Almost Family Reports Second Quarter and Year to Date 2017 Results

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GlobeNewswire 8-Aug-2017 4:05 PM
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LOUISVILLE, Ky., Aug. 08, 2017 (GLOBE NEWSWIRE) -- Almost Family, Inc. (NASDAQ:AFAM), a leading national provider of home health and related services, announced today its financial results for the quarter ended June 30, 2017.
Second Quarter Highlights (1):
Net service revenues of approximately $200.7 million including the second quarter of operations of the CHS-JV (see below), up 28.7% from the second quarter of 2016
GAAP net income of $4.8 million
GAAP EPS of $0.34(2) per diluted shareon 33% more shares outstanding than in the prior year
Adjusted net income of $7.8(1) million
Adjusted EPS of $0.56(1, 2); excluding the effect of the January 2017 equity sale, Adjusted EPS would have been $0.75(1, 2)
Adjusted EBITDA of $17.8(1) million
Year to date operating cash flows of $11.8 million
As of August 8, 2017, the Company has converted 71 of 110 home health branches to the new HomeCare-HomeBase information system and expects to convertthe remaining branches as planned before the end of 2017
In July of 2017, the Company'sCHS-JV purchased the assets of a Medicare-certified home health agency and related private duty company from Island Home Care in Key West, Florida marking our first co-investment with CHS since the formation of the JV.
CMS has announced a possible delay in ACO shared savings payments for Performance Year 2016 to fourth quarter 2017

(1) See Non-GAAP Financial Measures below(2) Note that comparability of EPS between years is partially impacted by changes in shares outstanding as explained further below
Management Comments William Yarmuth, Chairman and CEO, commented: We continue to be very pleased with the results of our operations. Additionally, our transition work with the CHS-JV is proceeding on schedule and we are progressing nicely through our HomeCare HomeBase implementation. In July, we made the first of what we hope will be many co-investments with CHS with the addition of an affiliated home health agency to a CHS hospital that did not previously have one. On the regulatory front, we note that the FY2018 preliminary rule from Medicare is relatively close to expectations. We are carefully studying the proposed Home Health Groupings Model for FY2019 and preparing our commentary for submission to CMS within the regulatory window.
Steve Guenthner, President added: With regard to the proposed rule, we feel very strongly CMS has an obligation to implement the HHGM in a budget neutral manner consistent with CMS historical practices in rule making and with its statutory grant of authority from Congress. To do otherwise may put vulnerable patient populations at risk and most certainly will drive unnecessary opposition to what is otherwise directionally a positive policy development. Having said that, we feel CMS issignaling a new era in provider-industry collaboration, and we in the home health industry have an obligation to work reciprocally with CMS to further refine the model prior to its implementation. Were pleased that many of the design principles of this new case mix model are consistent with an increased focus on chronically ill populations which is an approach we have long championed. We very much appreciate the inclusive process and early announcement of the model by CMS last year and its inclusion in the current rule, some 18 months before possible implementation.
Yarmuth concluded: In the second half of FY2017, we willcomplete our CHS-JV integration and our HCHB implementation work. This will allow us to shift our attention to be more fully focused on improving our organic growth and earnings in 2018. I want to sincerely thank all our employees and managers for their hard work and the fine job they have been doing on both of these very important initiatives. In addition, we are continuing our development activities to pursue further consolidation in the home health space with a number of good opportunities before us to maintain our growth trajectory.
Second Quarter Financial Results (See Matters Impacting Comparability and Presentation below)
Home Health (HH) segment net revenues increased by 35% or $38.0 million to $148.4 million from $110.3 million in the prior year and episodic admissions grew by 42.2% to 29,761 from 20,932 primarily due to the CHS-JV acquisition. Net revenue and episodic admissions in the CHS-JV were $41.9 million and 8,211, respectively. Excluding the CHS-JV, episodic admissions grew by approximately 3.0%, including growth in Florida of 2.8%. The Company expects to discontinue separate reporting of Florida admission growth in future periods.
Home Health segment contribution before corporate expenses increased $4.9 million, or 32.4%, to $20.2 million, from $15.3 million in the prior year period. Home Health contribution margins as a percentage of revenue decreased slightly to 13.6% from 13.8%, primarily due to the combined effect of a 1% Medicare rate cut and an annual cost of living wage rate adjustment of 2% both effective January 1, 2017.
Other Home-Based Services (OHBS) segment net revenues increased $6.5 million or 16.3% to $46.5 million in 2017 from $40.0 million, primarily as a result of the 15 hospice facilities acquired in the CHS-JV transaction. Hospice revenues were $7.3 million for the quarter. Personal care revenues were down $0.4 million or 1.1% from prior year on lower volumes. Additionally, mix changes combined with rate cuts and increases in wages influenced by increases in statutory minimum wage rates in certain states negatively impacted personal care margins. Overall OHBS segment contribution before corporate expenses increased $1.0 million, or 32.8% to $4.1 million from $3.1 million for the same period last year.
Healthcare Innovations (HCI) segment net revenues increased $0.2 million to $5.8 million from $5.6 million, while operating income before corporate expenses declined to $0.3 million from $0.7 million in 2016, largely due to changes in mix of assessments performed by our assessment business.
Corporate expenses as a percentage of revenue increased to 4.7% from 4.5%, primarily due to the current period including a management incentive provision. Deal, transition and other costs were $5.4 million, primarily due to the ongoing conversion of the HH segment to the HomeCare-HomeBase information system and transition costs for the CHS-JV acquisition. The HomeCare-HomeBase system conversion, implementation, training and related costs are expected to continue through the end of 2017.
The effective tax rates for the second quarter of 2017 and 2016 were 36.5% and 40.5%, respectively. The Companys lower effective income tax rate for the second quarter 2017 was due to the favorable impact of excess tax benefits from the exercise of stock options during the period.
Increased average shares outstanding from the Companys late January sale of common shares reduced Adjusted EPS of $0.56 for the second quarter of 2017 by $0.19. The second quarter is fully reflective of the dilutive effect of this offering.
Year to Date Financial Results (See Matters Impacting Comparability and Presentation below)
Home Health segment net revenues increased by $79.8 million or 36% to $299.5 million from $219.8 million in the prior year and episodic admissions grew by 43.5% to 61,051 from 42,544 in 2016, primarily due to the CHS-JV acquisition. Net revenue and episodic admissions in the CHS-JV were $84.8 million and 16,942, respectively. Excluding the CHS-JV, episodic admissions grew by approximately 3.7%, including growth in Florida of 2.6%.
Home Health segment contribution before corporate expenses increased $9.8 million, or 32.3%, to $40.1 million, from $30.3 million in the prior year period. Home Health contribution margins as a percentage of revenue decreased slightly to 13.4% from 13.8%, primarily due to the combined effect of a 1% Medicare rate cut and an annual cost of living wage rate adjustment of 2% both effective January 1, 2017.
Other Home-Based Services (OHBS) segment net revenues increased $12.2 million or 15.3% to a $92.1 million from $79.9 million primarily as a result of the 15 hospice facilities acquired in the CHS-JV transaction. Hospice revenues were $14.3 million. Personal care revenues were down $1.6 million or 2.0% from prior year on lower volumes. Additionally, mix changes combined with rate cuts and increases in wages influenced by increases in statutory minimum wage rates in certain states negatively impacted personal care margins. Overall OHBS segment contribution before corporate expenses increased $1.1 million as compared to the same period of last year.
Healthcare Innovations (HCI) segment net revenues increased $0.4 million to $10.4 million from $10.0 million, while operating (loss) income before corporate expenses was essentially break even in both periods.
Corporate expenses as a percentage of revenue decreased to 4.6% from 4.7% in the prior year period primarily due to a larger base of business. The first half of 2017 includes a provision for management incentives, while the first half of 2016 had no such provision. Deal, transition and other costs were $12.7 million, due to the CHS-JV acquisition and the conversion of the HH segment to the HomeCare-HomeBase information system. Borrowings related to acquisitions increased interest expense to $3.5 million from $2.9 million in the prior year period.
Net cash from operating activities of $11.8 million was generated in the first half of 2017. Accounts receivable days sales outstanding were 57 at the end of the second quarter of 2017, as compared to 56 days last year and 53 days at the end of the fourth quarter of 2016. Variations in days outstanding are largely attributable to delayed regulatory processing from asset acquisitions.
The effective tax rates for 2017 and 2016 were 29.5% and 40.5%, respectively. The Companys lower effective income tax rate in 2017 was due to a change in accounting rules for excess tax benefits from the exercise of stock options and vesting of restricted shares as a result of the prospective adoption of Accounting Standards Update 2016-09 as of the first day of fiscal 2017. Under previous accounting rules these benefits were recorded in additional paid-in capital rather than in the current period tax provision. Future periods with option exercises or restricted stock vesting could lower or raise the Companys tax provision in those periods. Excluding these items, the Company expects its effective tax rate for 2017 to be 39.5%.
Increased average shares outstanding from the Companys late January sale of common shares reduced Adjusted EPS of $1.11 for 2017 by $0.32.
Acquisitions
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.
Medicare Program Developments
On July 25, 2017, the Centers for Medicare and Medicaid Services (CMS) issued its proposed rule for 2018. CMS is proposing a 0.4% rate cut consisting of a 1.0% market basket update, a 0.97% case mix adjustment and sunset of the rural add-on provision. The proposed rule, which also proposes certain refinements to the Home Health Value-based Purchasing Model plus a new Home Health Groupings Model (HHGM Case Mix Model) for 2019, is currently open for comment. The final rule is expected to be released in late October 2017. With regard to the HHGM Case Mix Model, as proposed it would also be subject to regulatory review through the 2019 preliminary and final rule process and thus can reasonably be expected to change from its current form prior to actual implementation.
Due to the complexity, early stage of development and announcement and subjectivity to future change of the FY2019 HHGM, the Company is unable to predict at this time the impact such a proposal, if enacted, and in what form enacted, may have on the Companys future financial performance and condition. A series of responses to various stakeholder requests from the Senate Finance Committee, the House Ways and Means Committee and CMS dating to 2013 and including AFAM executive testimony before the Congress can be found at almostfamily.com. Many of the concepts and goals the Company has long championedin its position papers can be found in the HHGM design.
CMSDelay in ACO Medicare Shared Savings Program Success Fees
With regard to the timing of PY2016 ACO shared savings payments, if any, which the Company has historically reported in its third quarter earnings report, CMS recently announced: A delay in availability of 2016 final risk scores will postpone the delivery of Performance Year (PY) 2016 financial reconciliation results and final benchmark reports for PY2017. As a result of this CMS delay, the Company is unable to determine whether it will report its annual shared savings revenue for PY2016 in the third quarter of 2017 or whether the delay will result in later reporting of that revenue. Under the circumstances, and until further information is received from CMS, the Company advises investors and analysts to expect the results of its participation in the shared savings program to be reported in itsfourth quarter 2017 results.
Matters Impacting Comparability and Presentation CHS-JV and Segment Presentation
On the first day of fiscal 2017, the Company acquired an 80% controlling interest in the entity holding the home health and hospice assets of Community Health Systems, Inc. (NYSE: CYH) (CHS-JV). Community Health Systems, Inc. ("CHS"), one of the largest publicly-traded hospital companies in the United States and a leading operator of general acute care hospitals in communities across the country, retained the remaining 20%.
In the first quarter in 2017, the Company redefined its reporting segments to include a) Home Health (HH) formerly Visiting Nurse, b) Other Home-Based Services (OHBS) which includes all other home care services outside of Home Health services and c) the Healthcare Innovations (HCI) segment. The OHBS segment consists of the historical personal care (personal care) operations plus hospice services. Prior year segment information has been reclassified to conform to new segment definitions. In managements opinion, this approach provides investors clarity for the largest segment, Home Health, and best aligns with the Companys internal decision-making processes as viewed by the chief operating decision maker.
Financing Activities
On January 25, 2017, the Company completed a public offering of 3.5 million shares of its common stock for gross proceeds in excess of $150 million. The net proceeds of $144 million were applied to the Companys revolving credit facility, which increased credit available under the Facility from approximately $78.6 million at December 30, 2016 to approximately $204.1million after the offering.
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ALMOST FAMILY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)

Quarter ended Six months ended
June30,2017 July1,2016 June30,2017 July1,2016
Net service revenues $ 200,733 $ 155,996 $ 402,045 $ 309,694
Cost of service revenues (excluding depreciation & amortization) 104,052 83,692 210,320 165,924
Gross margin 96,681 72,304 191,725 143,770
General and administrative expenses:
Salaries and benefits 56,870 41,502 112,903 83,182
Other 24,556 18,715 49,272 38,156
Deal, transition & other costs 5,424 2,589 12,655 5,198
Total general and administrative expenses 86,850 62,806 174,830 126,536
Operating income 9,831 9,498 16,895 17,234
Interest expense, net 1,579 1,604 3,475 2,936
Income before noncontrolling interests and income taxes 8,252 7,894 13,420 14,298
Net income (loss) - noncontrolling interests 725 (133 ) 1,485 (323 )
Income before income tax expense 7,527 8,027 11,935 14,621
Income tax expense 2,751 3,250 3,525 5,927
Net income attributable to Almost Family, Inc. $ 4,776 $ 4,777 $ 8,410 $ 8,694

Per share amounts-basic:
Average shares outstanding 13,717 10,158 13,212 10,125

Net income attributable to Almost Family, Inc. $ 0.35 $ 0.47 $ 0.64 $ 0.86

Per share amounts-diluted:
Average shares outstanding 13,954 10,322 13,449 10,311

Net income attributable to Almost Family, Inc. $ 0.34 $ 0.46 $ 0.63 $ 0.84


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

(Unaudited)
June30,2017 December30, 2016
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 21,541 $ 10,110
Accounts receivable - net 125,984 99,212
Prepaid expenses and other current assets 13,443 11,432
TOTAL CURRENT ASSETS 160,968 120,754
PROPERTY AND EQUIPMENT - NET 19,441 10,732
GOODWILL 389,258 305,476
OTHER INTANGIBLE ASSETS - NET 146,736 85,063
TRANSACTION DEPOSIT 128,930
OTHER ASSETS 8,195 7,757
TOTAL ASSETS $ 724,598 $ 658,712

LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES:
Accounts payable $ 16,453 $ 12,122
Accrued other liabilities 50,612 39,728
TOTAL CURRENT LIABILITIES 67,065 51,850

LONG-TERM LIABILITIES:
Revolving credit facility 122,677 262,456
Deferred tax liabilities 24,970 21,145
Seller notes 12,461 12,500
Other liabilities 7,100 6,581
TOTAL LONG-TERM LIABILITIES 167,208 302,682
TOTAL LIABILITIES 234,273 354,532

NONCONTROLLING INTEREST - REDEEMABLE -
HEALTHCARE INNOVATIONS 2,256 2,256

STOCKHOLDERS EQUITY:
Preferred stock, par value $0.05; authorized 2,000 shares; none issued or outstanding
Common stock, par value $0.10; authorized 25,000; 14,133 and 10,504 issued and outstanding 1,413 1,051
Treasury stock, at cost, 169 and 117 shares (5,825 ) (3,258 )
Additional paid-in capital 287,649 141,233
Retained earnings 171,900 163,763
Almost Family, Inc. stockholders' equity 455,137 302,789
Noncontrolling interests - nonredeemable 32,932 (865 )
TOTAL STOCKHOLDERS EQUITY 488,069 301,924
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 724,598 $ 658,712
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ALMOST FAMILY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)

Six months ended
June30,2017 July1,2016
Cash flows from operating activities:
Net income attributable to Almost Family, Inc. $ 8,410 $ 8,694
Net income (loss) attributable to noncontrolling interests 1,485 (323 )
Income before non-controlling interests 9,895 8,371
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 3,193 1,848
Provision for uncollectible accounts 7,442 7,859
Stock-based compensation 1,414 1,402
Loan costs amortization 473 136
Deferred income taxes 3,825 4,236
26,242 23,852
Change in certain net assets and liabilities, net of the effects of acquisitions:
Accounts receivable (13,194 ) (10,081 )
Prepaid expenses and other current assets (1,363 ) (511 )
Other assets (900 ) (492 )
Accounts payable and accrued expenses 975 (2,363 )
Net cash provided by operating activities 11,760 10,405

Cash flows of investing activities:
Capital expenditures (3,117 ) (2,275 )
Transaction deposit 128,930 -
Acquisitions, net of cash acquired (129,164 ) (30,754 )
Net cash used in investing activities (3,351 ) (33,029 )

Cash flows of financing activities:
Credit facility borrowings 143,917 145,538
Credit facility repayments, net (283,697 ) (124,153 )
Debt issuance fees 46 (102 )
Proceeds from stock offering, net 143,907 -
Proceeds from stock option exercises 1,455 16
Purchase of common stock in connection with share awards (2,567 ) (484 )
Tax impact of share awards - 256
Principal payments on notes payable and capital leases (39 ) (55 )
Net cash provided by financing activities 3,022 21,016

Net change in cash and cash equivalents 11,431 (1,608 )
Cash and cash equivalents at beginning of period 10,110 7,522
Cash and cash equivalents at end of period $ 21,541 $ 5,914

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

Quarter ended
June30,2017 July1,2016 Change
Amount % Rev Amount % Rev Amount %
Net service revenues:
Home Health $ 148,373 73.9 % $ 110,340 70.7 % $ 38,033 34.5 %
Other Home-Based Services 46,519 23.2 % 40,012 25.6 % 6,507 16.3 %
Healthcare Innovations 5,841 2.9 % 5,644 3.6 % 197 3.5 %
200,733 100.0 % 155,996 100.0 % 44,737 28.7 %
Operating income before corporate expenses:
Home Health 20,213 13.6 % 15,267 13.8 % 4,946 32.4 %
Other Home-Based Services 4,051 8.7 % 3,051 7.6 % 1,000 32.8 %
Healthcare Innovations 327 5.6 % 720 12.8 % (393 ) (54.6 ) %
24,591 12.3 % 19,038 12.2 % 5,553 29.2 %

Corporate expenses 9,336 4.7 % 6,951 4.5 % 2,385 34.3 %
Deal, transition and other costs 5,424 2.7 % 2,589 1.7 % 2,835 109.5 %
Operating income 9,831 4.9 % 9,498 6.1 % 333 3.5 %
Interest expense, net 1,579 0.8 % 1,604 1.0 % (25 ) (1.6 ) %
Net income (loss) - noncontrolling interests 725 0.4 % (133 ) (0.1 ) % 858 NM
Net income before income taxes 7,527 3.7 % 8,027 5.1 % $ (500 ) (6.2 ) %
Income tax expense 2,751 1.4 % 3,250 2.1 % (499 ) (15.4 ) %
Net income attributable to Almost Family, Inc. $ 4,776 2.4 % $ 4,777 3.1 % $ (1 ) (0.0 ) %


Adjusted EBITDA (1) $ 17,816 8.9 % $ 13,757 8.8 % $ 4,059 29.5 %
Adjusted net income (1) $ 7,834 3.9 % $ 6,317 4.0 % $ 1,517 24.0 %

(1) See Non-GAAP Financial Measures below.

Six months ended
June30,2017 July1,2016 Change
Amount % Rev Amount % Rev Amount %
Net service revenues:
Home Health $ 299,528 74.5 % $ 219,762 71.0 % $ 79,766 36.3 %
Other Home-Based Services 92,117 22.9 % 79,896 25.8 % 12,221 15.3 %
Healthcare Innovations 10,400 2.6 % 10,036 3.2 % 364 3.6 %
402,045 100.0 % 309,694 100.0 % 92,351 29.8 %
Operating (loss) income before corporate expenses:
Home Health 40,095 13.4 % 30,308 13.8 % 9,787 32.3 %
Other Home-Based Services 7,865 8.5 % 6,722 8.4 % 1,143 17.0 %
Healthcare Innovations (16 ) (0.2 ) % 47 0.5 % (63 ) NM
47,944 11.9 % 37,077 12.0 % 10,867 29.3 %

Corporate expenses 18,394 4.6 % 14,645 4.7 % 3,749 25.6 %
Deal, transition and other costs 12,655 3.1 % 5,198 1.7 % 7,457 143.5 %
Operating income 16,895 4.2 % 17,234 5.6 % (339 ) (2.0 ) %
Interest expense, net 3,475 0.9 % 2,936 0.9 % 539 18.4 %
Net income (loss) - noncontrolling interests 1,485 0.4 % (323 ) (0.1 ) % 1,808 NM
Net income before income taxes 11,935 3.0 % 14,621 4.7 % $ (2,686 ) (18.4 ) %
Income tax expense 3,525 0.9 % 5,927 1.9 % (2,402 ) (40.5 ) %
Net income attributable to Almost Family, Inc. $ 8,410 2.1 % $ 8,694 2.8 % $ (284 ) (3.3 ) %


Adjusted EBITDA (1) $ 34,624 8.6 % $ 25,954 8.4 % $ 8,670 33.4 %
Adjusted net income (1) $ 14,926 3.7 % $ 11,787 3.8 % $ 3,139 26.6 %

(1) See Non-GAAP Financial Measures below.

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HOME HEALTH OPERATING METRICS

Quarter ended
June30,2017 July1,2016 Change
Amount % Rev Amount % Rev Amount %
Locations 239 162 77 47.5 %

All payors:
Admissions 39,728 27,410 12,318 44.9 %
Census 31,588 23,441 8,147 34.8 %
Visits 944,454 735,138 209,316 28.5 %
Cost per visit $ 76 $ 73 $ 3 3.7 %
G&A expense per census $ 1,796 $ 1,768 $ 28 1.6 %

Episodic:
Admissions 29,761 20,932 8,829 42.2 %
Census 24,263 18,010 6,253 34.7 %
Episodes 45,309 32,775 12,534 38.2 %
Visits 745,039 589,116 155,923 26.5 %
Revenue $ 126,984 85.6 % $ 95,305 86.4 % $ 31,679 33.2 %
Revenue per episode $ 2,803 2,908 $ (105 ) (3.6 ) %
Visits per episode 16.4 18.0 (1.5 ) (8.5 ) %

Non-episodic:
Admissions 9,967 6,478 3,489 53.9 %
Census 7,325 5,431 1,894 34.9 %
Visits 199,415 146,022 53,393 36.6 %
Revenue $ 21,389 14.4 % $ 15,035 13.6 % $ 6,354 42.3 %
Revenue per visit $ 107 $ 103 $ 4 4.2 %
Visits per admission 20.0 22.5 (2.5 ) (11.2 ) %

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HOME HEALTH OPERATING METRICS

Six months ended
June30,2017 July1,2016 Change
Amount % Rev Amount % Rev Amount %
Locations 239 162 77 47.5 %

All payors:
Admissions 81,185 55,842 25,343 45.4 %
Census 31,461 23,267 8,195 35.2 %
Visits 1,913,808 1,471,297 442,511 30.1 %
Cost per visit $ 76 $ 72 $ 4 5.0 %
G&A expense per census $ 3,639 $ 3,583 $ 56 1.6 %

Episodic:
Admissions 61,051 42,544 18,507 43.5 %
Census 24,206 17,853 6,354 35.6 %
Episodes 91,200 65,315 25,885 39.6 %
Visits 1,513,051 1,176,808 336,243 28.6 %
Revenue $ 257,053 85.8 % $ 190,737 86.8 % $ 66,316 34.8 %
Revenue per episode $ 2,819 2,920 $ (102 ) (3.5 ) %
Visits per episode 16.6 18.0 (1.4 ) (7.9 ) %

Non-episodic:
Admissions 20,134 13,298 6,836 51.4 %
Census 7,255 5,414 1,841 34.0 %
Visits 400,757 294,489 106,268 36.1 %
Revenue $ 42,475 14.2 % $ 29,025 13.2 % $ 13,450 46.3 %
Revenue per visit $ 106 $ 99 $ 7 7.5 %
Visits per admission 19.9 22.1 (2.2 ) (10.1 ) %
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OTHER HOME-BASED SERVICES OPERATING METRICS

Quarter ended
June30,2017 July1,2016 Change
Amount % Rev Amount % Rev Amount %
Personal Care:
Locations 74 71 3 4.2 %
Admissions 2,537 2,591 (54 ) (2.1 ) %
Census 12,706 12,894 (188 ) (1.5 ) %
Hours of service 1,813,207 1,857,937 (44,730 ) (2.4 ) %
Hours per patient per week 11.0 11.1 (0.1 ) (1.0 ) %
Revenue $ 39,248 84.4 % $ 39,694 99.2 % $ (446 ) (1.1 ) %
Operating income $ 2,913 $ 3,008 $ (95 ) (3.2 ) %
Revenue per hour $ 21.65 $ 21.36 $ 0.28 1.3 %
Cost per hour $ 13.23 $ 13.08 $ 0.15 1.1 %

Hospice:
Locations 16 1 15 NM
Admissions 750 26 724 NM
Census 481 25 456 NM
Length of stay 58 45 13 28.9 %
Revenue $ 7,271 15.6 % $ 318 0.8 % $ 6,953 NM
Operating income $ 1,138 $ 43 $ 1,095 NM
Revenue per day $ 166 $ 142 $ 24 16.9 %

Six months ended
June30,2017 July1,2016 Change
Amount % Rev Amount % Rev Amount %
Personal Care:
Locations 74 71 3 4.2 %
Admissions 4,878 5,037 (159 ) (3.2 ) %
Census 12,766 12,720 46 0.4 %
Hours of service 3,642,749 3,706,146 (63,397 ) (1.7 ) %
Hours per patient per week 11.0 11.2 (0.2 ) (2.1 ) %
Revenue $ 77,802 84.5 % $ 79,387 99.4 % $ (1,585 ) (2.0 ) %
Operating income $ 5,261 $ 6,745 $ (1,484 ) (22.0 ) %
Revenue per hour $ 21.36 $ 21.42 $ (0.06 ) (0.3 ) %
Cost per hour $ 13.08 $ 13.03 $ 0.05 0.4 %

Hospice:
Locations 16 1 15 NM
Admissions 1,508 49 1,459 NM
Census 474 20 454 NM
Length of stay 57 38 20 52.0 %
Revenue $ 14,315 15.5 % $ 509 0.6 % $ 13,806 NM
Operating income (loss) $ 2,604 $ (23 ) $ 2,627 NM
Revenue per day $ 166 $ 142 $ 24 16.9 %

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HEALTHCARE INNOVATIONS SUPPLEMENTAL DATA

Quarter ended
June30,2017 July1,2016 Change
Amount Amount Amount %

ACO Management:
Medicare ACO enrollees under management 141,556 121,881 19,675 16.1 %
ACOs under contract 15 14 1 7.1 %
Revenue $ 647 $ 165 $ 482 292.1 %
Operating (loss) $ (580 ) $ (479 ) $ (101 ) (21.1 ) %


Assessment Services
Assessments 22,284 19,820 2,464 12.4 %
Revenue $ 5,194 $ 5,479 $ (285 ) (5.2 ) %
Operating income $ 907 $ 1,199 $ (292 ) (24.4 ) %


Six months ended
June30,2017 July1,2016 Change
Amount Amount Amount %

ACO Management:
Medicare ACO enrollees under management 141,556 121,881 19,675 16.1 %
ACOs under contract 15 14 1 7.1 %
Revenue $ 1,190 $ 336 $ 854 254.2 %
Operating (loss) $ (969 ) $ (871 ) $ (98 ) (11.3 ) %


Assessment Services
Assessments 37,496 35,395 2,101 5.9 %
Revenue $ 9,210 $ 9,700 $ (490 ) (5.1 ) %
Operating income $ 953 $ 918 $ 35 3.8 %

[End Table]
Non-GAAP Financial Measures The information provided in some of the tables in this release includes certain non-GAAP financial measures as defined under SEC rules. In accordance with SEC rules, the Company has provided, in the supplemental information, a reconciliation of those measures to the most directly comparable GAAP measures.
Adjusted Net Income and Adjusted Earnings Per Share Adjusted net income and adjusted earnings per share is not a measure of financial performance under accounting principles generally accepted in the United States of America. It should not be considered in isolation or as a substitute for net income, operating income, cash flows from operating, investing or financing activities, or any other measure calculated in accordance with generally accepted accounting principles. The presentation of adjusted net income and adjusted earnings per share provides investors with pertinent information to enable comparison of financial performance between periods by excluding certain items that the Company believes are not representative of its ongoing operations due to the nature of the items.
The following table sets forth a reconciliation of net income attributable to Almost Family, Inc. to adjusted net income:
[Start Table]
ALMOST FAMILY, INC. AND SUBSIDIARIES

RECONCILIATION OF ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE
(In thousands)

Quarter ended Six months ended
(in thousands) June30,2017 July1,2016 June30,2017 July1,2016
Net income attributable to Almost Family, Inc. $ 4,776 $ 4,777 $ 8,410 $ 8,694

Addbacks:
Deal, transition and other, net of tax 3,058 1,540 6,516 3,093
Adjusted net income attributable to Almost Family, Inc. $ 7,834 $ 6,317 $ 14,926 $ 11,787

Per share amounts-diluted:
Average shares outstanding 13,954 10,322 13,449 10,311

Net income attributable to Almost Family, Inc. $ 0.34 $ 0.46 $ 0.63 $ 0.84

Addbacks:
Deal, transition and other, net of tax 0.22 0.15 0.48 0.30
Adjusted net income attributable to Almost Family, Inc. $ 0.56 $ 0.61 $ 1.11 $ 1.14

[End Table]
Adjusted EBITDA Adjusted earnings before interest, income and franchise taxes, depreciation and amortization, amortization of stock-based compensation, deal, transition and other (Adjusted EBITDA) is not a measure of financial performance under accounting principles generally accepted in the United States of America. It should not be considered in isolation or as a substitute for net income, operating income, cash flows from operating, investing or financing activities, or any other measure calculated in accordance with generally accepted accounting principles. The items excluded from Adjusted EBITDA 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 its industry to evaluate performance, measure leverage capacity and debt service ability, and to estimate current or prospective enterprise value. Adjusted EBITDA is also used in certain covenants contained in the Companys credit agreement.
The following table sets forth a reconciliation of net income to Adjusted EBITDA:
[Start Table]
ALMOST FAMILY, INC. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA
(In thousands)

Quarter ended Six months ended
(in thousands) June30,2017 July1,2016 June30,2017 July1,2016
Net income $ 4,776 $ 4,777 $ 8,410 $ 8,694
Add back:
Net (loss) income - noncontrolling interests 725 (133 ) 1,485 (323 )
Interest expense 1,579 1,604 3,475 2,936
Income tax expense 2,751 3,250 3,525 5,927
Franchise taxes 253 122 467 272
Depreciation and amortization 1,660 864 3,193 1,848
Stock-based compensation 648 684 1,414 1,402
Deal, transition and other costs 5,424 2,589 12,655 5,198
Adjusted EBITDA $ 17,816 $ 13,757 $ 34,624 $ 25,954

[End Table]
Forward Looking Statements
All statements, other than statements of historical facts, included in this news release are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current plans, expectations, projections, forecasts and assumptions about future events that involve risks and uncertainties that could cause actual outcomes and results to differ materially. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as may, will, should, could, would, estimate, project, forecast, intend, expect, plan, anticipate, believe, target, or similar terms, variations of those terms or the negative of those terms. While forward-looking statements reflect good faith beliefs, assumptions and expectations, they are not guarantees of future performance, and the Company undertakes no obligation to update or revise its forward-looking statements. The forward-looking statements in this news release are based on a variety of assumptions that may not be realized and that are subject to significant risks and uncertainties, including the impact of further changes in healthcare reimbursement systems, including the ultimate outcome of potential changes to Medicare reimbursement for home health services and to Medicaid reimbursement due to state budget shortfalls; the ability of the Company to maintain its level of operating performance and achieve its cost control objectives; changes in our relationships with referral sources; unanticipated difficulties or expenditures relating to acquisition transactions, including, without limitation, difficulties that result in the failure to achieve expected synergies, efficiencies and cost savings from a transaction within the expected time period (if at all); government regulation; health care reform; pricing pressures from Medicare, Medicaid and other third-party payers; changes in laws and interpretations of laws relating to the healthcare industry; the ability of the Company to integrate, manage and keep secure our information systems; changes in the marketplace and regulatory environment for Health Risk Assessments and the Companys self-insurance risks. For a more complete discussion regarding other factors which could affect the Company's financial performance, refer to the Company's various filings with the Securities and Exchange Commission, including its filing on Form 10-K for the year ended December 30, 2016, in particular information under the headings "Special Caution Regarding Forward-Looking Statements" and Risk Factors.
About Almost Family, Inc.
Almost Family, Inc., founded in 1976, is a leading national provider of home healthcare services, with 329 branch locations in 26 states, including its joint venture with Community Health Systems, Inc. (CHS) (NYSE:CYH). Almost Family, Inc. and its subsidiaries operate Home Health, Other Home-Based Services and HealthCare Innovations segments.
Almost Family, Inc. Steve Guenthner (502) 891-1000