Almost Family Announces Quarterly and Year End Results

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FY 2006 EPS from Continuing Operations up 67% over 2005, excluding one-time

     items

    LOUISVILLE, Ky., March 12 /-/ -- Almost Family, Inc. (Nasdaq: AFAM) today announced its operating results for the quarter and year ended December 31, 2006.

    Fourth Quarter Financial Highlights

    -- Net Income From Continuing Operations -- As Reported was $1,395,586 or

     $0.26 per diluted share in the quarter ended December 31, 2006 as

     compared to $1,272,396 or $0.24 per diluted share in the same quarter

     of 2005.

    -- Net Income From Continuing Operations -- As Adjusted, (excluding for

     2005 a one-time litigation settlement gain and the effect of changes in

     state income tax valuation allowances), was $1,395,586 or $0.26 per

     diluted share in the quarter ended December 31, 2006 as compared to

     $852,299 or $0.16 per diluted share in the same quarter of 2005 for

     diluted EPS growth of 63%.

    -- Consolidated revenues increased approximately 36% over the same quarter

     last year.

    -- The Company's VN segment revenues grew 63% over the same quarter last

     year.

    Fiscal Year Financial 2006 Highlights

    -- Net Income From Continuing Operations -- As Reported was $4,273,526 or

     $0.80 per diluted share in 2006 as compared to $2,950,607 or $0.57 per

     diluted share in 2005.

    -- Net Income From Continuing Operations -- As Adjusted, (excluding for

     2005 a one-time litigation settlement gain and the effect of changes in

     state income tax valuation allowances), was $4,273,526 or $0.80 per

     diluted share in 2006 as compared to $2,530,510 or $0.48 per diluted

     share in 2005 for diluted EPS growth of 67%

    -- Consolidated revenues increased approximately 22% over last year

    -- The Company's VN segment revenues grew 39% over last year

    -- During 2006, the Company invested approximately $25 million of capital

     in acquisitions and startup home health agencies.

    William B. Yarmuth, AFAM's Chairman and CEO commented on the results:

    "We are extremely pleased to report our fourth quarter results. Excluding 2005 one-time items our diluted earnings per share from continuing operations increased 63%. All three prongs of our growth strategy: 1) same store sales growth, 2) startups and 3) acquisitions continue to contribute significantly to our performance. In 2006 we were once again able to dramatically improve our earnings per share and EBITDA, complete acquisitions with a combined annual revenue run rate of over $30 million, generate meaningful internal revenue growth and still exit the year with substantial financial capacity to fuel continued future growth."

    "In 2006 our shareholders saw an unprecedented increase in the value of their investment. This is a direct result of the continued commitment and dedication of all our employees, and I thank them sincerely for their outstanding efforts."

    Quarterly Discussion

    Net Income From Continuing Operations -- As Reported grew 10% to $1,395,586 or $0.26 per diluted share for the December 2006 quarter as compared to $1,272,396 or $0.24 per diluted share in the December 2005 quarter (which including a net gain on litigation settlement of $267,426 or $0.05 per diluted share and the effect of revised state income tax valuation allowances of $152,671 or $0.03 per diluted share). Revenues grew 36% to $26.2 million in the December 2006 quarter from $19.2 million in the December 2005 quarter. The quarter ended December 2006 included approximately $2 million of revenue from the Mederi acquisition completed December 3, 2006.

    Revenues in the Company's "Caretenders" Visiting Nurse (VN) segment grew 63% over the same period last year. Acquired operations contributed approximately $3.7 million of that revenue growth. The $2.8 million balance of the VN revenue increase came from internal growth.

    Net income including discontinued operations, was $1,469,065 or $0.27 per diluted share in the quarter ended December 31, 2006 and $1,483,036 or $0.28 per diluted share in 2005.

    Results of operations for the quarters ended December 31, 2006 and 2005

     are set forth in the tables below:

     December December

     2006 2005 Change

     Amount % Rev Amount % Rev Amount %

    Net revenues

     Visiting

     Nurses $17,020,943 64.9% $10,474,930 54.5% $6,546,013 62.5%

     Personal

     Care 9,204,785 35.1% 8,748,558 45.5% 456,227 5.2%

     $26,225,728 100.0% $19,223,488 100.0% $7,002,240 36.4%

    Operating

     income

     Visiting

     Nurses $3,166,646 18.6% $1,402,663 13.4% $1,763,983 125.8%

     Personal

     Care 1,141,844 12.4% 958,074 11.0% 183,770 19.2%

     4,308,490 16.4% 2,360,737 12.3% 1,947,753 82.5%

    Unallocated

     corporate

     expenses 1,956,353 7.5% 1,083,579 5.6% 872,774 80.5%

     2,352,137 9.0% 1,277,158 6.6% 1,074,979 84.2%

    Litigation

     settlement

     gain - 0.0% (267,426) -1.4% 267,426 -100.0%

    Interest

     expense/

     (income) 39,780 0.2% (69,433) -0.4% 109,213 -157.3%

    Pre-tax

     income 2,312,357 8.8% 1,614,017 8.4% 698,340 43.3%

    Income taxes 916,771 3.5% 341,621 1.8% 575,150 168.4%

    Net income

     from

     continuing

     operations $1,395,586 5.3% $1,272,396 6.6% $123,190 9.7%

    Income (loss)

     from

     discontinued

     operations,

     net of tax 73,479 143,727 (70,248) NM

    Gain on sale

     of ADC seg-

     ment, net

     of tax - 66,913 (66,913) NM

    Net income $1,469,065 $1,483,036 $(13,971) NM

    Diluted

     earnings per

     share

     Diluted

     shares

     outstand-

     ing(1) 5,394,000 5,307,554 86,446 1.6%

     Continuing

     operations $0.26 $0.24 $0.02 8.3%

     Discontinued

     operations 0.01 0.03 (0.02) NM

     Gain on

     sale of ADC

     segment - 0.01 (0.01) NM

     $0.27 $0.28 $(0.01) NM

    (1) shares adjusted to give effect to 2-for-1 share split completed in

     January 2007

    Continuing

     Operations

     As Adjusted,

     (excluding

     litigation

     settlement

     gain and

     one-time

     income tax

     item)

     EBITDA $2,561,367 $1,332,398 $1,228,969 92.2%

     Net income $1,395,586 $852,299 $543,287 63.7%

     Diluted EPS $0.26 $0.16 $0.10 62.5%

     Effective tax

     rate 39.6% 36.7% 2.9%

    Year End Results

    Net Income From Continuing Operations -- As Reported grew 45% to $4,273,526 or $0.80 per diluted share for the year ended December 2006 as compared to $2,950,607 or $0.57 per diluted share in 2005 (which included a net gain on litigation settlement of $267,426 or $0.05 per diluted share and the effect of revised state income tax valuation allowances of $152,671 or $0.03 per diluted share). Revenues grew 22% to $91.8 million in 2006 from $75.1 million in 2005.

    Revenues in the VN segment grew 39% over the same period last year. Acquired operations contributed approximately $6.1 million of that revenue growth. The $9.4 million balance of the VN revenue increase came from internal growth. Net income including discontinued operations, was $4,239,444 or $0.80 per diluted share in the year ended December 31, 2006 and $7,868,468 or $1.51 per diluted share (including a gain on the sale of the adult day care segment of $5,205,698 or $2.00 per diluted share) in 2005.

    Results of operations for the years ended December 31, 2006 and 2005 are

     set forth in the tables below:

     December December

     2006 2005 Change

     Amount % Rev Amount % Rev Amount %

    Net revenues

     Visiting

     Nurses $55,190,258 60.1% $39,732,561 52.9% $15,457,697 38.9%

     Personal

     Care 36,621,690 39.9% 35,354,834 47.1 1,266,856 3.6%

     $91,811,948 100.0% $75,087,395 100.0% 16,724,553 22.3%

    Operating

     income

     Visiting

     Nurses $9,004,859 16.3% $5,372,837 13.5% $3,632,022 67.6%

     Personal

     Care 3,781,372 10.3% 3,278,887 9.3% 502,485 15.3%

     12,786,231 13.9% 8,651,724 11.5% 4,134,507 47.8%

    Unallocated

     corporate

     expenses 5,749,115 6.3% 4,449,661 5.9% 1,299,454 29.2%

     7,037,116 7.7% 4,202,063 5.6% 2,835,053 67.5%

    Litigation

     settlement

     gain - -% (267,426) -0.4% 267,426 -100.0%

    Interest expense (54,440) -0.1% 112,608 0.1% (167,048) -148.3%

    Pre-tax income 7,091,556 7.7% 4,356,881 5.8% 2,734,675 62.8%

    Income taxes 2,818,030 3.1% 1,406,274 1.9% 1,411,756 100.4%

    Net income from

     continuing

     operations $4,273,526 4.7% $2,950,607 3.9% $1,322,919 44.8%

    Income (loss)

     from

     discontinued

     operations,

     net of tax (34,082) (149,325) 115,243 NM

    Gain on sale of

     ADC segment - 5,067,186 (5,067,186) NM

     Net income $4,239,444 $7,868,468 $(3,629,024) NM

    Diluted earnings

     per share

     Diluted

     shares out-

     standing (1) 5,326,997 5,218,658 108,339 2.1%

     Continuing

     operations $0.80 $0.57 $0.23 42.1%

     Discontinued

     operations - (0.03) 0.03 NM

     Gain on sale

     of ADC

     segment - 0.97 (0.97) NM

     $0.80 $1.51 $(0.71) NM

    (1) shares adjusted to give effect to 2-for-1 share split completed in

     January 2007

    Continuing

     Operations

     -- As

     Adjusted,

     (excluding

     litigation

     settlement

     gain and

     one-time

     income tax

     item):

     EBITDA $8,040,882 $5,391,292 $2,649,590 49.1%

     Net income $4,273,526 $2,530,510 $1,743,016 68.9%

     Diluted EPS $0.80 $0.48 $0.32 66.7%

     Effective

     tax rate 39.7% 38.1% 1.6%

    Non-GAAP Financial Measure

    The information provided in the tables in this release includes certain non-GAAP financial measures as defined under Securities and Exchange Commission (SEC) rules. In accordance with SEC rules, the Company has provided, in the supplemental information and the footnotes to the tables, a reconciliation of those measures to the most directly comparable GAAP measures.

    Net Income From Continuing Operations -- As Adjusted

    Although "Net Income From Continuing Operations -- As Adjusted" is a non- GAAP financial measure, management believes that the presentation of net income as calculated using a normalized tax rate, which, for 2005, excludes the nonrecurring tax benefits as described in Note 1, and excluding the litigation settlement gain as described in Note 2, is a useful adjunct to "Net Income From Continuing Operations -- As Reported" under GAAP because it measures the Company's financial performance in a consistent manner between the results for the fourth quarters and fiscal years 2006 and 2005 and since these adjustments represent special or non-recurring items. For these reasons, management believes that "Net Income From Continuing Operations -- As Adjusted" is useful to investors. Investors should not view "Net Income From Continuing Operations -- As Adjusted" as an alternative to the GAAP measure of net income.

    The following table sets forth a reconciliation of Net Income From Continuing Operations -- As Reported to Net Income From Continuing Operations -- As Adjusted:

     Quarter Ended December 31, Year Ended December 31,

     2006 2005 2006 2005

    Net income from

     continuing

     operations - As

     Reported $1,395,586 $1,272,396 $4,273,526 $2,950,607

    2005 One-time

     items:

     Reduction in

     state income

     tax valuation

     allowance

     (Note 1) - (152,671) - (152,671)

     Litigation

     settlement

     gain (Note 2) - (267,426) - (267,426)

    Net income from

     continuing

     operations - As

     Adjusted $1,395,586 $852,299 $4,273,526 $2,530,510

    Continuing

     Operations

     Earnings Per

     Diluted Share:

     As Reported $0.26 $0.24 $0.80 $0.57

     As Adjusted $0.26 $0.16 $0.80 $0.48

    Note 1: The Company's income tax provision for 2005 included a one-time

     reduction of $152,671 or $0.03 per diluted share resulting from

     changes in state income tax valuation allowances relating to the

     anticipated realization of net operating loss carry-forwards.

    Note 2: In December 2005, the Tennessee Court of Appeals issued its

     ruling in the Franklin Litigation, a long contested contract case

     dating back to 1994. The court partially overturned the findings

     of the trial court thus lowering the amount of damages previously

     assessed to and recorded by the Company. The Company and the

     plaintiff subsequently entered into a settlement agreement on

     this case which resulted in a one-time net of tax gain of

     $267,426 or $0.05 per diluted share being recorded in the

     Company's results for the quarter and year ended December 31,

     2005.

    EBITDA:

    EBITDA is defined as income before depreciation and amortization, net interest expense and income taxes. EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States of America. It should not be considered in isolation or as a substitute for net income, operating income, cash flows from operating, investing or financing activities, or any other measure calculated in accordance with generally accepted accounting principles. The items excluded from EBITDA are significant components in understanding and evaluating financial performance and liquidity. Management routinely calculates and communicates EBITDA and believes that it is useful to investors because it is commonly used as an analytical indicator within our industry to evaluate performance, measure leverage capacity and debt service ability, and to estimate current or prospective enterprise value. EBITDA is also used in measurements of borrowing availability and certain covenants contained in our credit agreement.

    The following table sets forth a reconciliation of Continuing Operations Net Income -- As Adjusted to EBITDA - As Adjusted:

     Quarter Ended December 31, Year Ended December 31,

     2006 2005 2006 2005

    Net income from

     continuing

     operations - As

     Adjusted $1,395,586 $852,299 $4,273,526 $2,530,510

    Add back:

     Interest

     expense

     (income) 39,780 (69,433) (54,440) 112,608

     Income taxes 916,771 341,621 2,818,030 1,558,945

     Depreciation

     & amortization 209,230 207,911 1,003,766 1,189,229

    Earnings from

     continuing

     operations Before

     Interest, Income

     Taxes, Depreciation

     & Amortization

     (EBITDA) - As

     Adjusted $2,561,367 $1,332,398 $8,040,882 $5,391,292

    Sale of ADC Operations

    On September 30, 2005 the Company sold its ADC operating segment resulting in an after tax gain of approximately $5.1 million or $0.97 per diluted share reported in the year ended December 31, 2005.

    Almost Family, Inc. TM and subsidiaries (collectively "Almost Family") is a leading regional provider of home health services. The Company has service locations in Florida, Kentucky, Ohio, Connecticut, Massachusetts, Missouri, Alabama, Illinois and Indiana and (in order of revenue significance).

    Contact: William Yarmuth or Steve Guenthner (502) 891-1000.

    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 accelerate growth in its home health operations, the Company's ability to achieve expected cost savings net of incremental overhead post-acquisition, the ultimate outcome of the Company's allocation of purchase price to amortizable intangible assets, the Company's ability to generate positive cash flows, and the Company's expectations with regard to market conditions, 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 include: regulatory approvals or third party consents may not be obtained, the impact of further changes in healthcare reimbursement systems, including the ultimate outcome of potential changes to Medicaid reimbursement due to state budget shortfalls; the ability of the Company to maintain its level of operating performance and achieve its cost control objectives; changes in our relationships with referral sources; the ability of the Company to integrate acquired operations; government regulation; health care reform; pricing pressures from Medicare, Medicaid and other third-party payers; changes in laws and interpretations of laws relating to the healthcare industry, and the Company's self-insurance risks. For a more complete discussion regarding these and other factors which could affect the Company's financial performance, refer to the Company's Securities and Exchange Commission filing on Form 10-K for the year ended December 31, 2005, in particular information under the headings "Special Caution Regarding Forward-Looking Statements" and "Risk Factors." The Company disclaims any intent or obligation to update its forward-looking statements.
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