731		7,470
TOTAL CURRENT ASSETS		99,700		92,766

PROPERTY AND EQUIPMENT - NET		5,130		5,229
GOODWILL		133,096		132,653
OTHER INTANGIBLE ASSETS		19,676		19,709
OTHER ASSETS		649		465
	$	258,251	$	250,822

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	6,901	$	6,489
Accrued other liabilities		19,983		21,129
Current portion - capital leases and notes payable		500		1,200
TOTAL CURRENT LIABILITIES		27,384		28,818

LONG-TERM LIABILITIES:
Notes payable		625		1,125
Deferred tax liabilities		14,929		13,631
Other liabilities		714		951
TOTAL LONG-TERM LIABILITIES		16,268		15,707
TOTAL LIABILITIES		43,652		44,525

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; 9,420 and 9,381
issued and outstanding		942		938
Treasury stock, at cost, 89 and 13 shares		(2,283)		(431)
Additional paid-in capital		101,348		100,678
Retained earnings		114,592		105,112
TOTAL STOCKHOLDERS' EQUITY		214,599		206,297
	$	258,251	$	250,822

ALMOST FAMILY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
	Six Months Ended June 30,
	2012		2011
Cash flows from operating activities:
Net income	$	9,480	$	10,654
Adjustments to reconcile income to net cash provided by operating activities:
Depreciation and amortization		1,259		1,475
Provision for uncollectible accounts		1,181		684
Stock-based compensation		746		730
Deferred income taxes		1,134		2,567
		13,800		16,110
Change in certain net assets and liabilities, net of the effects of acquisitions:
Decrease (increase) in:
Accounts receivable		(4,157)		115
Prepaid expenses and other current assets		(408)		386
Other assets		(185)		115
Decrease in:
Accounts payable and accrued expenses		(978)		(2,984)
Net cash provided by operating activities		8,072		13,742

Cash flows from investing activities:
Capital expenditures		(1,032)		(1,104)
Acquisitions, net of cash acquired		-		(4,249)
Net cash used in investing activities		(1,032)		(5,353)

Cash flows from financing activities:
Proceeds from exercise of stock options		70		292
Purchase of common stock in connection with share awards		(1,852)		(428)
Tax impact of share awards		(142)		1,577
Principal payments on capital leases and notes payable		(1,200)		(1,595)
Net cash used in financing activities		(3,124)		(154)

Net change in cash and cash equivalents		3,916		8,235
Cash and cash equivalents at beginning of period		33,693		47,943
Cash and cash equivalents at end of period	$	37,609	$	56,178

Summary of non-cash investing and financing activities:
Settlement of Directors Deferred Compensation Plan	$	-	$	501
Acquisitions funded by notes payable	$	-	$	1,000

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

	Three Months Ended June 30,
	2012					2011					Change
	Amount		% Rev			Amount		% Rev			Amount		%
Net service revenues:
Visiting Nurse	$	67,614		77.8	%	$	71,208		87.1	%	$	(3,594)		-5.0	%
Personal Care		19,278		22.2	%		10,513		12.9	%		8,765		83.4	%
		86,892		100.0	%		81,721		100.0	%		5,171		6.3	%
Operating income before corporate expenses:
Visiting Nurse		10,795		16.0	%		11,835		16.6	%		(1,040)		-8.8	%
Personal Care		2,294		11.9	%		1,243		11.8	%		1,051		84.6	%
		13,089		15.1	%		13,078		16.0	%		11		0.1	%
Corporate expenses		5,538		6.4	%		4,750		5.8	%		788		16.6	%
Operating income		7,551		8.7	%		8,328		10.2	%		(777)		-9.3	%
Interest expense, net		(32)		0.0	%		(44)		0.1	%		12		-27.3	%
Income tax expense		(2,970)		3.4	%		(3,334)		4.1	%		364		-10.9	%
Net income	$	4,549		5.2	%	$	4,950		6.1	%	$	(401)		-8.1	%

EBITDA	$	8,573		9.9	%	$	9,396		11.5	%	$	(823)		-8.8	%


	Six Months Ended June 30,
	2012					2011					Change
	Amount		% Rev			Amount		% Rev			Amount		%
Net service revenues:
Visiting Nurse	$	138,317		78.2	%	$	143,897		87.6	%	$	(5,580)		-3.9	%
Personal Care		38,525		21.8	%		20,417		12.4	%		18,108		88.7	%
		176,842		100.0	%		164,314		100.0	%		12,528		7.6	%
Operating income before corporate expenses:
Visiting Nurse		21,844		15.8	%		24,867		17.3	%		(3,023)		-12.2	%
Personal Care		4,746		12.3	%		2,701		13.2	%		2,045		75.7	%
		26,590		15.0	%		27,568		16.8	%		(978)		-3.5	%
Corporate expenses		11,042		6.2	%		9,638		5.9	%		1,404		14.6	%
Operating income		15,548		8.8	%		17,930		10.9	%		(2,382)		-13.3	%
Interest expense, net		(70)		0.0	%		(99)		0.1	%		29		-29.3	%
Income tax expense		(5,998)		3.4	%		(7,177)		4.4	%		1,179		-16.4	%
Net income	$	9,480		5.4	%	$	10,654		6.5	%	$	(1,174)		-11.0	%

EBITDA	$	17,553		9.9	%	$	20,135		12.3	%	$	(2,582)		-12.8	%

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

	Three Months Ended June 30,
	2012					2011					Change
	Amount		% Rev			Amount		% Rev			Amount		%
Average number of locations		110					93					17		18.3	%

All payors:
Patients Months		52,851					52,464					387		0.7	%
Admissions		15,560					15,292					268		1.8	%
Billable Visits		471,387					482,593					(11,206)		-2.3	%

Medicare Statistics:
Revenue (in thousands)	$	61,437		90.9	%	$	65,755		92.3	%	$	(4,318)		-6.6	%
Billable visits		384,881					407,957					(23,076)		-5.7	%
Admissions		13,728					14,023					(295)		-2.1	%
Recertifications		7,860					7,907					(47)		-0.6	%
Episodes Completed		21,490					22,267					(777)		-3.5	%

Revenue per completed episode	$	2,880				$	3,052				$	(172)		-5.6	%
Visits per episode		17.7					18.4					(0.7)		-3.8	%

PERSONAL CARE OPERATING METRICS

	Three Months Ended June 30,
	2012					2011					Change
	Amount					Amount					Amount		%
Average number of locations		60					23					37		160.9	%

Admissions		1,294					732					562		76.8	%
Patient months of care		18,700					10,886					7,814		71.8	%
Patient days of care		253,294					143,253					110,041		76.8	%
Billable hours		1,057,143					572,608					484,535		84.6	%
Revenue per billable hour	$	18.24				$	18.36				$	(0.12)		-0.7	%

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

	Six Months Ended June 30,
	2012					2011					Change
	Amount		% Rev			Amount		% Rev			Amount		%
Average number of locations		110					92					18		19.6	%

All payors:
Patients Months		108,053					104,936					3,117		3.0	%
Admissions		32,066					30,965					1,101		3.6	%
Billable Visits		951,260					962,247					(10,987)		-1.1	%

Medicare Statistics:
Revenue (in thousands)	$	126,221		91.3	%	$	133,059		92.5	%	$	(6,838)		-5.1	%
Billable visits		786,773					815,459					(28,686)		-3.5	%
Admissions		28,404					28,375					29		0.1	%
Recertifications		15,924					16,234					(310)		-1.9	%
Episodes Completed		44,024					44,184					(160)		-0.4	%

Revenue per completed episode	$	2,852				$	3,011				$	(159)		-5.3	%
Visits per episode		17.6					18.1					(0.5)		-2.8	%

PERSONAL CARE OPERATING METRICS

	Six Months Ended June 30,
	2012					2011					Change
	Amount					Amount					Amount		%
Average number of locations		60					22					38		172.7	%

Admissions		2,658					1,513					1,145		75.7	%
Patient months of care		36,441					21,835					14,606		66.9	%
Patient days of care		507,126					283,884					223,242		78.6	%
Billable hours		2,109,613					1,124,122					985,491		87.7	%
Revenue per billable hour	$	18.26				$	18.16				$	0.10		0.5	%

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 and the footnotes to the tables, 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:

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Net income	$	4,549	$	4,950	$	9,480	$	10,654
Add back:
Interest expense		32		44		70		99
Income tax expense		2,970		3,334		5,998		7,177
Depreciation and amortization		637		730		1,259		1,475
Amortization of stock-based compensation		385		338		746		730
Earnings before interest, income taxes, depreciation and amortization (EBITDA)	$	8,573	$	9,396	$	17,553	$	20,135

About Almost Family
Almost Family, Inc., founded in 1976, is a leading regional provider of home health nursing and personal care services, with branch locations in Florida, Ohio, Kentucky, Connecticut, New Jersey, Massachusetts, Missouri, Alabama, Illinois, Indiana, and Pennsylvania, (in order of revenue significance). Almost Family, Inc. and its subsidiaries operate a Medicare-certified segment and a personal care segment. Altogether, Almost Family operates over 160 branch locations in 11 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.

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, 2011, in particular information under the headings "Special Caution Regarding Forward-Looking Statements" and "Risk Factors." The Company undertakes no obligation to update or revise its forward-looking statements.

SOURCE Almost Family, Inc.

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