Almost Family Reports First Quarter 2014 Results - 8NEWS - WRIC | News Where You Live

Almost Family Reports First Quarter 2014 Results

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SOURCE Almost Family, Inc.

LOUISVILLE, Ky., May 6, 2014 /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 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."

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, 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, 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, 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, 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, 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%

 

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.

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.

 

Almost Family, Inc.

Steve Guenthner

(502) 891-1000

 

 

 

The Ruth Group

Investor Relations

Nick Laudico

(646) 536-7030

nlaudico@theruthgroup.com

 

 

 

©2012 PR Newswire. All Rights Reserved.

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