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FOR IMMEDIATE RELEASE September 17, 2001
Almost Family Retains Visiting Nurse Operations
Expects One-Time Gain of $0.44 per share
Louisville, KY - Almost Family, Inc. (NASDAQ:AFAM) made the following
announcements today:
o The Company's Board of Directors voted to terminate its previously adopted
plan of disposition for its Visiting Nurse (VN) operations. This decision
followed a period of extensive analysis and evaluation of numerous
alternatives for the business unit.
o The decision to retain the VN operations is expected to result in a
one-time gain of approximately $1.1 million or $0.44 per share from the
reversal of previously recorded disposition charges.
o The Board of Directors voted to change the Company's fiscal year end from
March 31 to December 31 effective December 31, 2001.
o The next annual meeting of the shareholders has been set for November 12,
2001.
Decision to Retain and Develop VN Operations
"After a very thorough analysis of the alternatives available to us we have
reached the conclusion that the best way to maximize value for our shareholders
is to keep this business and, in fact, to further invest in its growth and
development", said William B. Yarmuth, AFAM's Chairman and CEO. "As we have
commented in our last few earnings releases, we have been very pleased with the
performance of our Visiting Nurse operations under Medicare's Prospective
Payment System (PPS). Our management team has adapted very well to the new
reimbursement environment. So well in fact that we believe our best way to
maximize shareholder value is to give this management team the opportunity to
build the business."
With regard to the future development of Almost Family, Yarmuth added: "The
decision to keep and further develop the VN business is not a shift in overall
strategy for us. We will continue on our mission to be the nation's premier
provider of services to help seniors and other special needs adults avoid
institutional care settings for as long as possible. This decision gives formal
recognition to the fact that the VN operations can and should be an integral
part of accomplishing that mission."
Following the decision to retain and develop its VN operations, the Company
expects to, in the quarter ended September 30, 2001, report a one-time gain of
approximately $1.1 million, or $0.44 per share, resulting from the reversal of
the remainder of previously recorded accounting reserves established for the
expected costs of completing the plan of disposition. The Company will terminate
the use of discontinued operations accounting treatment for the VN segment, the
results of which will now be reported as an on-going part of the continuing
operations of the Company. The Company will follow the prescribed rules of
segment reporting for its ADHS and VN segments.
In reaching its conclusion to retain and further develop its VN operations, the
Company has taken into account the currently mandated "15% rate cut" for
Medicare reimbursement rates. Such a rate cut, if eventually implemented, would
have an adverse impact on the earnings and cash flows of the VN operations.
Although there can be no assurance, the Company believes that, even if such a
rate cut were implemented, its VN operations will remain viable and profitable
and that the visiting nurse business will continue to present attractive
opportunities for investment.
The Board was advised in its decision to retain the VN operations by the
investment banking firm of Ewing Monroe Bemiss & Co. of Richmond VA.
The following table sets forth the combined operating results of Almost Family
with the VN segment included in continuing operations for each of the five
quarters in the period ended June 30, 2001. Note that the Medicare PPS
reimbursement system went into effect at the beginning of the Company's quarter
ended December 31, 2001 (3Q 2001):
Income Statements Consolidated - With VN in Continuing Operations
1Q 2002 4Q 2001 3Q 2001 2Q 2001 1Q 2001
Net revenues $19,273,646 $19,489,081 $19,289,863 $18,319,271 $18,116,685
Cost of sales and services 14,703,604 15,461,091 15,161,781 15,115,212 14,928,773
General and admin. expenses 2,146,656 2,032,191 1,941,390 2,058,840 2,235,666
Depreciation and amortization
Expense 404,078 300,811 413,853 384,562 448,088
Provision for
uncollectible accounts 320,677 301,435 279,626 361,653 192,209
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Income before other
income (expense) and
income taxes 1,698,631 1,393,553 1,493,213 399,004 311,949
Other income (expense)
Interest Expense (230,649) (184,337) (222,465) (233,398) (175,454)
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Income before income taxes 1,467,982 1,209,216 1,270,748 165,606 136,495
Provision (benefit) for
income taxes 614,286 457,590 605,334 145,092 99,445
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Net income (loss) from
Continuing Operations $ 853,696 $ 751,626 $665,414 $ 20,514 $37,050
=================================================================
Earnings Per Share From
Continuing Operations
Basic $ 0.34 $ 0.24 $ 0.21 $ 0.01 $ 0.01
Dilute $ 0.29 $ 0.23 $ 0.20 $ 0.01 $ 0.01
Earnings Before Interest,
Taxes, Depreciation and
Amortization (EBITDA) $2,102,709 $1,694,364 $1,907,066 $783,566 $ 760,037
=================================================================
Additionally, the following table presents selected supplemental data on each of
the Company's two operating segments:
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Segment Data Consolidated Segment Data
1Q 2002 4Q 2001 3Q 2001 2Q 2001 1Q 2001
Revenues $12,555,117 $12,737,588 $12,621,389 $12,545,155 $11,776,440
ADHS 6,718,529 6,751,493 6,668,474 5,774,116 6,340,245
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VN $19,273,646 $19,489,081 $19,289,863 $18,319,271 $18,116,685
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EBITDA Before
Unallocated Cor-
porate Costs
ADHS $ 1,430,533 $ 1,121,244 $ 1,459,643 $ 1,595,294 $ 1,221,665
VN 1,150,426 920,212 774,722 (465,407) (64,059)
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2,580,959 2,041,456 2,234,365 1,129,887 1,157,606
Unallocated Cor-
porate Costs 478,250 347,092 327,299 346,321 397,569
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EBITDA $ 2,102,709 $ 1,694,364 $ 1,907,066 $ 783,566 $ 760,037
================================================================
Finally, the following table reflects summary consolidated balance sheet
information as of June 30, 2001 as if discontinued operations accounting
treatment had not been used as of that reporting date:
Summary Balance Sheet Information
See Note (1)
Current Assets $ 20,480,000
Property, Plant & Equipment 6,870,000
Goodwill and Intangibles 3,870,000
Deferred Tax Assets 1,240,000
Other Assets 1,050,00
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$ 33,500,000
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Current Liabilities $ 11,710,000
Debt and Capital Lease Obligations 10,740,000
Other Liabilities 700,000
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23,140,000
Equity 10,360,000
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$ 33,500,000
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(1) Includes an estimate for reversal of previously recorded losses expected to
be incurred in completing plan of disposition.
The Company plans to announce earnings for the quarter and six months ended
September 30, 2001 on or about October 31, 2001 with the filing of its Form 10Q
to follow shortly thereafter. Consolidated earnings from continuing operations
for the September quarter are expected to be consistent with those for the June
quarter shown above. The report for the September quarter will also include a
supplemental unaudited statement of operations for the twelve months ended
September, which will include the first full year of operation under the
Medicare PPS reimbursement system.
Change in Year End
The Company announced today that its Board of Directors has approved a change in
the Company's yearend from March 31 to December 31, effective December 31, 2001.
The Company will report its operating results for the nine-month period ended
December 31, 2001 on Form 10K and will subsequently report on annual periods
ending December 31 thereafter. The Company believes that those analyzing the
results of operations, and in particular, those comparing its results to others,
will find that analysis and comparison to be easier if the Company reports on a
calendar year basis.
Almost Family, Inc. is an adult day health care services company focused on
providing alternatives for seniors and other special needs adults who wish to
avoid nursing home and other institutional placement. The Company has
locations in Kentucky, Maryland, Alabama, Massachusetts, Connecticut,
Indiana, Ohio, and Florida.
Contact: William Yarmuth or Steve Guenthner (502) 899-5355.
All statements, other than statements of historical facts, included in
this news release, including the objectives and expectations of management for
future operating results, the Company's ability to acquire or start new visiting
nurse agencies, and the Company's ability to operate profitably under Medicare
PPS, are forward-looking statements. These forward-looking statements are based
on the Company's current expectations. Although the company believes that the
expectations expressed or implied in such forward-looking statements are
reasonable, there can be no assurance that such expectations will prove to be
correct.
Because forward-looking statements involve risks and uncertainties, the
Company's actual results could differ materially. The potential risks and
uncertainties which could cause actual results to differ materially could
include the impact of further changes in healthcare reimbursement systems,
including the ultimate effects of implementation of Medicare Prospective Payment
System, potential changes to the Medicare PPS, the ability of the Company to
maintain its level of operating performance, the cost control and earnings
objectives of its plan for operating its visiting nurse division under Medicare
PPS; government regulation; health care reform; pricing pressures from Medicaid
and other third-party payers; and changes in laws and interpretations of laws
relating to the healthcare industry. For a more complete discussion regarding
these and other factors which could affect the company's financial performance,
refer to the company's Securities and Exchange Commission filing on Form 10-K
for the year ended March 31, 2001, in particular information under the headings
"Business" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations." The Company disclaims any intent or obligation to update
its forward-looking statements.