Almost Family Reports Second Quarter 2016 Results

LOUISVILLE, Ky., Aug. 03, 2016 (GLOBE NEWSWIRE) -- Almost Family, Inc. AFAM, a leading regional provider of home health nursing and personal care services, announced today its financial results for the quarter ended July 1, 2016.

Second Quarter Highlights (1):

• Record net service revenues of approximately $156.0 million with record revenues in all three segments
• GAAP EPS of $0.46 per diluted share, down $0.06 from a year ago, Adjusted EPS of $0.61, up $0.07 from a year ago 
• GAAP net income of $4.8 million, down $0.2 million from a year ago, Adjusted net income of $6.3 million, up $1.2 million from a year ago
• Record Adjusted EBITDA of $13.8 million, up 34% from a year ago
• Healthcare Innovations (HCI) segment contributed $0.03 in earnings per share, while performing nearly 20,000 in-home assessments and having nearly 122,000 ACO beneficiaries and 15 Accountable Care Organizations under contract
• Year to date operating cash flow of $10.4 million
• On June 18, 2016, we completed the previously announced acquisition of certain home health agencies in Wisconsin, Connecticut and Kentucky

___________

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

Management Comments
William Yarmuth, Chairman and Chief Executive Officer, commented:  "We are pleased with our quarterly results as we produced record revenues and solid performance while continuing with the integration of recent significant acquisition activity.  This is the first quarter in which our HCI segment has generated positive earnings without an ACO shared savings payment.  In only two years since its inception, the HCI segment has established a meaningful business presence with an expectation of on-going profitability.  Over the balance of 2016 we will continue to integrate our recent acquisitions, focus on the operation and growth of our existing operations and seek additional acquisition opportunities."

Steve Guenthner, President added:  "We remain optimistic about the future and comparatively favorable capital market and regulatory conditions.  The recently released 2017 preliminary rule on Medicare home health reimbursement marks the last of four years of rebasing of home health rates.  We feel CMS' recently announced pre-claim review process, which may initially be somewhat burdensome, if properly implemented should serve to reduce real and perceived payment error rates and help build a relationship of trust between the Program and providers that is critical to home health achieving its real potential in the health care delivery system.  We support CMS' program integrity efforts and will continue to work with them to find the best approaches to implementation."

Yarmuth concluded:  "The knowledge we are gaining from our HCI investments and their overall role in various models to control costs through well managed care only reinforces our overarching thesis that home health care is essential to the future of and will play an ever growing part in our health care delivery system. We will build on this, and our accomplishments to date, as we seek to maintain our growth trajectory.  I want to thank our 14,000+ employees for their continued commitment to our important mission-based work and express my confidence in our ability to continue to be a leader in the industry."

Second Quarter Financial Results
VN segment net revenues increased $12.9 million to a record $110.7 million from $97.7 million in the prior year and total Medicare admissions grew by 5% to 23,920 from 22,782 primarily due to home health agencies acquired in late 2015 and early 2016.  VN segment contribution increased $2.8 million, or 22.7%, to $15.3 million, from $12.5 million in the prior year period.  Contribution margin as a percentage of revenue increased to 13.8% from 12.8%.  On a same-store basis, Medicare admissions outside of Florida grew by 3.1%.  The Company is continuing its efforts to improve the performance of its Florida business, however, with its growth and acquisition activity outside of the state, the impact of Florida performance on the Company's operating results is lessening.  Florida operations 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 $10.2 million or 34.6% to a record $39.7 million in 2016 from $29.5 million in 2015 primarily due to acquisitions.  PC segment contribution decreased $0.6 million as compared to the same period of last year, primarily due to rate reductions in certain skilled elements of the Ohio Medicaid program as well as higher provision for bad debts in two Medicaid managed care states.

HCI segment net revenues increased $5.5 million to a record $5.6 million, in 2016 from $0.1 million in 2015.  The HCI segment earned $0.03 EPS in its first quarter of profitability without an ACO-related shared savings payment.  The HCI segment is expected to be profitable for the balance of 2016.

Corporate expenses as a percentage of revenue declined to 4.5%, from 5.4% in the prior year period.  Deal, transition and other costs grew to $2.6 million for 2016, primarily as a result of costs related to 2016 and 2015 acquisitions.  Borrowings related to acquisitions increased interest expense to $1.6 million, from $0.5 million in the prior year period.

Net cash from operating activities of $4.9 million was generated in the second quarter of 2016.  Home Health accounts receivable days sales outstanding were 56 at the end of the second quarter of 2016 as compared to 59 at the end of the second quarter of 2015.

The effective tax rate for the second quarter of 2016 and 2015 was 40.5% and 40.3%, respectively. 

Year to Date Financial Results
VN segment net revenues increased $23.0 million to a record $220.3 million from $197.3 million in the prior year period and total Medicare admissions grew by 1.3% to 47,105 from 46,504 primarily due to home health agencies acquired in late 2015 and 2016.  VN segment contribution increased $5.4 million, or 21.7%, to $30.3 million, from $24.9 million in the first half of last year.  Contribution margin as a percentage of revenue increased to 13.7% from 12.6%.  On a same-store basis, Medicare admissions outside of Florida grew organically by 2.8%.  Within Florida, same store Medicare admissions in Florida in the first half of 2016 were 7.6% below the first half of 2015 which represented a high-water mark for Florida Medicare admissions. 

PC segment net revenues increased $21.1 million or 36.3% to a record $79.4 million in 2016 from $58.2 million in 2015 primarily due to acquisitions.  PC segment contribution increased 3.4% or $0.2 million as compared to the first half of last year.

HCI segment net revenues increased $9.8 million to a record $10.0 million in 2016 from $0.2 million in 2015.  The HCI segment contribution improved $1.0 million over the first half of 2015.

Corporate expenses as a percentage of revenue declined to 4.7%, from 5.4% in the prior year period.  Deal, transition and other costs grew to $5.2 million for 2016, primarily as a result of costs related to 2016 and 2015 acquisitions.  Borrowings related to acquisitions increased interest expense to $2.9 million, from $0.9 million in the first half of 2015.

Net cash from operating activities of $10.4 million was generated in the first half of 2016, more than double the $5.1 million generated in the first half of 2015. 

The effective tax rate for the second quarter of 2016 and 2015 was 40.5% and 40.4%, 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.

Medicare Program Developments
On June 27, 2016, the Centers for Medicare and Medicaid Services (CMS) issued its proposed rule for 2017.  CMS is proposing a 1.0% rate cut consisting of a 2.8% market basket update minus a 0.5% productivity adjustment, a 2.3% rebasing cut, and a 0.97% case mix adjustment.  The proposed rule, which also proposes certain refinements to the Home Health Value-based Purchasing Model is currently open for comment.  The final rule is expected to be released in late October 2016.

On June 8, 2016, CMS announced the "Pre-Claim Review Demonstration of Home Health Services" which seeks to demonstrate that a review of selected documentation prior to payment of claims can decrease "improper payments because of insufficient documentation".  According to the CMS announcement, the pre-claim review demonstration will help educate HHAs on what documentation is required and encourage them to submit the correct documentation, while still allowing the HHA to begin providing services and receive initial payments prior to the pre-claim review decision.  The pre-claim review demonstration will begin in Illinois no earlier than August 1, 2016 and the remaining states of Florida, Texas, Michigan and Massachusetts will phase in over 2016 and 2017.  The Company is currently unable to predict what impact, if any, this demonstration program may have on its results of operations or financial position.

ALMOST FAMILY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (UNAUDITED)
	Three month period ended								Six months ended
	July 1, 2016				July 3, 2015				July 1, 2016				July 3, 2015
Net service revenues	$	155,996			$	127,366			$	309,694			$	255,765
Cost of service revenues (excluding depreciation & amortization)		83,692				66,343				165,924				134,659
Gross margin		72,304				61,023				143,770				121,106
General and administrative expenses:
Salaries and benefits		41,502				35,832				83,182				72,225
Other		18,715				16,356				38,156				32,175
Deal and transition costs		2,589				203				5,198				609
Total general and administrative expenses		62,806				52,391				126,536				105,009
Operating income		9,498				8,632				17,234				16,097
Interest expense, net		(1,604	)			(457	)			(2,936	)			(905	)
Income before income taxes		7,894				8,175				14,298				15,192
Income tax expense		(3,250	)			(3,393	)			(5,927	)			(6,381	)
Net income		4,644				4,782				8,371				8,811
Net loss - noncontrolling interests		133				228				323				592
Net income attributable to Almost Family, Inc.	$	4,777			$	5,010			$	8,694			$	9,403
Per share amounts-basic:
Average shares outstanding		10,158				9,393				10,125				9,377
Net income attributable to Almost Family, Inc.	$	0.47			$	0.53			$	0.86			$	1.00
Per share amounts-diluted:
Average shares outstanding		10,322				9,569				10,311				9,554
Net income attributable to Almost Family, Inc.	$	0.46			$	0.52			$	0.84			$	0.98

 

ALMOST FAMILY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands)
		July 1, 2016
		(UNAUDITED)					January 1, 2016
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$		5,914			$		7,522
Accounts receivable - net				95,623					92,909
Prepaid expenses and other current assets				9,853					9,033
TOTAL CURRENT ASSETS				111,390					109,464
PROPERTY AND EQUIPMENT - NET				8,626					10,000
GOODWILL				321,539					277,061
OTHER INTANGIBLE ASSETS				69,811					64,629
OTHER ASSETS				4,086					3,615
TOTAL ASSETS		$		515,452			$		464,769
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable		$		13,937			$		12,297
Accrued other liabilities				39,280					42,524
TOTAL CURRENT LIABILITIES				53,217					54,821
LONG-TERM LIABILITIES:
Revolving credit facility				135,175					113,790
Deferred tax liabilities				17,094					13,094
Seller notes				12,500					6,556
Other liabilities				3,330					2,608
TOTAL LONG-TERM LIABILITIES				168,099					136,048
TOTAL LIABILITIES				221,316					190,869
NONCONTROLLING INTEREST - REDEEMABLE -
HEALTHCARE INNOVATIONS				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; 10,490 and 10,125 issued and outstanding				1,049					1,013
Treasury stock, at cost, 116 and 103 shares				(3,214	)				(2,731	)
Additional paid-in capital				139,565					127,253
Noncontrolling interest - nonredeemable				(718	)				(730	)
Retained earnings				153,815					145,456
TOTAL STOCKHOLDERS' EQUITY				290,497					270,261
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$		515,452			$		464,769

 

ALMOST FAMILY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands)
	Six months ended
	July 1, 2016				July 3, 2015
Cash flows of operating activities:
Net income	$	8,371			$	8,811
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,984				1,780
Provision for uncollectible accounts		7,859				4,821
Stock-based compensation		1,402				1,005
Deferred income taxes		4,236				1,639
		23,852				18,056
Change in certain net assets and liabilities, net of the effects of acquisitions:
Accounts receivable		(10,081	)			(12,522	)
Prepaid expenses and other current assets		(511	)			3,538
Other assets		(492	)			46
Accounts payable and accrued expenses		(2,363	)			(4,062	)
Net cash provided by operating activities		10,405				5,056
Cash flows of investing activities:
Capital expenditures		(2,275	)			(1,147	)
Cost basis investment		-				(1,000	)
Acquisitions, net of cash acquired		(30,754	)			(3,000	)
Net cash used in investing activities		(33,029	)			(5,147	)
Cash flows of financing activities:
Credit facility borrowings		145,538				87,747
Credit facility repayments		(124,153	)			(86,743	)
Debt issuance fees		(102	)			(1,161	)
Proceeds from stock option exercises		16				68
Purchase of common stock in connection with share awards		(484	)			(338	)
Tax impact of share awards		256				210
Payment of special dividend in connection with share awards		-				(50	)
Principal payments on notes payable and capital leases		(55	)			(30	)
Net cash provided by (used in) financing activities		21,016				(297	)
Net change in cash and cash equivalents		(1,608	)			(388	)
Cash and cash equivalents at beginning of period		7,522				6,886
Cash and cash equivalents at end of period	$	5,914			$	6,498

 

ALMOST FAMILY, INC. AND SUBSIDIARIES RESULTS OF OPERATIONS (UNAUDITED) (In thousands)
		Three months ended
		July 1, 2016									July 3, 2015									Change
		Amount					% Rev				Amount					% Rev				Amount					%
Home Health Operations
Net service revenues:
Visiting Nurse		$		110,658				73.6	%		$		97,748				76.8	%		$		12,910				13.2	%
Personal Care				39,694				26.4	%				29,488				23.2	%				10,206				34.6	%
				150,352				100.0	%				127,236				100.0	%				23,116				18.2	%
Operating income before corporate expenses:
Visiting Nurse				15,310				13.8	%				12,482				12.8	%				2,828				22.7	%
Personal Care				3,008				7.6	%				3,604				12.2	%				(596	)			-16.5	%
				18,318				12.2	%				16,086				12.6	%				2,232				13.9	%
Healthcare Innovations Operations
Revenue				5,644				100.0	%				130				100.0	%				5,514				4241.5	%
Operating income (loss)				720				12.8	%				(402	)			-309.2	%				1,122				279.1	%
Corporate expenses				6,951				4.5	%				6,849				5.4	%				102				1.5	%
Deal, transition and other costs				2,589				1.7	%				203				0.2	%				2,386				1175.4	%
Operating income				9,498				6.1	%				8,632				6.8	%				866				10.0	%
Interest expense, net				(1,604	)			-1.0	%				(457	)			-0.4	%				(1,147	)			251.0	%
Income tax expense				(3,250	)			-2.1	%				(3,393	)			-2.7	%				143				-4.2	%
Net income		$		4,644				3.0	%		$		4,782				3.8	%		$		(138	)			-2.9	%
Adjusted EBITDA (1)		$		13,768				8.8	%		$		10,345				8.1	%		$		3,423				33.1	%
Adjusted net income (1)		$		6,317				4.0	%		$		5,131				4.0	%		$		1,187				23.1	%
__________________
(1) See Non-GAAP Financial Measures starting on page 12.

 

		Six months ended
		July 1, 2016									July 3, 2015									Change
		Amount					% Rev				Amount					% Rev				Amount					%
Home Health Operations
Net service revenues:
Visiting Nurse		$		220,271				73.5	%		$		197,283				77.2	%		$		22,988				11.7	%
Personal Care				79,387				26.5	%				58,249				22.8	%				21,138				36.3	%
				299,658				100.0	%				255,532				100.0	%				44,126				17.3	%
Operating income before corporate expenses:
Visiting Nurse				30,287				13.7	%				24,883				12.6	%				5,404				21.7	%
Personal Care				6,732				8.5	%				6,513				11.2	%				219				3.4	%
				37,019				12.4	%				31,396				12.3	%				5,623				17.9	%
Healthcare Innovations Operations
Revenue				10,036				100.0	%				233				100.0	%				9,803				4207.3	%
Operating income (loss)				47				0.5	%				(919	)			-394.4	%				966			NM
Corporate expenses				14,634				4.7	%				13,771				5.4	%				863				6.3	%
Deal, transition and other costs				5,198				1.7	%				609				0.2	%				4,589				753.5	%
Operating income				17,234				5.6	%				16,097				6.3	%				1,137				7.1	%
Interest expense, net				(2,936	)			-0.9	%				(905	)			-0.4	%				(2,031	)			224.4	%
Income tax expense				(5,927	)			-1.9	%				(6,381	)			-2.5	%				454				-7.1	%
Net income		$		8,371				2.7	%		$		8,811				3.4	%		$		(440	)			-5.0	%
Adjusted EBITDA (1)		$		26,006				8.4	%		$		19,931				7.8	%		$		6,075				30.5	%
Adjusted net income (1)		$		11,787				3.8	%		$		9,765				3.8	%		$		2,021				20.7	%
__________________
(2) See Non-GAAP Financial Measures starting on page 12.

VISITING NURSE SEGMENT OPERATING METRICS
		Three months ended
		July 1, 2016									July 3, 2015									Change
		Amount					%				Amount					%				Amount					%
Average number of locations				163									162									1				0.6	%
All payors:
Patient months				90,737									81,067									9,670				11.9	%
Admissions				27,410									24,920									2,490				10.0	%
Billable visits				735,138									638,479									96,659				15.1	%
Medicare:
Admissions				23,920				87	%				22,782				91	%				1,138				5.0	%
Revenue (in thousands)		$		103,514				94	%		$		93,673				96	%		$		9,841				10.5	%
Revenue per admission		$		4,328							$		4,112							$		216				5.2	%
Billable visits				647,490				88	%				580,709				91	%				66,781				11.5	%
Recertifications				12,579									11,580									999				8.6	%
Payor mix % of Admissions
Traditional Medicare Episodic				83.2	%								82.9	%								0.3	%
Replacement Plans Paid Episodically				4.8	%								3.9	%								0.9	%
Replacement Plans Paid Per Visit				12.0	%								13.2	%								-1.2	%
Non-Medicare:
Admissions				3,490				13	%				2,138				9	%				1,352				63.2	%
Revenue (in thousands)		$		7,144				6	%		$		4,075				4	%		$		3,069				75.3	%
Revenue per admission		$		2,047							$		1,906							$		141				7.4	%
Billable visits				87,648				12	%				57,770				9	%				29,878				51.7	%
Recertifications				1,153									480									673				140.2	%
Payor mix % of Admissions
Medicaid & other governmental				25.8	%								36.8	%								-11.0	%
Private payors				74.2	%								63.2	%								11.0	%

PERSONAL CARE SEGMENT OPERATING METRICS
		Three months ended
		July 1, 2016			July 3, 2015			Change
		Amount			Amount			Amount					%
Average number of locations			71			62				9				14.5	%
Admissions			2,591			1,651				940				56.9	%
Patient months of care			39,758			23,722				16,036				67.6	%
Billable hours			1,833,784			1,317,978				515,806				39.1	%
Revenue per billable hour		$	21.65		$	22.37		$		(0.73	)			-3.3	%

      

VISITING NURSE SEGMENT OPERATING METRICS
		Six months ended
		July 1, 2016									July 3, 2015									Change
		Amount					%				Amount					%				Amount					%
Average number of locations				163									162									1				0.6	%
All payors:
Patient months				182,695									162,049									20,646				12.7	%
Admissions				55,911									51,199									4,712				9.2	%
Billable visits				1,467,380									1,281,071									186,309				14.5	%
Medicare:
Admissions				47,105				84	%				46,504				91	%				601				1.3	%
Revenue (in thousands)		$		206,672				94	%		$		188,794				96	%		$		17,878				9.5	%
Revenue per admission		$		4,387							$		4,060							$		328				8.1	%
Billable visits				1,295,836				88	%				1,165,147				91	%				130,689				11.2	%
Recertifications				25,170									23,507									1,663				7.1	%
Payor mix % of Admissions
Traditional Medicare Episodic				81.8	%								83.5	%								-1.7	%
Replacement Plans Paid Episodically				4.9	%								4.0	%								0.9	%
Replacement Plans Paid Per Visit				13.3	%								12.5	%								0.8	%
Non-Medicare:
Admissions				8,806				16	%				4,695				9	%				4,111				87.6	%
Revenue (in thousands)		$		13,599				6	%		$		8,489				4	%		$		5,110				60.2	%
Revenue per admission		$		1,544							$		1,808							$		(264	)			-14.6	%
Billable visits				171,544				12	%				115,924				9	%				55,620				48.0	%
Recertifications				2,284									907									1,377				151.8	%
Payor mix % of Admissions
Medicaid & other governmental				45.9	%								33.5	%								12.4	%
Private payors				54.1	%								66.5	%								-12.4	%

PERSONAL CARE OPERATING METRICS
		Six months ended
		July 1, 2016					July 3, 2015					Change
		Amount			%		Amount			%		Amount					%
Average number of locations			71					62						9				14.5	%
Admissions			5,037					3,078						1,959				63.6	%
Patient months of care			78,818					46,488						32,330				69.5	%
Billable hours			3,655,323					2,604,862						1,050,461				40.3	%
Revenue per billable hour		$	21.72				$	22.36				$		(0.64	)			-2.9	%

HEALTHCARE INNOVATIONS SUPPLEMENTAL DATA
		Three months ended
		July 1, 2016					July 3, 2015						Change
		Amount					Amount						Amount				%
In-home Assessments				19,820					-					19,820			NM
Medicare ACO enrollees under management				121,881					83,133					38,748				46.6	%
ACOs under contract				15					11					4				36.4	%
Assets		$		62,050			$		9,428			$		52,622				558.1	%
Liabilities		$		28,395			$		226			$		28,169				12464.2	%
Non-controlling interest - redeemable		$		3,639			$		3,639			$		-				0.0	%
Non-controlling interest - nonredeemable		$		(184	)		$		(155	)		$		(29	)			18.7	%

		Six months ended
		July 1, 2016			July 3, 2015				Change
		Amount			Amount				Amount		%
In-home Assessments			36,766			-			36,766		NM
Medicare enrollees under management			121,881			83,133			38,748			46.6	%
ACOs under contract			15			11			4			36.4	%

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 are not measures of financial performance under accounting principles generally accepted in the United States of America.  They 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 month period ended								Six months ended
(in thousands)		July 1, 2016			July 3, 2015					July 1, 2016					July 3, 2015
Net income attributable to Almost Family, Inc.		$	4,777		$		5,010			$		8,694			$		9,403
Addbacks:
Deal, transition and other, net of tax			1,540				121					3,093					362
Adjusted net income		$	6,317		$		5,131			$		11,787			$		9,765
Per share amounts-diluted:
Average shares outstanding			10,322				9,569					10,311					9,554
Net income attributable to Almost Family, Inc.		$	0.46		$		0.52			$		0.84			$		0.98
Addbacks:
Deal, transition and other, net of tax			0.15				0.02					0.30					0.04
Adjusted earnings per share		$	0.61		$		0.54			$		1.14			$		1.02
Adjusted earnings per share:
Home health operations		$	0.58		$		0.55			$		1.16			$		1.06
Healthcare Innovations			0.03				(0.01	)				(0.02	)				(0.04	)
Total		$	0.61		$		0.54			$		1.14			$		1.02

Adjusted EBITDA 
Adjusted earnings before interest, income tax, 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 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 month period ended								Six months ended
(in thousands)		July 1, 2016			July 3, 2015					July 1, 2016				July 3, 2015
Net income		$	4,777		$		5,010			$	8,694			$		9,403
Add back:
Interest expense			1,604				457				2,936					905
Income tax expense			3,250				3,393				5,927					6,381
Depreciation and amortization			864				797				1,849					1,628
Stock-based compensation			684				485				1,402					1,005
Deal and transition costs			2,589				203				5,198					609
Adjusted EBITDA		$	13,768		$		10,345			$	26,006			$		19,931
Adjusted EBITDA:
Home health operations		$	12,147		$		10,818			$	24,714			$		21,021
Healthcare Innovations			1,621				(473	)			1,292					(1,090	)
Total		$	13,768		$		10,345			$	26,006			$		19,931

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).  Almost Family, Inc. and its subsidiaries operate a Medicare-certified segment, a personal care segment and a healthcare innovations segment.  Almost Family operates over 240 branch locations in sixteen 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; 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.