Almost Family Reports Third Quarter 2016 Results

LOUISVILLE, Ky., Nov. 01, 2016 (GLOBE NEWSWIRE) -- Almost Family, Inc. (Nasdaq:AFAM), a leading regional provider of home health nursing and personal care services, announced today its financial results for the quarter ended September 30, 2016.

Third Quarter Highlights (1):
  • Record net service revenues of approximately $160.4 million with record revenues in our PC and HCI segments
  • GAAP EPS of $0.52 per diluted share, down $0.27 from a year ago, Adjusted EPS of $0.66, up $0.14 from a year ago
  • GAAP net income of $5.4 million, down $2.4 million from a year ago, Adjusted net income of $6.8 million, up $1.7 million from a year ago
  • Record Adjusted EBITDA of $14.8 million, up 39% from a year ago
  • Healthcare Innovations (HCI) segment recorded Medicare Shared Savings payment success fees from multiple ACOs, while performing over 21,000 in-home assessments and having nearly 122,000 ACO beneficiaries and 15 Accountable Care Organizations under contract
  • Unusually high health insurance claims and a significant rate cut in Connecticut's Medicaid-sponsored behavioral health program reduced diluted EPS by $0.06 and $0.05, respectively
  • A change in the Company's expected effective tax rate recognized in the current quarter increased diluted EPS by $0.02
  • Year to date operating cash flow of $15.3 million
  • On October 14, 2016, we signed a definitive agreement to acquire a controlling interest in the entity holding the home health and hospice assets of Community Health Systems, Inc.

(1) See Non-GAAP Financial Measures starting on page 12

Management Comments William Yarmuth, Chairman and Chief Executive Officer, commented:  "We're very pleased with the progress in our core home health business in the quarter where we continue to generate meaningful organic growth, while also working through the integration of our 2015 and 2016 acquisitions.  In addition, we're especially pleased to report outstanding record results in our healthcare innovations segment which is drawing increased attention as it makes significant strides in its earnings and developments.  At the same time all of this has been accomplished, we also just recently announced entering into the nation's largest public company hospital-home health joint venture, enabling us, in a very strategic way, to continue our strong growth trajectory."

Steve Guenthner, President added:  "Although it was somewhat masked by the acquisitions of certain agencies where we did not acquire accounts receivable, we had especially strong operating cash flows in the third quarter reducing days outstanding to 53, the lowest level in quite some time.  Additionally, we were pleased to see the somewhat favorable final rule for Medicare reimbursement in 2017, continuing the comparatively favorable tone of regulators toward home health."

Yarmuth concluded:  "As we move through the balance of 2016 and into 2017 our key focus will be the successful integration of our new strategic home health partnership with CHS, continuing our work on organic volume growth and improving the financial results of all our business units."

The Company noted that the third quarter typically marks the seasonally low-water point of its home health business in terms of admissions and the high point for HCI results due to the timing of accounting recognition for success fees under the Medicare Shared Savings Program for Accountable Care Organizations. 

Third Quarter Financial ResultsVN segment net revenues increased $10.1 million to $108.4 million from $98.3 million in the prior year and total Medicare admissions grew by 5.3% to 23,030 from 21,876 primarily due to home health agencies acquired in late 2015 and the first half of 2016.  VN segment contribution increased $0.5 million, or 4.5%, to $12.6 million, from $12.1 million in the prior year period.  Contribution margin as a percentage of revenue decreased from 12.3% to 11.6%.  VN results in the current quarter were impacted by unusually high health insurance claims experience of about $1 million which lowered diluted EPS by $0.06.  On a same-store basis, Medicare admissions outside of Florida grew by 3.2%, while Florida was marginally positive.  The Company is continuing its efforts to improve the performance of its Florida business which currently account for approximately one-fourth of VN segment revenues as compared to one-third a year ago and one-half three years ago.

PC segment net revenues increased $10.9 million or 35.2% to a record $41.7 million in 2016 from $30.8 million in 2015 primarily due to acquisitions.  PC segment contribution decreased $0.5 million as compared to the same period of last year, primarily due to a 20% rate cut in the State of Connecticut's Medicaid-sponsored behavioral health program which generated approximately $2.6 million of revenue in the current quarter as compared to $3.3 million in the same quarter last year on similar volumes.  The Company is currently evaluating the on-going viability of this program under current reimbursement and regulations.

Healthcare Innovations (HCI) segment net revenues increased $8.3 million to a record $10.3 million, in 2016 from $2.1 million in 2015.  The Company's ACO-enablement operations recorded shared savings incentive revenue of $4.3 million from multiple ACOs participating in the Medicare Shared Savings Program.  ACOs managed by the Company saved the Medicare program a total of $25 million in the measurement period.  The Company's assessment business acquired in transactions in January 2016 and July 2015 contributed the balance of the revenues.  As a result, operating income for the HCI segment was a record $5.1 million, or $0.15 per share attributable to Almost Family.

Corporate expenses as a percentage of revenue declined to 4.4%, from 4.8% in the prior year period.  Deal, transition and other costs grew to $2.3 million for 2016, primarily as a result of costs related to 2016 and 2015 acquisition, while the prior year included a one-time $4.2 million benefit related to legal settlements.  Borrowings related to acquisitions increased interest expense to $1.4 million, from $0.6 million in the prior year period.

Net cash from operating activities of $4.9 million was generated in the third quarter of 2016.  Home Health accounts receivable days sales outstanding were 53 at the end of the third quarter of 2016 as compared to 58 at the end of the third quarter of 2015.  The Company noted that its late June 2016 acquisition of certain home health agencies from ResCare did not include accounts receivable.  Building normal accounts receivable reduced operating cash flows by about $6 million in the third quarter of 2016.

The effective tax rate for the third quarter of 2016 and 2015 was 37.3% and 21.0%, respectively.  During the quarter, the Company lowered its estimated effective tax rate from 40.5% to 39.5% due to lower permanently non-deductible expenses in relation to taxable income.

Year to Date Financial ResultsVN segment net revenues increased $33.0 million to a record $328.7 million from $295.6 million in the prior year period and total Medicare admissions grew by 2.4% to 70,021 from 68,380 primarily due to home health agencies acquired in late 2015 and 2016.  VN segment contribution increased $5.9 million, or 16.1%, to $42.9 million, from $37.0 million in the same period last year.  Contribution margin as a percentage of revenue increased to 13.1% from 12.5%.  On a same-store basis, Medicare admissions outside of Florida grew organically by 3% while Florida was down 4%.

PC segment net revenues increased $32.0 million or 35.9% to a record $121.1 million in 2016 from $89.1 million in 2015 primarily due to acquisitions.  PC segment contribution decreased 3.2% or $0.3 million due to rate cuts in certain skilled elements of the Connecticut and Ohio Medicaid programs more than offset earnings from acquisitions.

HCI segment net revenues increased $18.0 million to a record $20.3 million, in 2016 from $2.3 million in 2015, as acquired LTS and Ingenios assessment business revenues were $15.4 million with the remainder due to higher shared savings revenue as multiple Imperium served ACOs received Medicare shared savings payments.  LTS was acquired in January 2016 and Ingenios was acquired in July 2015.  The HCI segment contribution thus improved $5.5 million, as the segment was profitable for year to date 2016.

Corporate expenses as a percentage of revenue declined to 4.6%, from 5.2% in the prior year period.  Deal, transition and other costs grew to $7.5 million for 2016, primarily as a result of costs related to 2016 and 2015 acquisitions, while the prior year included a one-time $4.2 million benefit related to legal settlements.  Borrowings related to acquisitions increased interest expense to $4.3 million, from $1.5 million in the same period 2015.

Net cash from operating activities of $15.3 million was generated in 2016, up $2.0 million from the $13.3 million generated in the same period 2015. 

The effective tax rate for 2016 and 2015 was 39.3% and 32.9%, respectively. 

The Company noted that it will continue to pursue quality acquisitions of in-home health care service providers consistent with its stated strategy and the types of services its segments currently provide.

Acquisition of the Home Health and Hospice Assets of Community Health Systems, Inc.On October 14, 2016, the Company signed a definitive agreement to acquire a controlling interest in the entity holding the home health and hospice assets of Community Health Systems, Inc. for $128.0 million, subject to a working capital adjustment. Financing for the transaction has been fully committed by JPMorgan. The transaction is expected to be completed during the fourth quarter, subject to regulatory approvals and the satisfaction of customary closing conditions. The Company expects the transaction will add approximately $200 million in revenue, all of which will be classified in the Company's VN segment. The transaction will expand the Company's geographic service territory to a total of 26 states.

Medicare Program DevelopmentsOn October 31, 2016 the Centers for Medicare and Medicaid Services (CMS) released the final rule for FY2017 home health reimbursement.  The impact table included in the final rule suggests the final rule is slightly more favorable than the preliminary rule published earlier this year.
 
ALMOST FAMILY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(UNAUDITED)
               
  Three months ended   Nine months ended
  September 30, 2016   October 2, 2015   September 30, 2016   October 2, 2015
Net service revenues $ 160,421     $ 131,232     $ 470,114     $ 386,997  
Cost of service revenues (excluding depreciation & amortization)   86,074       69,475       251,998       204,134  
Gross margin   74,347       61,757       218,116       182,863  
General and administrative expenses:              
Salaries and benefits   42,952       36,767       126,134       108,993  
Other   18,167       15,598       56,323       47,772  
Deal and transition costs   2,257       (1,306 )     7,455       (696 )
Total general and administrative expenses   63,376       51,059       189,912       156,069  
Operating income   10,971       10,698       28,204       26,794  
Interest expense, net   (1,399 )     (559 )     (4,335 )     (1,463 )
Income before income taxes   9,572       10,139       23,869       25,331  
Income tax expense   (3,194 )     (2,078 )     (9,120 )     (8,458 )
Net income   6,378       8,061       14,749       16,873  
Net loss - noncontrolling interests   (1,012 )     (262 )     (689 )     330  
Net income attributable to Almost Family, Inc. $ 5,366     $ 7,799     $ 14,060     $ 17,203  
               
Per share amounts-basic:              
Average shares outstanding   10,172       9,604       10,150       9,432  
               
Net income attributable to Almost Family, Inc. $ 0.53     $ 0.81     $ 1.39     $ 1.82  
               
Per share amounts-diluted:              
Average shares outstanding   10,310       9,822       10,328       9,649  
               
Net income attributable to Almost Family, Inc. $ 0.52     $ 0.79     $ 1.36     $ 1.78  
               

ALMOST FAMILY, INC. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
(In thousands)  
   
    September 30, 2016          
    (UNAUDITED)   January 1, 2016  
ASSETS              
CURRENT ASSETS:              
Cash and cash equivalents   $   6,827     $   7,522    
Accounts receivable - net       95,616         92,909    
Prepaid expenses and other current assets       14,090         9,033    
TOTAL CURRENT ASSETS       116,533         109,464    
PROPERTY AND EQUIPMENT - NET       9,753         10,000    
GOODWILL       320,794         277,061    
OTHER INTANGIBLE ASSETS       69,909         64,629    
OTHER ASSETS       4,143         3,615    
TOTAL ASSETS   $   521,132     $   464,769    
               
LIABILITIES AND STOCKHOLDERS' EQUITY              
CURRENT LIABILITIES:              
Accounts payable   $   14,007     $   11,297    
Accrued other liabilities       36,054         40,742    
TOTAL CURRENT LIABILITIES       50,061         52,039    
               
LONG-TERM LIABILITIES:              
Revolving credit facility        133,824          113,790    
Deferred tax liabilities        18,494          13,094    
Seller notes        12,500          6,556    
Other liabilities        6,335          5,390    
TOTAL LONG-TERM LIABILITIES        171,153          138,830    
TOTAL LIABILITIES        221,214          190,869    
               
NONCONTROLLING INTEREST - REDEEMABLE -              
HEALTHCARE INNOVATIONS        2,256          3,639    
               
STOCKHOLDERS' EQUITY:              
Preferred stock, par value $0.05; authorized 2,000 shares; none issued or outstanding                  
Common stock, par value $0.10; authorized 25,000; 10,489 and 10,125 issued and outstanding        1,050          1,013    
Treasury stock, at cost, 116 and 103 shares        (3,214 )        (2,731 )  
Additional paid-in capital        140,351          127,253    
Noncontrolling interest - nonredeemable        (766 )        (730 )  
Retained earnings        160,241          145,456    
TOTAL STOCKHOLDERS' EQUITY        297,662          270,261    
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $    521,132     $    464,769    
                       

ALMOST FAMILY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
 
  Nine Months Ended
  September 30, 2016   October 2, 2015
Cash flows of operating activities:      
Net income $ 14,749     $ 16,873  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization    3,020        2,625  
Provision for uncollectible accounts    10,626        9,322  
Stock-based compensation    2,013        1,455  
Deferred income taxes    6,081        3,108  
     36,489        33,383  
Change in certain net assets and liabilities, net of the effects of acquisitions:      
Accounts receivable    (12,831 )      (13,444 )
Prepaid expenses and other current assets    (4,451 )      (4,038 )
Other assets    (620 )      (46 )
Accounts payable and accrued expenses    (3,302 )      (2,535 )
Net cash provided by operating activities    15,285        13,320  
       
Cash flows of investing activities:      
Capital expenditures    (4,364 )      (1,753 )
Cost basis investment    -        (1,000 )
Acquisitions, net of cash acquired    (31,256 )      (55,701 )
Net cash used in investing activities    (35,620 )      (58,454 )
       
Cash flows of financing activities:      
Credit facility borrowings    215,430        163,904  
Credit facility repayments    (195,396 )      (118,053 )
Debt issuance fees    (102 )      (1,161 )
Proceeds from stock option exercises    (9 )      141  
Purchase of common stock in connection with share awards    (484 )      (338 )
Tax impact of share awards    257        227  
Payment of special dividend in connection with share awards    -        (50 )
Principal payments on notes payable and capital leases    (56 )      (54 )
Net cash provided by financing activities    19,640        44,616  
       
Net change in cash and cash equivalents    (695 )      (518 )
Cash and cash equivalents at beginning of period    7,522        6,886  
Cash and cash equivalents at end of period $ 6,827     $ 6,368  
       

ALMOST FAMILY, INC. AND SUBSIDIARIES  
RESULTS OF OPERATIONS  
(UNAUDITED)  
(In thousands)  
   
    Three Months Ended            
    September 30, 2016   October 2, 2015   Change  
    Amount   % Rev   Amount   % Rev   Amount   %  
Home Health Operations                                
Net service revenues:                                
Visiting Nurse   $    108,425       72.2 %   $    98,344       76.1 %   $   10,081       10.3 %  
Personal Care        41,688       27.8 %        30,837       23.9 %       10,851       35.2 %  
         150,113       100.0 %        129,181       100.0 %       20,932       16.2 %  
Operating income before corporate expenses:                                
Visiting Nurse        12,618       11.6 %        12,074       12.3 %       544       4.5 %  
Personal Care        2,540       6.1 %        3,067       9.9 %       (527 )     -17.2 %  
         15,158       10.1 %        15,141       11.7 %       17       0.1 %  
Healthcare Innovations Operations                                
Revenue        10,308       100.0 %        2,051       100.0 %       8,257       402.6 %  
Operating income        5,051       49.0 %        485       23.6 %       4,566       941.4 %  
                                 
Corporate expenses        6,981       4.4 %        6,234       4.8 %       747       12.0 %  
Deal, transition and other costs        2,257       1.4 %       (1,306 )     -1.0 %       3,563       -272.8 %  
Operating income        10,971       6.8 %        10,698       8.2 %       273       2.6 %  
Interest expense, net        (1,399 )     -0.9 %        (559 )     -0.4 %       (840 )     150.3 %  
Income tax expense        (3,194 )     -2.0 %        (2,078 )     -1.6 %       (1,116 )     53.7 %  
Net income   $    6,378       4.0 %   $    8,061       6.1 %   $    (1,683 )     -20.9 %  
                                 
Adjusted EBITDA (1)   $    14,804       9.2 %   $    10,623       8.1 %   $    4,181       39.4 %  
Adjusted net income (1)   $    7,793       4.9 %   $    5,361       4.1 %   $    2,432       45.4 %  

(1) See Non-GAAP Financial Measures starting on page 12.
                                 
    Nine Months Ended            
    September 30, 2016   October 2, 2015   Change  
    Amount   % Rev   Amount   % Rev   Amount   %  
Home Health Operations                                
Net service revenues:                                
Visiting Nurse   $    328,697       73.1 %   $    295,627       76.8 %   $   33,070       11.2 %  
Personal Care        121,074       26.9 %        89,086       23.2 %       31,988       35.9 %  
         449,771       100.0 %        384,713       100.0 %       65,058       16.9 %  
Operating income before corporate expenses:                                
Visiting Nurse        42,905       13.1 %        36,956       12.5 %       5,949       16.1 %  
Personal Care        9,273       7.7 %        9,580       10.8 %       (307 )     -3.2 %  
         52,178       11.6 %        46,536       12.1 %       5,642       12.1 %  
Healthcare Innovations Operations                                
Revenue        20,343       100.0 %        2,284       100.0 %       18,059       790.7 %  
Operating income (loss)        5,098       25.1 %        (434 )     -19.0 %       5,532       NM    
                                 
Corporate expenses        21,617       4.6 %        20,004       5.2 %       1,613       8.1 %  
Deal, transition and other costs        7,455       1.6 %        (696 )     -0.2 %       8,151       -1171.1 %  
Operating income        28,204       6.0 %        26,794       6.9 %       1,410       5.3 %  
Interest expense, net        (4,335 )     -0.9 %        (1,463 )     -0.4 %       (2,872 )     196.3 %  
Income tax expense        (9,120 )     -1.9 %        (8,458 )     -2.2 %       (662 )     7.8 %  
Net income   $    14,749       3.1 %   $    16,873       4.4 %   $   (2,124 )     -12.6 %  
                                 
Adjusted EBITDA (1)   $    40,486       8.6 %   $    29,962       7.7 %   $    10,524       35.1 %  
Adjusted net income (1)   $    19,259       4.1 %   $    14,536       3.8 %   $    4,723       32.5 %  

(1) See Non-GAAP Financial Measures starting on page 12.
   
   
VISITING NURSE SEGMENT OPERATING METRICS  
   
    Three Months Ended            
    September 30, 2016   October 2, 2015   Change  
    Amount   %   Amount   %   Amount   %  
Average number of locations        169              164              5       3.0 %  
                                 
All payors:                                
Patient months        88,396              80,940              7,456       9.2 %  
Admissions        25,788              24,759              1,029       4.2 %  
Billable visits        711,998              645,589              66,409       10.3 %  
                                 
Medicare:                                
Admissions        23,030       89 %        21,876       88 %        1,154       5.3 %  
Revenue (in thousands)   $    101,383       94 %   $    92,033       94 %   $    9,350       10.2 %  
Revenue per admission   $    4,402         $    4,207         $    195       4.6 %  
Billable visits        630,089       88 %        580,709       90 %        49,380       8.5 %  
Recertifications        12,639              11,966              673       5.6 %  
Payor mix % of Admissions                                
Traditional Medicare Episodic       84.0 %           84.6 %           -0.6 %      
 Replacement Plans Paid Episodically       5.9 %           4.1 %           1.8 %      
 Replacement Plans Paid Per Visit       10.1 %           11.3 %           -1.2 %      
                                 
Non-Medicare:                                
Admissions        2,758       11 %        2,883       12 %     $ (125 )     -4.3 %  
Revenue (in thousands)   $    7,042       6 %   $    6,311       6 %   $    731       11.6 %  
Revenue per admission   $    2,553         $    2,189         $    364       16.6 %  
Billable visits        81,909       12 %        64,880       10 %        17,029       26.2 %  
Recertifications        1,233              774              459       59.3 %  
Payor mix % of Admissions                                
Medicaid & other governmental       25.9 %           30.6 %           -4.7 %      
Private payors       74.1 %           69.4 %           4.7 %      
                                             

PERSONAL CARE SEGMENT OPERATING METRICS  
   
    Three Months Ended            
    September 30, 2016   October 2, 2015   Change  
    Amount       Amount       Amount   %  
Average number of locations      80          66            14       21.2 %  
                                 
Admissions      2,638          1,725            913       52.9 %  
Patient months of care      43,562          25,419            18,143       71.4 %  
Billable hours      1,919,931          1,384,466            535,465       38.7 %  
Revenue per billable hour   $  21.71       $  22.27       $    (0.56 )     -2.5 %  

                                 
VISITING NURSE SEGMENT OPERATING METRICS  
                                 
    Nine Months Ended            
    September 30, 2016   October 2, 2015   Change  
    Amount   %   Amount   %   Amount   %  
Average number of locations        165              162             3       1.9 %  
                                 
All payors:                                
Patient months        270,880              242,989              27,891       11.5 %  
Admissions        81,574              75,958              5,616       7.4 %  
Billable visits        2,174,980              1,926,660              248,320       12.9 %  
                                 
Medicare:                                
Admissions        70,021       86 %        68,380       90 %        1,641       2.4 %  
Revenue (in thousands)   $    308,055       94 %   $    280,827       95 %   $    27,228       9.7 %  
Revenue per admission   $    4,399         $    4,107         $   293       7.1 %  
Billable visits        1,921,796       88 %        1,745,856       91 %        175,940       10.1 %  
Recertifications        37,777              35,473              2,304       6.5 %  
Payor mix % of Admissions                                
Traditional Medicare Episodic       82.5 %           83.9 %           -1.4 %      
 Replacement Plans Paid Episodically       5.2 %           4.0 %           1.2 %      
 Replacement Plans Paid Per Visit       12.3 %           12.1 %           0.2 %      
                                 
Non-Medicare:                                
Admissions        11,553       14 %        7,578       10 %        3,975       52.5 %  
Revenue (in thousands)   $    20,642       6 %   $    14,800       5 %   $    5,842       39.5 %  
Revenue per admission   $    1,787         $    1,953         $    (166 )     -8.5 %  
Billable visits        253,184       12 %        180,804       9 %        72,380       40.0 %  
Recertifications        3,517              1,485              2,032       136.8 %  
Payor mix % of Admissions                                
Medicaid & other governmental       41.1 %           32.4 %           8.7 %      
Private payors       58.9 %           67.6 %           -8.7 %      
                                             

PERSONAL CARE OPERATING METRICS  
                                 
    Nine Months Ended            
    September 30, 2016   October 2, 2015   Change  
    Amount       Amount       Amount   %  
Average number of locations      74          64            10       15.6 %  
                                 
Admissions      7,675          4,803            2,872       59.8 %  
Patient months of care      122,380          71,907            50,473       70.2 %  
Billable hours      5,575,254          3,989,328            1,585,926       39.8 %  
Revenue per billable hour   $ 21.72       $ 22.33       $   (0.61 )     -2.8 %  
                                         

HEALTHCARE INNOVATIONS SUPPLEMENTAL DATA  
   
    Three Months Ended            
    September 30, 2016   October 2, 2015     Change  
    Amount   Amount     Amount   %  
In-home Assessments     21,019     1,962       19,057       NM    
                         
Medicare ACO enrollees under management     121,881     83,133       38,748       46.6 %  
ACOs under contract     15     11       4       36.4 %  
Assets   $ 64,556     11,070   $   53,486       NM    
Liabilities   $ 23,118     1,124   $   21,994       NM    
Non-controlling interest - redeemable   $ 2,256     3,639   $   (1,383 )     -38.0 %  
Non-controlling interest - nonredeemable   $ 1,060     417   $   643       154.2 %  

                         
    Nine Months Ended            
    September 30, 2016   October 2, 2015     Change  
    Amount   Amount     Amount   %  
In-home Assessments      79,017      1,962      77,055     NM    
                         
Medicare enrollees under management      121,881      83,133      38,748     46.6 %  
ACOs under contract      15      11      4     36.4 %  
                             

Non-GAAP Financial MeasuresThe information provided in some of the tables in this release includes certain non-GAAP financial measures as defined under SEC rules.  In accordance with SEC rules, the Company has provided, in the supplemental information, a reconciliation of those measures to the most directly comparable GAAP measures.

Adjusted Net Income and Adjusted Earnings Per Share Adjusted net income and adjusted earnings per share is not a measure of financial performance under accounting principles generally accepted in the United States of America.  It should not be considered in isolation or as a substitute for net income, operating income, cash flows from operating, investing or financing activities, or any other measure calculated in accordance with generally accepted accounting principles. The presentation of adjusted net income and adjusted earnings per share provides investors with pertinent information to enable comparison of financial performance between periods by excluding certain items that the Company believes are not representative of its ongoing operations due to the nature of the items. 

The following tables set forth a reconciliation of net income attributable to Almost Family, Inc. to adjusted net income:  
   
ALMOST FAMILY, INC. AND SUBSIDIARIES  
RECONCILIATION OF ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE  
(In thousands)  
   
    Three Months Ended   Nine Months Ended  
(in thousands)   September 30, 2016   October 2, 2015   September 30, 2016   October 2, 2015  
Net income   $    6,378     $    8,061     $    14,749     $    16,873    
                           
Addbacks:                          
Deal, transition and other, net of tax        1,415          (2,700 )        4,510          (2,337 )  
Adjusted net income        7,793          5,361          19,259          14,536    
Non-controlling interest        (1,012 )        (262 )        (689 )        330    
Adjusted net income attributable to Almost Family, Inc.   $    6,781     $    5,099        18,570     $    14,866    
                           
Per share amounts-diluted:                          
Average shares outstanding        10,310          9,822          10,328          9,649    
                           
Net income   $    0.62     $    0.82     $    1.43     $    1.75    
                           
Addbacks:                          
Deal, transition and other, net of tax        0.14          (0.27        0.44          (0.24 )  
Adjusted earnings per share        0.76          0.55          1.86          1.51    
Non-controlling interest        (0.10 )        (0.03 )        (0.07 )        0.03    
Adjusted net income attributable to Almost Family, Inc.   $    0.66     $    0.52     $    1.80     $    1.54    
                           

Adjusted EBITDA Adjusted earnings before interest, income tax, depreciation and amortization, amortization of stock-based compensation, deal, transition and other (Adjusted EBTIDA) is not a measure of financial performance under accounting principles generally accepted in the United States of America.  It should not be considered in isolation or as a substitute for net income, operating income, cash flows from operating, investing or financing activities, or any other measure calculated in accordance with generally accepted accounting principles.  The items excluded from Adjusted EBITDA Operations are significant components in understanding and evaluating financial performance and liquidity.  Management routinely calculates and communicates Adjusted EBITDA Operations and believes that it is useful to investors because it provides a common analytical indicator within our industry to evaluate performance, measure leverage capacity and debt service ability, and to estimate current or prospective enterprise value.  Adjusted EBITDA is also used in certain covenants contained in our credit agreement.

The following tables set forth a reconciliation of net income from continuing operations to Adjusted EBITDA from Home Health Operations:  
   
ALMOST FAMILY, INC. AND SUBSIDIARIES  
RECONCILIATION OF ADJUSTED EBITDA  
(In thousands)  
   
    Three Months Ended   Nine Months Ended  
(in thousands)   September 30, 2016   October 2, 2015   September 30, 2016     October 2, 2015  
Net income   $  6,378   $    8,061     $  14,749     $    16,873    
Add back:                            
Interest expense      1,399        559        4,335          1,463    
Income tax expense      3,194        2,078        9,120          8,458    
Depreciation and amortization      964        781        2,814          2,409    
Stock-based compensation      612        450        2,013          1,455    
Deal and transition costs      2,257        (1,306 )      7,455          (696 )  
Adjusted EBITDA   $  14,804   $    10,623     $  40,486     $    29,962    
                             

About Almost Family, Inc. Almost Family, Inc., founded in 1976, is a leading regional provider of home health nursing services, with branch locations in Florida, Ohio, Tennessee, New York, Connecticut, Kentucky, New Jersey, Massachusetts, Pennsylvania, Georgia, Wisconsin, Indiana, Missouri, Illinois, Mississippi and Alabama (in order of revenue significance and prior to the acquisition of Community Health Systems, Inc. home health and hospice operations).  Almost Family, Inc. and its subsidiaries operate a Medicare-certified segment, a personal care segment and a healthcare innovations segment.  Almost Family operates over 250 branch locations in sixteen U.S. states.

Forward Looking StatementsAll statements, other than statements of historical facts, included in this news release are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements may be identified by the use of forward-looking terminology such as "may," "will," "expect," "believe," "estimate," "project," "anticipate," "continue," or similar terms, variations of those terms or the negative of those terms.  These forward-looking statements are based on the Company's current plans, expectations and projections about future events.  Statements about the Company's or CHS Home Health's past financial results do not, and are not meant to, predict future results.  The Company can provide no assurance that such results and performance will continue.

Because forward-looking statements involve risks and uncertainties, the Company's actual results could differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. The potential risks and uncertainties which could cause actual results to differ materially include: the satisfaction of the conditions precedent to the consummation of the proposed transaction, including, without limitation, the receipt of regulatory approvals or third party consents on the terms desired or anticipated; the Company's ability to obtain financing on the anticipated terms and schedule; disruptions of the Company's and CHS Home Health's current plans, operations and relationships caused by the announcement and pendency of the proposed transaction; the impact of further changes in healthcare reimbursement systems, including the ultimate outcome of potential changes to Medicare reimbursement for home health services and to Medicaid reimbursement due to state budget shortfalls; the ability of the Company to maintain its level of operating performance and achieve its cost control objectives; changes in our relationships with referral sources; unanticipated difficulties or expenditures relating to the proposed transaction, including, without limitation, difficulties that result in the failure to achieve expected synergies, efficiencies and cost savings from the proposed transaction within the expected time period (if at all); government regulation; health care reform; pricing pressures from Medicare, Medicaid and other third-party payers; changes in laws and interpretations of laws relating to the healthcare industry; the ability of the Company to integrate, manage and keep secure our information systems; changes in the marketplace and regulatory environment for Health Risk Assessments and the Company's self-insurance risks.  For a more complete discussion regarding these and other factors which could affect the Company's financial performance, refer to the Company's various filings with the Securities and Exchange Commission, including its filing on Form 10-K for the fiscal year ended January 1, 2016, in particular information under the headings "Special Caution Regarding Forward-Looking Statements" and "Risk Factors."  With regard to the Company's investment in development-stage enterprises in its Healthcare Innovations segment, there can be no assurance that its operational and developmental objectives will be realized or that the Company's investments will result in future returns.  The Company undertakes no obligation to update or revise its forward-looking statements.
Almost Family, Inc.Steve Guenthner(502) 891-1000

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