Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 3, 2015
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-09848
ALMOST FAMILY, INC.
(Exact name of Registrant as specified in its charter)
Delaware |
|
06-1153720 |
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification Number) |
9510 Ormsby Station Road, Suite 300, Louisville, Kentucky 40223
(Address of principal executive offices)
(502) 891-1000
(Registrants telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of accelerated filer, large accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act (check one):
Large accelerated filer o |
|
Accelerated filer x |
|
|
|
Non-accelerated filer o |
|
Smaller Reporting Company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.
Class of Common Stock |
|
$0.10 par value |
|
Shares outstanding at July 27, 2015 |
|
9,820,132 |
|
Table of Contents
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
ALMOST FAMILY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
|
|
July 3, 2015 |
|
|
|
|
|
(UNAUDITED) |
|
December 31, 2014 |
|
ASSETS |
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
6,498 |
|
$ |
6,886 |
|
Accounts receivable - net |
|
83,060 |
|
74,894 |
|
Prepaid expenses and other current assets |
|
6,986 |
|
10,420 |
|
Deferred tax assets |
|
13,242 |
|
12,230 |
|
TOTAL CURRENT ASSETS |
|
109,786 |
|
104,430 |
|
|
|
|
|
|
|
PROPERTY AND EQUIPMENT - NET |
|
5,120 |
|
5,575 |
|
GOODWILL |
|
195,067 |
|
192,523 |
|
OTHER INTANGIBLE ASSETS |
|
54,639 |
|
54,402 |
|
OTHER ASSETS |
|
2,457 |
|
558 |
|
TOTAL ASSETS |
|
$ |
367,069 |
|
$ |
357,488 |
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY |
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
Accounts payable |
|
$ |
10,101 |
|
$ |
9,257 |
|
Accrued other liabilities |
|
37,019 |
|
42,326 |
|
Current portion - notes payable and capital leases |
|
34 |
|
51 |
|
TOTAL CURRENT LIABILITIES |
|
47,154 |
|
51,634 |
|
|
|
|
|
|
|
LONG-TERM LIABILITIES: |
|
|
|
|
|
Revolving credit facility |
|
47,451 |
|
46,447 |
|
Deferred tax liabilities |
|
26,257 |
|
23,510 |
|
Other |
|
3,259 |
|
2,705 |
|
TOTAL LONG-TERM LIABILITIES |
|
76,967 |
|
72,662 |
|
TOTAL LIABILITIES |
|
124,121 |
|
124,296 |
|
|
|
|
|
|
|
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; 9,633 and 9,574 issued and outstanding |
|
963 |
|
957 |
|
Treasury stock, at cost, 103 and 94 shares of common stock |
|
(2,731 |
) |
(2,392 |
) |
Additional paid-in capital |
|
107,140 |
|
105,862 |
|
Noncontrolling interest - nonredeemable |
|
(659 |
) |
(420 |
) |
Retained earnings |
|
134,596 |
|
125,546 |
|
TOTAL STOCKHOLDERS EQUITY |
|
239,309 |
|
229,553 |
|
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |
|
$ |
367,069 |
|
$ |
357,488 |
|
See accompanying Notes to Consolidated Financial Statements.
3
Table of Contents
ALMOST FAMILY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In thousands, except per share data)
|
|
Three month period ended |
|
Six month period ended |
|
|
|
July 3, 2015 |
|
June 30, 2014 |
|
July 3, 2015 |
|
June 30, 2014 |
|
Net service revenues |
|
$ |
127,366 |
|
$ |
125,192 |
|
$ |
255,765 |
|
$ |
245,532 |
|
Cost of service revenues (excluding depreciation & amortization) |
|
66,343 |
|
65,556 |
|
134,670 |
|
131,083 |
|
Gross margin |
|
61,023 |
|
59,636 |
|
121,095 |
|
114,449 |
|
General and administrative expenses: |
|
|
|
|
|
|
|
|
|
Salaries and benefits |
|
35,832 |
|
35,875 |
|
72,225 |
|
69,541 |
|
Other |
|
16,405 |
|
15,510 |
|
32,304 |
|
31,224 |
|
Deal and transition costs |
|
206 |
|
1,243 |
|
614 |
|
4,357 |
|
Total general and administrative expenses |
|
52,443 |
|
52,628 |
|
105,143 |
|
105,122 |
|
Operating income |
|
8,580 |
|
7,008 |
|
15,952 |
|
9,327 |
|
Interest expense, net |
|
(392 |
) |
(329 |
) |
(753 |
) |
(677 |
) |
Income before income taxes |
|
8,188 |
|
6,679 |
|
15,199 |
|
8,650 |
|
Income tax expense |
|
(3,393 |
) |
(2,618 |
) |
(6,380 |
) |
(3,435 |
) |
Net income from continuing operations |
|
4,795 |
|
4,061 |
|
8,819 |
|
5,215 |
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations: |
|
|
|
|
|
|
|
|
|
Loss from operations, net of tax of ($9), ($41), ($5) and ($90) |
|
(13 |
) |
(64 |
) |
(8 |
) |
(134 |
) |
Net income |
|
4,782 |
|
3,997 |
|
8,811 |
|
5,081 |
|
Net loss (income) - noncontrolling interests |
|
228 |
|
(36 |
) |
592 |
|
153 |
|
Net income attributable to Almost Family, Inc. |
|
$ |
5,010 |
|
$ |
3,961 |
|
$ |
9,403 |
|
$ |
5,234 |
|
|
|
|
|
|
|
|
|
|
|
Per share amounts-basic: |
|
|
|
|
|
|
|
|
|
Average shares outstanding |
|
9,393 |
|
9,338 |
|
9,377 |
|
9,316 |
|
Income from continuing operations attributable to Almost Family, Inc. |
|
$ |
0.53 |
|
$ |
0.43 |
|
$ |
1.00 |
|
$ |
0.58 |
|
Discontinued operations |
|
|
|
(0.01 |
) |
|
|
(0.01 |
) |
Net income attributable to Almost Family, Inc. |
|
$ |
0.53 |
|
$ |
0.42 |
|
$ |
1.00 |
|
$ |
0.57 |
|
|
|
|
|
|
|
|
|
|
|
Per share amounts-diluted: |
|
|
|
|
|
|
|
|
|
Average shares outstanding |
|
9,569 |
|
9,431 |
|
9,554 |
|
9,423 |
|
Income from continuing operations attributable to Almost Family, Inc. |
|
$ |
0.52 |
|
$ |
0.43 |
|
$ |
0.99 |
|
$ |
0.57 |
|
Discontinued operations |
|
|
|
(0.01 |
) |
|
|
(0.01 |
) |
Net income attributable to Almost Family, Inc. |
|
$ |
0.52 |
|
$ |
0.42 |
|
$ |
0.99 |
|
$ |
0.56 |
|
See accompanying Notes to Consolidated Financial Statements.
4
Table of Contents
ALMOST FAMILY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
|
|
Six month period ended |
|
|
|
July 3, 2015 |
|
June 30, 2014 |
|
Cash flows of operating activities: |
|
|
|
|
|
Net income |
|
$ |
8,811 |
|
$ |
5,081 |
|
Loss on discontinued operations, net of tax |
|
(8 |
) |
(134 |
) |
Net income from continuing operations |
|
8,819 |
|
5,215 |
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
|
|
|
|
|
Depreciation and amortization |
|
1,780 |
|
2,152 |
|
Provision for uncollectible accounts |
|
4,803 |
|
4,308 |
|
Stock-based compensation |
|
1,005 |
|
872 |
|
Deferred income taxes |
|
1,639 |
|
2,402 |
|
|
|
18,046 |
|
14,949 |
|
Change in certain net assets and liabilities, net of the effects of acquisitions: |
|
|
|
|
|
Accounts receivable |
|
(12,485 |
) |
(11,863 |
) |
Prepaid expenses and other current assets |
|
3,536 |
|
(728 |
) |
Other assets |
|
26 |
|
1 |
|
Accounts payable and accrued expenses |
|
(4,097 |
) |
(4,457 |
) |
Net cash provided by (used in) operating activities |
|
5,026 |
|
(2,098 |
) |
|
|
|
|
|
|
Cash flows of investing activities: |
|
|
|
|
|
Capital expenditures |
|
(1,147 |
) |
(735 |
) |
Cost basis investment |
|
(1,000 |
) |
|
|
Acquisitions, net of cash acquired |
|
(3,000 |
) |
(969 |
) |
Net cash used in investing activities |
|
(5,147 |
) |
(1,704 |
) |
|
|
|
|
|
|
Cash flows of financing activities: |
|
|
|
|
|
Credit facility borrowings |
|
87,747 |
|
655 |
|
Credit facility repayments |
|
(86,743 |
) |
(6,000 |
) |
Debt issuance fees |
|
(1,161 |
) |
|
|
Proceeds from stock option exercises |
|
68 |
|
39 |
|
Purchase of common stock in connection with share awards |
|
(338 |
) |
(52 |
) |
Tax impact of share awards |
|
210 |
|
(38 |
) |
Payment of special dividend in connection with share awards |
|
(50 |
) |
(35 |
) |
Principal payments on notes payable and capital leases |
|
(30 |
) |
(606 |
) |
Net cash used in financing activities |
|
(297 |
) |
(6,037 |
) |
|
|
|
|
|
|
Cash flows from discontinued operations |
|
|
|
|
|
Operating activities |
|
30 |
|
358 |
|
Investing activities |
|
|
|
|
|
Net cash provided by discontinued operations |
|
30 |
|
358 |
|
|
|
|
|
|
|
Net change in cash and cash equivalents |
|
(388 |
) |
(9,481 |
) |
Cash and cash equivalents at beginning of period |
|
6,886 |
|
12,246 |
|
Cash and cash equivalents at end of period |
|
$ |
6,498 |
|
$ |
2,765 |
|
See accompanying Notes to Consolidated Financial Statements.
5
Table of Contents
ALMOST FAMILY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Unless otherwise indicated, all dollars and share amounts are in thousands, except per share data)
1. Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements for the periods ended July 3, 2015 and June 30, 2014, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been omitted pursuant to such rules and regulations. Accordingly, the reader of this Form 10-Q is referred to Almost Family, Inc.s (the Company) Annual Report on Form 10-K for the year ended December 31, 2014 for further information. In the opinion of management of the Company, the accompanying unaudited consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position at July 3, 2015, and the results of operations and cash flows for the periods ended July 3, 2015 and June 30, 2014. The results of operations for the period ended July 3, 2015 are not necessarily indicative of the operating results for the year.
Effective with the first quarter of 2015, the Company adopted a 52-53 fiscal reporting calendar under which it will report its annual results going forward in four equal 13-week quarters. Every fifth year, one quarter will include 14 weeks and that year will include 53 weeks of operating results. Once fully adopted, this approach will help minimize the impact of calendar differences when comparing different historical periods.
As a result of the change in the fiscal reporting calendar, the quarter ended April 3, 2015 and the year to date period January 1, 2015 through July 3, 2015 included 3 more days of results than they would have had if the change not been made. The three month period for the second quarter of 2015, which includes operating results from April 4, 2015 through July 3, 2015 had the same number of days it would have had if the reporting calendar change had not been made. However the Independence Day holiday observed on July 3, 2015 would have otherwise been reported in the next period. Including the Independence Day holiday reduced diluted EPS by $0.03 in the current period.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Recently Issued Accounting Pronouncements
The Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), during the second quarter of 2014. Topic 606 affects virtually all aspects of an entitys revenue recognition, including determining the measurement of revenue and the timing of when it is recognized for the transfer of goods or services to customers. Topic 606 is effective for annual reporting periods beginning after December 15, 2017. The Company is currently evaluating the effect of the adoption of Topic 606 on its financial position and results of operations.
In April, the FASB issued ASU No. 2015-03, Interest Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. Subtopic 835-30 requires that debt issuance costs related to a
6
Table of Contents
recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. Subtopic 835-30 is effective for annual and interim periods beginning after December 15, 2015. The Company is currently evaluating the effect of the adoption of ASU No 2015-03 on its financial position and results of operations.
Discontinued Operations
In April 2014, the FASB issued accounting guidance amending the requirements for reporting discontinued operations Accounting Standards Codification (ASC 205 Presentation of Financial Statements and ASC 360 Property, Plant and Equipment). This guidance limits the requirement for discontinued operations treatment to the disposal of a component of an entity, or a group of components of an entity, that represents a strategic shift that has (or will have) a major effect on an entitys operations and financial results. Additionally, this new guidance no longer precludes discontinued operations presentation based on continuing involvement or cash flows following the disposal. This guidance became effective prospectively for the Company on January 1, 2015, and will impact the Companys determination and disclosure of discontinued operations treatment for subsequent qualifying divestitures, if any.
In the first quarter of 2014, the Companys VN segment exited a market in the Northeast through the closure of a branch location. In conjunction with the SunCrest acquisition in 2013, the Company acquired operations which had been discontinued prior to acquisition. The operations and any related gain on sale for these operations were reclassified from continuing operations into discontinued operations for all periods presented. Unless otherwise noted, amounts in these Notes to Consolidated Financial Statements exclude amounts attributable to discontinued operations.
Cost-basis Investment
On January 29, 2015, the Company invested $1,000 in a development stage analytics software company, NavHealth, Inc. The cost basis investment is included in other assets in the Companys balance sheet. The Company, through its ownership interest, is not in a position to significantly influence the activities of NavHealth, Inc.
2. Segment Data
The Company has two divisions, Home Health Care and Healthcare Innovations. The Home Health Care division is comprised of two reportable segments, Visiting Nurse Services (VN or Visiting Nurse) and Personal Care Services (PC or Personal Care). Healthcare Innovations is also a reportable segment. Reportable segments have been identified based upon how management has organized the business by services provided to customers and how the chief operating decision maker manages the business and allocates resources, consistent with the criteria in ASC 280, Segment Reporting.
Consistent with information given to the chief operating decision maker, the Company does not allocate certain expenses to the reportable segments. The Company evaluates the performance of its business segments based on operating income. Intercompany and intersegment transactions have been eliminated.
The VN segment provides skilled medical services in patients homes largely to enable recipients to reduce or avoid periods of hospitalization and/or nursing home care. Approximately 96% of the VN segment revenues are generated from the Medicare program while the balance is generated from Medicaid and private insurance programs. VN Medicare revenues include revenues from all Medicare sources including traditional Medicare and Medicare Advantage, whether paid on a per episode basis or a per visit basis.
The PC segment services are also provided in patients homes. These services (generally provided by paraprofessional staff such as home health aides) are generally of a custodial rather than skilled nature. PC revenues are generated on an hourly basis. Approximately 85% of the PC segment revenues are generated from Medicaid and other government programs while the balance is generated from insurance programs and private pay patients.
7
Table of Contents
The Companys Healthcare Innovations business segment was created to house and separately report on our developmental activities outside the traditional home health business platform. These activities are intended ultimately, whether directly or indirectly, to benefit the Companys patients and payors through the enhanced provision of home health services. The activities all share a common goal of improving patient experiences and quality outcomes, while lowering costs. They include, but are not limited to, items such as: technology, information, population health management, risk-sharing, care-coordination and transitions, clinical advancements, enhanced patient engagement and informed clinical decision and technology enabled in-home clinical assessments.
|
|
Three month period ended |
|
Six month period ended |
|
Consolidated |
|
July 3, 2015 |
|
June 30, 2014 |
|
July 3, 2015 |
|
June 30, 2014 |
|
Home Health Operations |
|
|
|
|
|
|
|
|
|
Net service revenues: |
|
|
|
|
|
|
|
|
|
Visiting Nurse |
|
$ |
97,748 |
|
$ |
96,776 |
|
$ |
197,283 |
|
$ |
189,949 |
|
Personal Care |
|
29,488 |
|
28,160 |
|
58,249 |
|
55,020 |
|
|
|
127,236 |
|
124,936 |
|
255,532 |
|
244,969 |
|
Operating income before corporate expenses: |
|
|
|
|
|
|
|
|
|
Visiting Nurse |
|
12,362 |
|
12,445 |
|
24,786 |
|
21,193 |
|
Personal Care |
|
3,724 |
|
3,501 |
|
6,599 |
|
6,140 |
|
|
|
16,086 |
|
15,946 |
|
31,385 |
|
27,333 |
|
Healthcare Innovations |
|
|
|
|
|
|
|
|
|
Revenue |
|
130 |
|
256 |
|
233 |
|
563 |
|
Operating loss before noncontrolling interest |
|
(402 |
) |
(427 |
) |
(919 |
) |
(683 |
) |
|
|
|
|
|
|
|
|
|
|
Corporate expenses |
|
6,898 |
|
7,268 |
|
13,900 |
|
12,966 |
|
Deal, transition and other |
|
206 |
|
1,243 |
|
614 |
|
4,357 |
|
Operating income |
|
8,580 |
|
7,008 |
|
15,952 |
|
9,327 |
|
Interest expense, net |
|
(392 |
) |
(329 |
) |
(753 |
) |
(677 |
) |
Income tax expense |
|
(3,393 |
) |
(2,618 |
) |
(6,380 |
) |
(3,435 |
) |
Net income from continuing operations |
|
$ |
4,795 |
|
$ |
4,061 |
|
$ |
8,819 |
|
$ |
5,215 |
|
3. Capitalized Software Development Costs
The Company capitalizes the cost of internally generated computer software developed for the Companys own use. Software development costs of approximately $215 and $108 were capitalized in the three month periods ended July 3, 2015 and June 30, 2014, respectively. Software development costs of approximately $287 and $192 were capitalized in the six month periods ended July 3, 2015 and June 30, 2014, respectively. Capitalized software development costs are amortized over the estimated useful life, generally three years, once the software is ready for its intended use.
4. Goodwill and Other Intangible Assets
The Company conducts annual reviews for impairment, or more frequently if circumstances indicate impairment may have occurred. Other intangible assets consist of certificates of need and licenses, trade names and non-compete agreements. Finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives. Licenses, provider numbers, certificates of need and trade names have indefinite lives and are reviewed at least annually for possible impairment, or whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. The Company completed its most recent annual impairment test of goodwill and other indefinite-lived intangible assets as of December 31, 2014 and determined that no impairment existed.
The following table summarizes the activity related to goodwill and other intangible assets for 2015:
8
Table of Contents
|
|
|
|
Other Intangible Assets |
|
|
|
Goodwill |
|
Certificates of Need and Licenses |
|
Trade Names |
|
Non-compete Agreements |
|
Total |
|
Balances at 12-31-14 |
|
$ |
192,523 |
|
$ |
39,611 |
|
$ |
14,771 |
|
$ |
20 |
|
$ |
54,402 |
|
Acquisitions |
|
2,544 |
|
250 |
|
|
|
|
|
250 |
|
Amortization |
|
|
|
|
|
(5 |
) |
(8 |
) |
(13 |
) |
Balances at 7-3-15 |
|
$ |
195,067 |
|
$ |
39,861 |
|
$ |
14,766 |
|
$ |
12 |
|
$ |
54,639 |
|
Acquisitions in the table relate to the WillCare Ohio acquisition discussed further in Note 10, Acquisitions.
The following table summarizes the Companys goodwill and other intangible assets by segment:
|
|
|
|
Other Intangible Assets |
|
|
|
Goodwill |
|
Certificates of Need and Licenses |
|
Trade Names |
|
Non-compete Agreements |
|
Total |
|
Visiting Nurse |
|
$ |
148,071 |
|
$ |
39,041 |
|
$ |
11,386 |
|
$ |
6 |
|
$ |
50,433 |
|
Personal Care |
|
39,412 |
|
820 |
|
3,380 |
|
6 |
|
4,206 |
|
Healthcare Innovations |
|
7,584 |
|
|
|
|
|
|
|
|
|
Balances at 7-3-15 |
|
$ |
195,067 |
|
$ |
39,861 |
|
$ |
14,766 |
|
$ |
12 |
|
$ |
54,639 |
|
5. Revolving Credit Facility
At July 3, 2015, the Company had a senior secured revolving credit facility with JP Morgan Chase Bank, NA, as Administrative Agent, Bank of America, as Syndication Agent, and certain other lenders (the Facility). The Facility consists of a $175,000 credit line with a maturity date of November 15, 2020 and an accordion feature providing for potential future expansion of the Facility to $250,000. Borrowings (other than letters of credit) under the credit facility generally will bear interest at a rate varying from the London Interbank Offered Rate (LIBOR) plus 1.75% to LIBOR rate plus 3.00%, depending on leverage. The Facility is secured by substantially all of the Companys assets and the stock of its subsidiaries.
Borrowings under the Facility are subject to various covenants including a multiple of 3.5 times earnings before interest, taxes, depreciation and amortization (EBITDA). EBITDA may include Acquired EBITDA from pro-forma acquisitions as defined. Borrowings under the New Facility may be used for general corporate purposes, including acquisitions. Application of the Facilitys borrowing formula as of July 3, 2015, permitted an additional $80,700 to be used. The Company had irrevocable letters of credit totaling $9,800 outstanding in connection with the Companys self-insurance programs, which resulted in a total of $70,900 being available for use at July 3, 2015. As of July 3, 2015, the Company was in compliance with the various financial covenants. Under the most restrictive of its covenants, the Company was required to maintain minimum net worth of at least $172,200 at July 3, 2015. At such date, the Companys net worth was approximately $239,300.
The effective interest rates on the Companys borrowings were 2.58% and 2.39% for the three month periods ended July 3, 2015 and June 30, 2014, respectively.
9
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6. Fair Value Measurements
The Companys financial instruments consist of cash, accounts receivable, payables and debt instruments. The carrying values of cash, accounts receivable and payables are considered representative of their respective fair values due to the short-term nature of these instruments. The fair value of the Companys debt instruments approximates their carrying values as substantially all of such debt instruments have rates which fluctuate with changes in market rates. The Company does not have any assets or liabilities carried at fair value that are measured on a recurring basis.
7. Stock-Based Compensation
The Company issues both restricted share and option awards to employees and non-employee directors. Restricted share awards to employees cliff vest on the third anniversary of the grant date, while option share awards vest annually in 25% increments over four years from the grant date. Stock option grant date fair values are determined at the date of grant using a Monte Carlo option valuation model with suboptimal exercise behavior. Changes in unvested awards are summarized as follows:
|
|
Restricted shares |
|
Options |
|
|
|
Shares |
|
Wtd Avg. Grant Price |
|
Shares |
|
Wtd Avg. Exercise Price |
|
Aggregate Intrinsic Value |
|
December 31, 2014 |
|
122 |
|
$ |
22.68 |
|
427 |
|
$ |
24.89 |
|
$ |
1,734 |
|
Granted |
|
53 |
|
36.23 |
|
56 |
|
37.30 |
|
107 |
|
Vested or exercised |
|
(45 |
) |
22.87 |
|
(8 |
) |
20.91 |
|
(139 |
) |
Forfeited |
|
|
|
|
|
(2 |
) |
(20.18 |
) |
(89 |
) |
July 3, 2015 |
|
130 |
|
$ |
28.17 |
|
473 |
|
$ |
26.44 |
|
$ |
6,047 |
|
8. Earnings per Common Share
A reconciliation of the weighted average shares outstanding used in the calculation of basic and diluted earnings per common share is as follows:
|
|
Three month period ended |
|
Six month period ended |
|
|
|
July 3, 2015 |
|
June 30, 2014 |
|
July 3, 2015 |
|
June 30, 2014 |
|
Basic weighted average outstanding shares |
|
9,393 |
|
9,338 |
|
9,377 |
|
9,316 |
|
Add common equivalent shares representing shares issuable upon exercise of dilutive awards |
|
176 |
|
93 |
|
177 |
|
107 |
|
Diluted weighted average number of shares |
|
9,569 |
|
9,431 |
|
9,554 |
|
9,423 |
|
|
|
|
|
|
|
|
|
|
|
Anti-dilutive shares excluded from calculation |
|
3 |
|
261 |
|
22 |
|
96 |
|
See footnote 12, Subsequent Event related to the issuance of shares subsequent to quarter end which are expected to be dilutive to earnings per share.
9. Commitments and Contingencies
Insurance Programs
The Company bears significant insurance risk under its large-deductible workers compensation insurance program and its self-insured employee health program. Under the workers compensation insurance program, the Company bears risk up to $400 per incident, after which stop-loss coverage is maintained. The Company purchases stop-loss insurance for the employee health plan that places a specific limit, generally $300, on its exposure for any individual covered life.
10
Table of Contents
Malpractice and general patient liability claims for incidents which may give rise to litigation have been asserted against the Company by various claimants. The claims are in various stages of processing and some may ultimately be brought to trial. The Company is aware of incidents that have occurred through July 3, 2015 that may result in the assertion of additional claims. The Company currently carries professional and general liability insurance coverage (on a claims made basis) for this exposure with no deductible. The Company also carries D&O coverage (also on a claims made basis) for potential claims against the Companys directors and officers, including securities actions, with deductibles ranging from $100 to $200 per claim.
The Company records estimated liabilities for its insurance programs based on information provided by the third-party plan administrators, historical claims experience, the life cycle of claims, expected costs of claims incurred but not paid, and expected costs to settle unpaid claims. The Company monitors its estimated insurance-related liabilities and recoveries, if any, on a monthly basis and records amounts due under insurance policies in other current assets, while recording the estimated carrier liability in other current liabilities. As facts change, it may become necessary to make adjustments that could be material to the Companys results of operations and financial condition.
Legal Proceedings
The Company is currently, and from time to time, subject to claims and suits arising in the ordinary course of its business, including claims for damages for personal injuries. In the opinion of management, after discussions with legal counsel, the ultimate resolution of any of these ordinary course pending claims and legal proceedings will not have a material effect on the Companys financial position or results of operations.
10. Acquisition
On February 24, 2015 the Company signed a definitive agreement to acquire the stock of WillCare. WillCare, based in Buffalo NY, reported $72,000 in revenue in 2014 with VN and PC branch locations in New York, Connecticut and Ohio. The purchase price is expected to total between $46,000 and $53,000 based on changes in earnings and working capital between execution of the definitive agreement and the current expected close in the third quarter of 2015 pending final New York regulatory approval, which is to be heard on August 6, 2015. The transaction will be funded by borrowings under the Companys bank credit facility. On March 1, 2015, the Company acquired the stock of WillCares Ohio operations for $3,000.
11. Income Taxes
The Companys effective income tax rates from continuing operations for the three month periods ended July 3, 2015 and June 30, 2014 were approximately 40.3% and 39.2%, respectively.
Accounting principles generally accepted in the United States prescribe a recognition threshold and measurement attribute for the accounting and financial statement disclosure of tax positions taken or expected to be taken in a tax return. The evaluation of a tax position is a two-step process. The first step requires the Company to determine whether it is more likely than not that a tax position will be sustained upon examination based on the technical merits of the position. The second step requires the Company to recognize in the financial statements each tax position that meets the more likely than not criteria, measured at the amount of benefit that has a greater than 50% likelihood of being realized. The Company had $1,800 of unrecognized tax benefits at July 3, 2015, the total amount of which, if recognized, would affect the tax rate. The Company includes the full amount of unrecognized tax benefits in other liabilities in the Consolidated Balance Sheets. Additionally, the Company may from time to time be assessed interest and penalties by tax jurisdictions. Any such assessments historically have been immaterial to the Companys financial results and are classified as other general and administrative expenses in the consolidated statements of income.
11
Table of Contents
12. Subsequent Events
On July 23, 2015, the Company acquired 100% of the equity of Ingenios Health Co. for approximately 260 shares of the Companys common stock plus $2,000 in cash. Ingenios is a leading provider of technology enabled in-home clinical assessments for Medicare Advantage, Managed Medicaid and Commercial Exchange lives in 7 states and Washington, D.C. The operating results of Ingenios will be reported in the Companys Healthcare Innovations business segment, while the issuance of shares is expected to be dilutive to earnings per share.
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Table of Contents
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company
Almost Family, Inc. and subsidiaries (collectively Almost Family) is a leading regional provider of home health nursing services. In this report, the terms Company, we, us or our mean Almost Family, Inc. and all subsidiaries included in our consolidated financial statements.
Cautionary Statements - Forward Outlook and Risks
Certain statements contained in this quarterly report on Form 10-Q, including, without limitation, statements containing the words believes, anticipates, intends, expects, assumes, trends and similar expressions, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon the Companys current plans, expectations and projections about future events. However, such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors include, among others, the following:
· general economic and business conditions;
· demographic changes;
· changes in, or failure to comply with, existing governmental regulations;
· legislative proposals for healthcare reform;
· changes in Medicare and Medicaid reimbursement levels;
· changes in laws and regulations with respect to Accountable Care Organizations;
· changes in the marketplace and regulatory environment for Health Risk Assessments;
· effects of competition in the markets in which the Company operates;
· liability and other claims asserted against the Company;
· potential audits and investigations by government and regulatory agencies, including the impact of any negative publicity or litigation;
· ability to attract and retain qualified personnel;
· availability and terms of capital;
· loss of significant contracts or reduction in revenues associated with major payor sources;
· ability of customers to pay for services;
· business disruption due to natural disasters or terrorist acts;
· ability to effectively integrate, manage and keep secure our information systems;
· ability to successfully integrate the operations of acquired businesses and achieve expected synergies and operating efficiencies from the acquisition, in each case within expected time-frames or at all;
· significant deterioration in economic conditions and significant market volatility;
· effect on liquidity of the Companys financing arrangements; and
· changes in estimates and judgments associated with critical accounting policies and estimates.
For a detailed discussion of these and other factors that could cause the Companys actual results to differ materially from the results contemplated by the forward-looking statements, please refer to Item 1A. Risk Factors and Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations in the Companys annual report on Form 10-K for year ended December 31, 2014 and this Form 10-Q. The reader should not place undue reliance on forward-looking statements, which speak only as of the date of this report. Except as required by law, the Company assumes no responsibility for updating forward-looking statements to reflect unforeseen or other events after the date of this report. The Company has provided a detailed discussion of risk factors in its Form 10-K and various filings with the Securities and Exchange Commission (SEC). The reader is encouraged to review these risk factors and filings.
Critical Accounting Policies
Refer to the Critical Accounting Policies section of Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations included in our Form 10-K for the year ended December 31,
13
Table of Contents
2014 for a detailed discussion of our critical accounting policies. There have been no material changes to our critical accounting policies and estimates as described therein.
Fiscal Year End
Effective with the first quarter of 2015 the Company adopted a 52-53 fiscal reporting calendar under which it will report its annual results going forward in four equal 13-week quarters. Every fifth year, one quarter will include 14 weeks and that year will include 53 weeks of operating results. Once fully adopted, this approach will help minimize the impact of calendar differences when comparing different historical periods.
As a result of the change in the fiscal reporting calendar, the quarter ended April 3, 2015 and the year to date period January 1, 2015 through July 3, 2015 included 3 more days of results than they would have had if the change not been made. The three month period for the second quarter of 2015, which includes operating results from April 4, 2015 through July 3, 2015 had the same number of days it would have had if the reporting calendar change had not been made. However the Independence Day holiday observed on July 3, 2015 would have otherwise been reported in the next period. Including the Independence Day holiday reduced diluted EPS by $0.03 in the current period.
Operating Segments
The Company has two divisions, Home Health Care and Healthcare Innovations. The Home Health Care division is comprised of two reportable segments, Visiting Nurse Services (VN or Visiting Nurse) and Personal Care Services (PC or Personal Care). Our Healthcare Innovations division is also a reporting segment. Reportable segments have been identified based upon how management has organized the business by services provided to customers and how the chief operating decision maker manages the business and allocates resources, consistent with the criteria in ASC 280, Segment Reporting.
Our VN segment provides skilled medical services in patients homes largely to enable recipients to reduce or avoid periods of hospitalization and/or nursing home care. VN Medicare revenues include revenues from all Medicare sources including traditional Medicare and Medicare Advantage, whether paid on a per episode basis or a per visit basis. Approximately 96% of the VN segment revenues are generated from the Medicare program while the balance is generated from Medicaid and private insurance programs.
Our PC segment services are also provided in patients homes. These services (generally provided by paraprofessional staff such as home health aides) are generally of a custodial rather than skilled nature. PC revenues are typically generated on an hourly basis. Approximately 85% of the PC segment revenues are generated from Medicaid and other government programs while the balance is generated from insurance programs and private pay patients.
Our Healthcare Innovations business segment was created to separately report on our developmental activities outside our traditional home health business platform. These activities are intended ultimately, whether directly or indirectly, to benefit our patients and our payers through the enhanced provision of home health services. Our activities all share a common goal of improving patient experiences and quality outcomes while lowering costs. They include, but are not limited to, items such as: technology, information, population health management, risk-sharing, care coordination and transitions, clinical advancements, enhanced patient engagement and informed clinical decision and technology enabled in-home clinical assessments.
Certain general and administrative expenses incurred at the corporate level have not been allocated to the segments.
Acquisitions and Investment
On July 23, 2015, we acquired 100% of the equity of Ingenios Health Co. for approximately 260,000 shares of the Companys common stock plus $2 million in cash. Ingenios is a leading provider of technology enabled in-home clinical assessments for Medicare Advantage, Managed Medicaid and Commercial Exchange lives in 7 states and Washington, D.C. The operating results of Ingenios will be reported in our
14
Table of Contents
Healthcare Innovations business segment, while the issuance of shares is expected to be dilutive to earnings per share.
On February 24, 2015, we signed a definitive agreement to acquire the stock of WillCare. WillCare, based in Buffalo NY, reported $72 million in revenue in 2014 with VN and PC branch locations in New York, Connecticut and Ohio. The purchase price is expected to total between $46 and $53 million based on changes in earnings and working capital between execution of the definitive agreement and the expected close, currently expected in the third quarter of 2015 pending final New York regulatory approval, which is to be heard on August 6, 2015. The transaction will be funded by borrowings under our bank credit facility. On March 1, 2015, we acquired the stock of WillCares Ohio operations for $3 million.
On January 29, 2015, we invested $1.0 million in a development stage analytics software company, NavHealth, Inc. The cost basis investment is included in other assets in our balance sheet. We are not in a position to significantly influence the activities of NavHealth, Inc.
Health Care Reform Legislation and Medicare Regulations
The reader is encouraged to review our detailed discussion of Health Care Reform Legislation and Medicare Regulations in the similarly titled section in Part II, Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations, along with the discussion under Government Regulation in Part I, Item 1, Business including but not limited to Item 1A. Risk Factors in the Companys annual report on Form 10-K for year ended December 31, 2014.
On July 10, 2015, the Centers for Medicare and Medicaid Services (CMS) issued its proposed rule for 2016. CMS is proposing a 1.8% rate cut consisting of a 2.9% market basket update minus a 0.6% productivity adjustment, a 2.5% rebasing cut and a 1.72% case mix adjustment. CMS is proposing to implement a Value Based Purchasing (VBP) demonstration in 9 states under which certain 2016 agency specific performance measures would be used to establish individual agency reimbursement rates for 2018. The proposed rule is currently open for comment. The final rule is expected to be released in late October 2015.
Seasonality
Our VN segment operations in Florida, where nearly 34% of that segments revenues are generated, normally experience higher admissions during the first quarter and lower admissions during the third quarter than in the other quarters due to seasonal population fluctuations.
15
Table of Contents
RESULTS OF OPERATIONS
SECOND QUARTER
Consolidated
(In thousands)
|
|
Three months ended |
|
|
|
|
|
|
|
July 3, 2015 |
|
June 30, 2014 |
|
Change |
|
|
|
Amount |
|
% Rev |
|
Amount |
|
% Rev |
|
Amount |
|
% |
|
Home Health Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net service revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Visiting Nurse |
|
$ |
97,748 |
|
76.8 |
% |
$ |
96,776 |
|
77.5 |
% |
$ |
972 |
|
1.0 |
% |
Personal Care |
|
29,488 |
|
23.2 |
% |
28,160 |
|
22.5 |
% |
1,328 |
|
4.7 |
% |
|
|
127,236 |
|
100.0 |
% |
124,936 |
|
100.0 |
% |
2,300 |
|
1.8 |
% |
Operating income before corporate expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Visiting Nurse |
|
12,362 |
|
12.6 |
% |
12,445 |
|
12.9 |
% |
(83 |
) |
-0.7 |
% |
Personal Care |
|
3,724 |
|
12.6 |
% |
3,501 |
|
12.4 |
% |
223 |
|
6.4 |
% |
|
|
16,086 |
|
12.6 |
% |
15,946 |
|
12.8 |
% |
140 |
|
0.9 |
% |
Healthcare Innovations |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
130 |
|
|
|
256 |
|
|
|
(126 |
) |
-49.2 |
% |
Operating loss before noncontrolling interest |
|
(402 |
) |
NM |
|
(427 |
) |
NM |
|
25 |
|
-5.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate expenses |
|
6,898 |
|
5.4 |
% |
7,268 |
|
5.8 |
% |
(370 |
) |
-5.1 |
% |
Deal, transition and other |
|
206 |
|
0.2 |
% |
1,243 |
|
1.0 |
% |
(1,037 |
) |
-83.4 |
% |
Operating income |
|
8,580 |
|
6.7 |
% |
7,008 |
|
5.6 |
% |
1,572 |
|
22.4 |
% |
Interest expense, net |
|
(392 |
) |
-0.3 |
% |
(329 |
) |
-0.3 |
% |
(63 |
) |
19.1 |
% |
Income tax expense |
|
(3,393 |
) |
-2.7 |
% |
(2,618 |
) |
-2.1 |
% |
(775 |
) |
29.6 |
% |
Net income from continuing operations |
|
$ |
4,795 |
|
3.8 |
% |
$ |
4,061 |
|
3.2 |
% |
$ |
734 |
|
18.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA-HHO (1) |
|
$ |
10,606 |
|
8.3 |
% |
$ |
10,264 |
|
8.2 |
% |
$ |
342 |
|
3.3 |
% |
Adjusted Earnings-HHO (1) |
|
$ |
5,293 |
|
4.2 |
% |
$ |
4,921 |
|
3.9 |
% |
$ |
372 |
|
7.6 |
% |
(1) See Page 24 for GAAP reconciliation of Adjusted EBITDA from home health operations and Adjusted earnings from home health operations.
Home health operating net revenues increased $2.3 million, or 1.8%, to $127.2 million primarily on favorable Medicare reimbursement rates. Operating income from home health operations grew $0.1 million, primarily in the PC Segment, due to acquired operations and mix changes. Refer to VN and PC segment discussions below for further home health division operating performance details. Refer to Fiscal Year End related to our 52-53 reporting calendar conversion.
Corporate expenses declined as a percent of revenues to 5.4% in the 2015 period from 5.8% resulting primarily from higher management incentives in the 2014 period due to relative performance against plan on a year to date basis. Deal and transition costs declined by $1.0 million to $0.2 million from $1.2 million in 2014 as the transition of our 2013 acquisitions were completed during 2014. Deal and transition costs in 2015 were related to the WillCare and Ingenios acquisitions.
Our effective tax rate for the second quarter of 2015 was 40.3% compared to 39.2% for the second quarter of 2014. The higher income tax rate in 2015 occurred primarily due to the expiration of the Work Opportunity Tax Credit.
16
Table of Contents
Visiting Nurse Segment
|
|
Three months ended |
|
|
|
|
|
|
|
July 3, 2015 |
|
June 30, 2014 |
|
Change |
|
(In thousands, except for statistics) |
|
Amount |
|
% Rev |
|
Amount |
|
% Rev |
|
Amount |
|
% |
|
Net service revenues |
|
$ |
97,748 |
|
100.0 |
% |
$ |
96,776 |
|
100.0 |
% |
$ |
972 |
|
1.0 |
% |
Cost of service revenues |
|
46,499 |
|
47.6 |
% |
46,344 |
|
47.9 |
% |
155 |
|
0.3 |
% |
Gross margin |
|
51,249 |
|
52.4 |
% |
50,432 |
|
52.1 |
% |
817 |
|
1.6 |
% |
General and administrative expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits |
|
28,313 |
|
29.0 |
% |
27,987 |
|
28.9 |
% |
326 |
|
1.2 |
% |
Other |
|
10,574 |
|
10.8 |
% |
10,000 |
|
10.3 |
% |
574 |
|
5.7 |
% |
Total general and administrative expenses |
|
38,887 |
|
39.8 |
% |
37,987 |
|
39.3 |
% |
900 |
|
2.4 |
% |
Operating income before corporate expenses |
|
$ |
12,362 |
|
12.6 |
% |
$ |
12,445 |
|
12.9 |
% |
$ |
(83 |
) |
-0.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of locations |
|
162 |
|
|
|
173 |
|
|
|
(11 |
) |
-6.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All payors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Patient months |
|
81,067 |
|
|
|
80,412 |
|
|
|
655 |
|
0.8 |
% |
Admissions |
|
24,920 |
|
|
|
24,545 |
|
|
|
375 |
|
1.5 |
% |
Billable visits |
|
638,479 |
|
|
|
637,361 |
|
|
|
1,118 |
|
0.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medicare: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Admissions (1) |
|
22,367 |
|
90 |
% |
21,876 |
|
89 |
% |
491 |
|
2.2 |
% |
Revenue (in thousands) |
|
$ |
93,673 |
|
96 |
% |
$ |
92,412 |
|
95 |
% |
$ |
1,261 |
|
1.4 |
% |
Revenue per admission |
|
$ |
4,188 |
|
|
|
$ |
4,224 |
|
|
|
$ |
(36 |
) |
-0.9 |
% |
Billable visits (1) |
|
577,358 |
|
90 |
% |
576,001 |
|
90 |
% |
1,357 |
|
0.2 |
% |
Recertifications |
|
11,384 |
|
|
|
12,140 |
|
|
|
(756 |
) |
-6.2 |
% |
Payor mix % of Admissions |
|
|
|
|
|
|
|
|
|
|
|
|
|
Traditional Medicare Episodic |
|
84.4 |
% |
|
|
84.5 |
% |
|
|
-0.1 |
% |
|
|
Replacement Plans Paid Episodically |
|
4.0 |
% |
|
|
3.2 |
% |
|
|
0.8 |
% |
|
|
Replacement Plans Paid Per Visit |
|
11.6 |
% |
|
|
12.3 |
% |
|
|
-0.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Medicare: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Admissions (1) |
|
2,553 |
|
10 |
% |
2,669 |
|
11 |
% |
(116 |
) |
-4.3 |
% |
Revenue (in thousands) |
|
$ |
4,075 |
|
4 |
% |
$ |
4,364 |
|
5 |
% |
$ |
(289 |
) |
-6.6 |
% |
Revenue per admission |
|
$ |
1,596 |
|
|
|
$ |
1,635 |
|
|
|
$ |
(39 |
) |
-2.4 |
% |
Billable visits (1) |
|
61,121 |
|
10 |
% |
61,360 |
|
10 |
% |
(239 |
) |
-0.4 |
% |
Recertifications |
|
480 |
|
|
|
470 |
|
|
|
10 |
|
2.1 |
% |
Payor mix % of Admissions |
|
|
|
|
|
|
|
|
|
|
|
|
|
Medicaid & other governmental |
|
30.8 |
% |
|
|
22.0 |
% |
|
|
8.8 |
% |
|
|
Private payors |
|
69.2 |
% |
|
|
78.0 |
% |
|
|
-8.8 |
% |
|
|
(1) Percentages pertain to percentage of total admissions or total billable visits, as applicable.
VN segment net revenue increased by $1.0 million to $97.7 million from $96.8 million in the prior year period primarily due to an approximately 1% effective rate increase from Medicare. The average number of locations declined due to the 2014 combination of certain branches with overlapping service territory in Florida following the SunCrest acquisition.
Cost of service revenues were essentially unchanged on a per visit basis which combined with the effective Medicare rate increase which led to a slightly higher gross margin. General and administrative expenses Salaries and benefits increased 1.2% primarily due to higher wage rates. General and administrative expenses Other increased primarily due to higher provision for uncollectible accounts.
As a result, VN segment operating income before corporate expenses was $12.4 million for both periods, while VN segment operating income as percentage of revenue decreased to 12.6% from 12.9% in the prior year period.
17
Table of Contents
Personal Care Segment
|
|
Three months ended |
|
|
|
|
|
|
|
July 3, 2015 |
|
June 30, 2014 |
|
Change |
|
(In thousands, except for statistics) |
|
Amount |
|
% Rev |
|
Amount |
|
% Rev |
|
Amount |
|
% |
|
Net service revenues |
|
$ |
29,488 |
|
100.0 |
% |
$ |
28,160 |
|
100.0 |
% |
$ |
1,328 |
|
4.7 |
% |
Cost of service revenues |
|
19,825 |
|
67.2 |
% |
19,144 |
|
68.0 |
% |
681 |
|
3.6 |
% |
Gross margin |
|
9,663 |
|
32.8 |
% |
9,016 |
|
32.0 |
% |
647 |
|
7.2 |
% |
General and administrative expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits |
|
3,878 |
|
13.2 |
% |
3,573 |
|
12.7 |
% |
305 |
|
8.5 |
% |
Other |
|
2,061 |
|
7.0 |
% |
1,942 |
|
6.9 |
% |
119 |
|
6.1 |
% |
Total general and administrative expenses |
|
5,939 |
|
20.1 |
% |
5,515 |
|
19.6 |
% |
424 |
|
7.7 |
% |
Operating income before corporate expenses |
|
$ |
3,724 |
|
12.6 |
% |
$ |
3,501 |
|
12.4 |
% |
$ |
223 |
|
6.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of locations |
|
62 |
|
|
|
61 |
|
|
|
1 |
|
1.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Admissions |
|
1,651 |
|
|
|
1,653 |
|
|
|
(2 |
) |
-0.1 |
% |
Patient months of care |
|
23,722 |
|
|
|
22,502 |
|
|
|
1,220 |
|
5.4 |
% |
Billable hours |
|
1,317,978 |
|
|
|
1,348,504 |
|
|
|
(30,526 |
) |
-2.3 |
% |
Revenue per billable hour |
|
$ |
22.37 |
|
|
|
$ |
20.88 |
|
|
|
$ |
1.49 |
|
7.1 |
% |
Net service revenues increased $1.3 million, or 4.7%, to $29.5 million in 2015 from $28.2 million in 2014. Approximately $0.9 million of the revenue increase came from the WillCare Ohio acquisition and the balance came from changes in business mix. Cost of service revenues as a percentage of Net service revenues decreased slightly to 67.2% in 2015 from 68.0% in 2014, primarily due to changes in business mix.
Total general and administrative expenses as a percent of net service revenues increased to 20.2% in 2015 from 19.6% in 2014, primarily due to a $0.3 million increase in bad debt provision in certain states that transitioned to Medicaid Management Care providers.
PC segment operating income before corporate expenses increased to $3.7 million from $3.5 million in 2014, while operating income before corporate expenses as percentage of revenue increased 0.2%.
18
Table of Contents
YEAR TO DATE
Consolidated
(In thousands)
|
|
Six months ended |
|
|
|
|
|
|
|
July 3, 2015 |
|
June 30, 2014 |
|
Change |
|
|
|
Amount |
|
% Rev |
|
Amount |
|
% Rev |
|
Amount |
|
% |
|
Home Health Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net service revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Visiting Nurse |
|
$ |
197,283 |
|
77.2 |
% |
$ |
189,949 |
|
77.5 |
% |
$ |
7,334 |
|
3.9 |
% |
Personal Care |
|
58,249 |
|
22.8 |
% |
55,020 |
|
22.5 |
% |
3,229 |
|
5.9 |
% |
|
|
255,532 |
|
100.0 |
% |
244,969 |
|
100.0 |
% |
10,563 |
|
4.3 |
% |
Operating income before corporate expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Visiting Nurse |
|
24,786 |
|
12.6 |
% |
21,193 |
|
11.2 |
% |
3,593 |
|
17.0 |
% |
Personal Care |
|
6,599 |
|
11.3 |
% |
6,140 |
|
11.2 |
% |
459 |
|
7.5 |
% |
|
|
31,385 |
|
12.3 |
% |
27,333 |
|
11.2 |
% |
4,052 |
|
14.8 |
% |
Healthcare Innovations |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
233 |
|
|
|
563 |
|
|
|
(330 |
) |
-58.6 |
% |
Operating loss before noncontrolling interest |
|
(919 |
) |
NM |
|
(683 |
) |
NM |
|
(236 |
) |
34.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate expenses |
|
13,900 |
|
5.4 |
% |
12,966 |
|
5.3 |
% |
934 |
|
7.2 |
% |
Deal, transition and other |
|
614 |
|
0.2 |
% |
4,357 |
|
1.8 |
% |
(3,743 |
) |
-85.9 |
% |
Operating income |
|
15,952 |
|
6.2 |
% |
9,327 |
|
3.8 |
% |
6,625 |
|
71.0 |
% |
Interest expense, net |
|
(753 |
) |
-0.3 |
% |
(677 |
) |
-0.3 |
% |
(76 |
) |
11.2 |
% |
Income tax expense |
|
(6,380 |
) |
-2.5 |
% |
(3,435 |
) |
-1.4 |
% |
(2,945 |
) |
85.7 |
% |
Net income from continuing operations |
|
$ |
8,819 |
|
3.4 |
% |
$ |
5,215 |
|
2.1 |
% |
$ |
3,604 |
|
69.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA-HHO (1) |
|
$ |
20,442 |
|
8.0 |
% |
$ |
17,505 |
|
7.1 |
% |
$ |
2,937 |
|
16.8 |
% |
Adjusted Earnings-HHO (1) |
|
$ |
10,112 |
|
4.0 |
% |
$ |
8,210 |
|
3.4 |
% |
$ |
1,902 |
|
23.2 |
% |
(1) See Page 24 for GAAP reconciliation of Adjusted EBITDA from home health operations and Adjusted earnings from home health operations.
Home health operating net revenues increased $10.6 million, or 4.3%, to $255.5 million on higher volumes and rates. Operating income from home health operations grew $4.0 million, primarily in the VN Segment, where additional volumes and favorable Medicare reimbursement combined to increase our operating margin by 1.4%. Refer to VN and PC segment discussions below for further home health division operating performance details. Refer to Fiscal Year End related to our 52-53 reporting calendar conversion.
Our Healthcare Innovations operating loss deteriorated slightly as lower monthly fee revenues were only partially offset by lower labor and administrative expenses.
Corporate expenses for 2015 increased slightly as a percentage of revenue to 5.4% from 5.3% in the prior year period, primarily related to support for acquisitions and organic growth. Deal and transition costs declined by $3.7 million to $0.6 million from $4.4 million in 2014 as the transition of our 2013 acquisitions were completed during 2014. Deal and transition costs in 2015 were related to the WillCare and Ingenios acquisitions.
Our year to date effective tax rate for 2015 was 40.4% compared to 39.7% for the prior year. The higher income tax rate in 2015 occurred primarily due to the expiration of the Work Opportunity Tax Credit.
19
Table of Contents
Visiting Nurse Segment
|
|
Six months ended |
|
|
|
|
|
|
|
July 3, 2015 |
|
June 30, 2014 |
|
Change |
|
(In thousands, except for statistics) |
|
Amount |
|
% Rev |
|
Amount |
|
% Rev |
|
Amount |
|
% |
|
Net service revenues |
|
$ |
197,283 |
|
100.0 |
% |
$ |
189,949 |
|
100.0 |
% |
$ |
7,334 |
|
3.9 |
% |
Cost of service revenues |
|
94,583 |
|
47.9 |
% |
93,031 |
|
49.0 |
% |
1,552 |
|
1.7 |
% |
Gross margin |
|
102,700 |
|
52.1 |
% |
96,918 |
|
51.0 |
% |
5,782 |
|
6.0 |
% |
General and administrative expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits |
|
56,991 |
|
28.9 |
% |
55,146 |
|
29.0 |
% |
1,845 |
|
3.3 |
% |
Other |
|
20,923 |
|
10.6 |
% |
20,579 |
|
10.8 |
% |
344 |
|
1.7 |
% |
Total general and administrative expenses |
|
77,914 |
|
39.5 |
% |
75,725 |
|
39.9 |
% |
2,189 |
|
2.9 |
% |
Operating income before corporate expenses |
|
$ |
24,786 |
|
12.6 |
% |
$ |
21,193 |
|
11.2 |
% |
$ |
3,593 |
|
17.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of locations |
|
162 |
|
|
|
174 |
|
|
|
(12 |
) |
-6.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All payors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Patient months |
|
162,049 |
|
|
|
159,600 |
|
|
|
2,449 |
|
1.5 |
% |
Admissions |
|
51,199 |
|
|
|
49,651 |
|
|
|
1,548 |
|
3.1 |
% |
Billable visits |
|
1,281,071 |
|
|
|
1,248,405 |
|
|
|
32,666 |
|
2.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medicare: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Admissions (1) |
|
46,089 |
|
90 |
% |
44,337 |
|
89 |
% |
1,752 |
|
4.0 |
% |
Revenue (in thousands) |
|
$ |
188,794 |
|
96 |
% |
$ |
181,388 |
|
95 |
% |
$ |
7,406 |
|
4.1 |
% |
Revenue per admission |
|
$ |
4,096 |
|
|
|
$ |
4,091 |
|
|
|
$ |
5 |
|
0.1 |
% |
Billable visits (1) |
|
1,161,796 |
|
91 |
% |
1,128,402 |
|
90 |
% |
33,394 |
|
3.0 |
% |
Recertifications |
|
23,311 |
|
|
|
24,055 |
|
|
|
(744 |
) |
-3.1 |
% |
Payor mix % of Admissions |
|
|
|
|
|
|
|
|
|
|
|
|
|
Traditional Medicare Episodic |
|
84.3 |
% |
|
|
83.9 |
% |
|
|
0.4 |
% |
|
|
Replacement Plans Paid Episodically |
|
4.0 |
% |
|
|
3.2 |
% |
|
|
0.8 |
% |
|
|
Replacement Plans Paid Per Visit |
|
11.7 |
% |
|
|
12.9 |
% |
|
|
-1.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Medicare: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Admissions (1) |
|
5,110 |
|
10 |
% |
5,314 |
|
11 |
% |
(204 |
) |
-3.8 |
% |
Revenue (in thousands) |
|
$ |
8,489 |
|
4 |
% |
$ |
8,561 |
|
5 |
% |
$ |
(72 |
) |
-0.8 |
% |
Revenue per admission |
|
$ |
1,661 |
|
|
|
$ |
1,611 |
|
|
|
$ |
50 |
|
3.1 |
% |
Billable visits (1) |
|
119,275 |
|
9 |
% |
120,003 |
|
10 |
% |
(728 |
) |
-0.6 |
% |
Recertifications |
|
907 |
|
|
|
934 |
|
|
|
(27 |
) |
-2.9 |
% |
Payor mix % of Admissions |
|
|
|
|
|
|
|
|
|
|
|
|
|
Medicaid & other governmental |
|
30.8 |
% |
|
|
21.6 |
% |
|
|
9.2 |
% |
|
|
Private payors |
|
69.2 |
% |
|
|
78.4 |
% |
|
|
-9.2 |
% |
|
|
(1) Percentages pertain to percentage of total admissions or total billable visits, as applicable.
VN segment net revenue increased by $7.3 million to $197.3 million from $189.9 million in the prior year period primarily due to higher volumes and an effective Medicare rate increase of about 1%. The average number of locations declined due to the 2014 combination of certain branches with overlapping service territory in Florida following the SunCrest acquisition.
Gross margin as a percent of revenue increased 1.1% primarily due to the Medicare rate increase. General and administrative expenses Salaries and benefits increased due to a combination of higher patient months and higher wage rates. General and administrative expenses Other increased primarily due to higher provision for uncollectible accounts.
As a result, VN segment operating income before corporate expenses improved to $24.8 million from $21.2 million in the prior year period, while VN segment operating income as percentage of revenue increased to 12.6% from 11.2% in the prior year period.
20
Table of Contents
Personal Care Segment
|
|
Six months ended |
|
|
|
|
|
|
|
July 3, 2015 |
|
June 30, 2014 |
|
Change |
|
(In thousands, except for statistics) |
|
Amount |
|
% Rev |
|
Amount |
|
% Rev |
|
Amount |
|
% |
|
Net service revenues |
|
$ |
58,249 |
|
100.0 |
% |
$ |
55,020 |
|
100.0 |
% |
$ |
3,229 |
|
5.9 |
% |
Cost of service revenues |
|
40,022 |
|
68.7 |
% |
37,893 |
|
68.9 |
% |
2,129 |
|
5.6 |
% |
Gross margin |
|
18,227 |
|
31.3 |
% |
17,127 |
|
31.1 |
% |
1,100 |
|
6.4 |
% |
General and administrative expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits |
|
7,775 |
|
13.3 |
% |
7,056 |
|
12.8 |
% |
719 |
|
10.2 |
% |
Other |
|
3,853 |
|
6.6 |
% |
3,931 |
|
7.1 |
% |
(78 |
) |
-2.0 |
% |
Total general and administrative expenses |
|
11,628 |
|
20.0 |
% |
10,987 |
|
20.0 |
% |
641 |
|
5.8 |
% |
Operating income before corporate expenses |
|
$ |
6,599 |
|
11.3 |
% |
$ |
6,140 |
|
11.2 |
% |
$ |
459 |
|
7.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of locations |
|
62 |
|
|
|
61 |
|
|
|
1 |
|
1.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Admissions |
|
3,078 |
|
|
|
3,172 |
|
|
|
(94 |
) |
-3.0 |
% |
Patient months of care |
|
46,488 |
|
|
|
44,359 |
|
|
|
2,129 |
|
4.8 |
% |
Billable hours |
|
2,604,862 |
|
|
|
2,635,794 |
|
|
|
(30,932 |
) |
-1.2 |
% |
Revenue per billable hour |
|
$ |
22.36 |
|
|
|
$ |
20.87 |
|
|
|
$ |
1.49 |
|
7.1 |
% |
Net service revenues increased $3.2 million, or 5.9%, to $58.2 million in 2015 from $55.0 million in 2014 primarily due to mix changes and the WillCare Ohio acquisition. Cost of service revenues as a percentage of Net service revenues decreased slightly to 68.7% in 2015 from 68.9% in 2014, primarily due to changes in business mix.
Total general and administrative expenses as a percent of net service revenues was 20.0% in 2015 and 2014.
As a result, PC segment operating income before corporate expenses increased to $6.6 million from $6.1 million in 2014, while operating income before corporate expenses as percentage of revenue increased 0.1%.
21
Table of Contents
Liquidity and Capital Resources
Revolving Credit Facility
At July 3, 2015, we had a senior secured revolving credit facility with JP Morgan Chase Bank, NA, as Administrative Agent, Bank of America, as Syndication Agent, and certain other lenders (the Facility). The Facility consists of a $175 million credit line with a maturity date of November 15, 2020 and an accordion feature providing for potential future expansion of the Facility to $250 million. Borrowings (other than letters of credit) under the credit facility generally will bear interest at a rate varying from the London Interbank Offered Rate (LIBOR) plus 1.75% to LIBOR rate plus 3.00%, depending on leverage. The Facility is secured by substantially all of our assets and the stock of our subsidiaries.
Borrowings under the Facility are subject to various covenants including a multiple of 3.5 times earnings before interest, taxes, depreciation and amortization (EBITDA). EBITDA may include Acquired EBITDA from pro-forma acquisitions as defined. Borrowings under the New Facility may be used for general corporate purposes, including acquisitions. Application of the Facilitys borrowing formula as of July 3, 2015, permitted $80.7 million to be used. We had irrevocable letters of credit totaling $9.8 million outstanding in connection with our self-insurance programs, which resulted in a total of $70.9 million being available for use at July 3, 2015. As of July 3, 2015, we were in compliance with the various financial covenants. Under the most restrictive of its covenants, we were required to maintain minimum net worth of at least $172.2 million at July 3, 2015. At such date, our net worth was approximately $239.3 million.
We believe that this facility plus cash on hand will be sufficient to fund our operating needs and expansion plans for at least the next year. We will continue to evaluate additional capital, including possible debt and equity investments in the Company, to support a more rapid development of the business than would be possible with internal funds.
Cash Flows
Key elements to the Consolidated Statements of Cash Flows for the six month periods ended July 3, 2015 and June 30, 2014 were:
Net Change in Cash and Cash Equivalents (in thousands) |
|
2015 |
|
2014 |
|
(Used in) provided by: |
|
|
|
|
|
Operating activities |
|
$ |
5,026 |
|
$ |
(2,098 |
) |
Investing activities |
|
(5,147 |
) |
(1,704 |
) |
Financing activities |
|
(297 |
) |
(6,037 |
) |
Discontinued operations activities |
|
30 |
|
358 |
|
Net change in cash and cash equivalents |
|
$ |
(388 |
) |
$ |
(9,481 |
) |
2015
Net cash provided by operating activities resulted primarily from current period net income of $8.8 million plus certain non-cash items, net of changes in accounts receivable, accounts payable and accrued expenses. Accounts receivable days sales outstanding, which were 59 at July 3, 2015 and 55 at December 31, 2014 increased due to collection delays, primarily in the PC segment, due to changes in patient enrollment and billing requirements enacted by the Medicaid managed care providers in the states of Tennessee and to a lesser degree Ohio. Accounts receivable days sales outstanding declined by 3 days during the three months ended July 3, 2015.
Cash used in investing activities was primarily due to our March 1, 2015 acquisition of the stock of WillCares Ohio operations for $3.0 million, capital expenditures of $1.1 million and a $1.0 million cost basis investment.
22
Table of Contents
2014
Net cash used in operating activities resulted primarily from current period net income of $5.2 million plus certain non-cash items, net of an increase in accounts receivable, and decreases in accounts payable and accrued expenses. The cash used in investing activities was primarily due to an April 2014 acquisition and capital expenditures. Cash used in financing activities resulted from $6.0 million of payments on the revolving credit facility.
Impact of Inflation
Management does not believe that inflation has had a material effect on income during the past several years.
23
Table of Contents
Non-GAAP Financial Measures
The information provided in some of the tables use certain non-GAAP financial measures as defined under SEC rules. In accordance with SEC rules, the Company has provided, in the supplemental information below, a reconciliation of those measures to the most directly comparable GAAP measures.
Adjusted Earnings from Home Health Operations
Adjusted earnings from home health operations (Adjusted Earnings-HHO) is not a measure of financial performance under accounting principles generally accepted in the United States of America (US GAAP). 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. We believe the use of non-GAAP measures on a consolidated and business segment basis assists investors in understanding the ongoing operating performance by presenting comparable financial results between periods. The non-GAAP information provided is used by us and may not be determined in a manner consistent with the methodologies used by other companies.
|
|
Three month period ended |
|
Six month period ended |
|
(in thousands) |
|
July 3, 2015 |
|
June 30, 2014 |
|
July 3, 2015 |
|
June 30, 2014 |
|
Net income attributable to Almost Family, Inc. |
|
$ |
5,010 |
|
$ |
3,961 |
|
$ |
9,403 |
|
$ |
5,234 |
|
|
|
|
|
|
|
|
|
|
|
Addbacks: |
|
|
|
|
|
|
|
|
|
Deal, transition and other, net of tax |
|
123 |
|
740 |
|
365 |
|
2,592 |
|
Loss on discontinued operations, net of tax |
|
13 |
|
64 |
|
8 |
|
134 |
|
Adjusted earnings |
|
5,146 |
|
4,765 |
|
9,776 |
|
7,960 |
|
Healthcare Innovations operating loss after Noncontrolling interest, net of tax |
|
147 |
|
156 |
|
336 |
|
250 |
|
Adjusted Earnings-HHO |
|
$ |
5,293 |
|
$ |
4,921 |
|
$ |
10,112 |
|
$ |
8,210 |
|
Adjusted EBITDA from Home Health Operations
Adjusted earnings before interest, income tax, depreciation, amortization, amortization of stock-based compensation, Healthcare Innovations operating loss and deal, transition and other from Home Health Operations (Adjusted EBITDA-HHO) is not a measure of financial performance under U.S. GAAP. 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-HHO are significant components in understanding and evaluating financial performance and liquidity. Management routinely calculates and communicates Adjusted EBITDA-HHO 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 used in certain covenants contained in our Credit Facility.
The following table sets forth a reconciliation of net income to Adjusted EBITDA-HHO as of July 3 (in thousands):
|
|
Three month period ended |
|
Six month period ended |
|
(in thousands) |
|
July 3, 2015 |
|
June 30, 2014 |
|
July 3, 2015 |
|
June 30, 2014 |
|
Net income from continuing operations |
|
$ |
4,795 |
|
$ |
4,061 |
|
$ |
8,819 |
|
$ |
5,215 |
|
Add back: |
|
|
|
|
|
|
|
|
|
Interest expense |
|
392 |
|
329 |
|
753 |
|
677 |
|
Income tax expense |
|
3,393 |
|
2,618 |
|
6,380 |
|
3,435 |
|
Depreciation and amortization |
|
862 |
|
1,050 |
|
1,780 |
|
2,152 |
|
Stock-based compensation from HHO |
|
485 |
|
458 |
|
1,005 |
|
872 |
|
Deal and transition costs |
|
206 |
|
1,243 |
|
614 |
|
4,357 |
|
Adjusted EBITDA |
|
10,133 |
|
9,759 |
|
19,351 |
|
16,708 |
|
Healthcare Innovation operating loss |
|
473 |
|
505 |
|
1,091 |
|
797 |
|
Adjusted EBITDA from HHO |
|
$ |
10,606 |
|
$ |
10,264 |
|
$ |
20,442 |
|
$ |
17,505 |
|
24
Table of Contents
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Derivative Instruments
The Company does not use derivative instruments.
Market Risk of Financial Instruments
Our primary market risk exposure with regard to financial instruments is to changes in interest rates on long-term obligations.
At July 3, 2015, a hypothetical 100 basis point increase in short-term interest rates would result in a reduction of approximately $0.5 million in our quarter pre-tax earnings.
ITEM 4. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures As of July 3, 2015, the Companys management, with participation of the Companys Chief Executive Officer and Principal Financial Officer, evaluated the effectiveness of the Companys disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e). Based on that evaluation, the Chief Executive Officer and Principal Financial Officer concluded that the Companys disclosure controls and procedures were effective as of July 3, 2015.
Changes in Internal Control Over Financial Reporting - There were no changes in the Companys internal control over financial reporting during the second quarter of 2015, that have materially affected, or are reasonably likely to materially affect, Almost Family, Inc.s internal control over financial reporting.
25
Table of Contents
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we are subject to various legal actions arising in the ordinary course of our business, including claims for damages for personal injuries. In our opinion, after discussion with legal counsel, the ultimate resolution of any of these pending ordinary course claims and legal proceedings will not have a material effect on our financial position or results of operations.
ITEM 1A. RISK FACTORS
Information regarding risk factors appears in our Form 10-K for the year ending December 31, 2014, under the heading Special Caution Regarding Forward Looking Statements and in the Form 10-K Part I, Item 1A. Risk Factors. There have been no material changes from the risk factors disclosed in our Form 10-K and subsequent Form 10-Q.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities (1)
|
|
|
|
(d) Maximum Number |
|
Period |
|
(a) Total Number of Shares (or Units) Purchased (1) |
|
(b) Average Price Paid per Share (or Unit) |
|
c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs |
|
(or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs |
|
April 4, 2015 - May 1, 2015 |
|
|
|
$ |
|
|
|
|
|
|
May 2, 2015 - May 29, 2015 |
|
462 |
|
$ |
39.05 |
|
|
|
|
|
May 30, 2015 - July 3, 2015 |
|
1,057 |
|
$ |
41.96 |
|
|
|
|
|
Total |
|
1,519 |
|
$ |
41.07 |
|
|
|
|
|
(1) Shares were submitted by optionees in lieu of cash purchase price that would have otherwise been due on exercise in transactions approved by the Companys Board of Directors.
26
Table of Contents
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS
31.1
Certifications of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certifications of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certifications of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
Certifications of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101
Financial statements from the quarterly report on Form 10-Q of Almost Family, Inc. for the quarter ended July 3, 2015, filed on July 30, 2015, formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Cash Flows, and (iv) the Notes to Consolidated Financial Statements.
27
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
ALMOST FAMILY, INC. |
|
|
Date July 30, 2015 |
By: |
/s/ William B. Yarmuth |
|
|
William B. Yarmuth |
|
|
Chairman of the Board and |
|
|
Chief Executive Officer |
|
|
|
|
|
|
|
By: |
/s/ C. Steven Guenthner |
|
|
C. Steven Guenthner |
|
|
President and |
|
|
Principal Financial Officer |
28
Exhibit 31.1
CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT
I, William B. Yarmuth, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Almost Family, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: July 30, 2015 |
By |
/s/ William B. Yarmuth |
|
|
William B. Yarmuth |
|
|
Chairman of the Board and Chief |
|
|
Executive Officer |
1
Exhibit 31.2
CERTIFICATIONS OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT
I, C. Steven Guenthner, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Almost Family, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: July 30, 2015 |
By |
/s/ C. Steven Guenthner |
|
|
C. Steven Guenthner |
|
|
President and |
|
|
Principal Financial Officer |
1
Exhibit 32.1
CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
(AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)
I, William B. Yarmuth, Chief Executive Officer of Almost Family, Inc. (the Company), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
(1) The Quarterly Report on Form 10-Q of the Company for the quarter ended July 3, 2015 (the Report) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: July 30, 2015 |
By |
/s/ William B. Yarmuth |
|
|
William B. Yarmuth |
|
|
Chairman of the Board and Chief |
|
|
Executive Officer |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
1
Exhibit 32.2
CERTIFICATIONS OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
(AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)
I, C. Steven Guenthner, Principal Financial Officer of Almost Family, Inc. (the Company), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
(1) The Quarterly Report on Form 10-Q of the Company for the quarter ended July 3, 2015 (the Report) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: July 30, 2015 |
By |
/s/ C. Steven Guenthner |
|
|
C. Steven Guenthner |
|
|
President and Principal Financial |
|
|
Officer |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
1
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