ALMOST FAMILY,INC. (NASDAQ:AFAM) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive
Agreement.
The information set forth in Item 2.01 is hereby incorporated in
this Item 1.01 by reference.
Item 2.01 Completion of Acquisition or
Disposition of Assets.
On December30, 2016, Almost Family,Inc. (the Company) and its
wholly-owned subsidiary, National Health Industries,Inc. (NHI),
consummated the transactions (the Closing) contemplated by an
Equity Purchase Agreement dated as of October14, 2016 (the Equity
Purchase Agreement) with (i)CHS/Community Health Systems,Inc.
(CHS) and (ii)Community Health United Home Care, LLC (CHS Home
Health). to the Equity Purchase Agreement, NHI purchased from CHS
an 80% equity interest in CHS Home Health for aggregate cash
consideration equal to $128.0 million, as adjusted for increases
or decreases in working capital. CHS Home Health previously
operated CHSs home health and hospice business. CHS retained a
20% interest in CHS Home Health following the Closing. The Equity
Purchase Agreement is described more fully in the Companys
Current Report on Form8-K dated October14, 2016.
Amended and Restated Limited Liability Company Agreement
In connection with the Closing, on December30, 2016, NHI and CHS
entered into an Amended and Restated Limited Liability Company
Agreement for CHS Home Health (the LLC Agreement).
Under the LLC Agreement, CHS Home Health will be managed by a
five-member Board of Directors (the Board) of whom four are
appointed by NHI and one appointed by CHS. The Chairman of the
Board will be elected annually by the Board members appointed by
NHI. In most instances, the approval of the majority of the Board
is required for actions by CHS Home Health, although certain
material actions require the approval of at least three directors
appointed by NHI and one director appointed by CHS including:
approving or amending annual operating and capital budgets;
admitting new members or issuing additional equity; permitting
the transfer of membership interests; approving additional
capital contributions; incurring or guaranteeing debt in excess
of $10,000,000 (except as described herein); and approving
extraordinary cash distributions.
NHI and CHS must negotiate in good faith to resolve material
disputes, but if material disputes cannot be resolved in
accordance with the dispute resolution provisions of the LLC
Agreement, either NHI or CHS may submit the matter to binding
arbitration.
The LLC Agreement imposes material restrictions on NHIs ability
to transfer its membership interests to a third party. A transfer
to a third-party requires CHSs approval and is subject to CHSs
right of first refusal.
The LLC Agreement requires the Company to make a $25,000,000 line
of credit available to CHS Home Health at the Companys cost.
The Company and its affiliates are prohibited from participating
in a Competing Business for as long as the Company has an
indirect ownership interest in CHS Home Health and for two years
thereafter, subject to certain agreed upon exclusions. Similarly,
if the Company acquires a Competing Business as a result of a
future acquisition, CHS can require the Company to contribute the
Competing Business to CHS Home Health, provided that CHS must pay
the Company an amount equal to CHSs then ownership percentage in
CHS Home Health multiplied by the purchase price of the Competing
Business. A similar provision provides the Company the ability to
require CHS to contribute any acquired Competing Business to CHS
Home Health on the same terms.
Competing Business is defined in the LLC Agreement as any
business which offers services in competition with or similar
to those offered by any of CHS Home Healths subsidiaries in at
least one of the counties where the subsidiary is licensed or
Medicare-certified to provide services.
The foregoing description of the LLC Agreement is qualified in
its entirety by reference to the full text of the LLC
Agreement, a copy of which is attached as Exhibit10.1 to this
Current Report on Form8-K and incorporated herein by reference.
Administrative and Management Services Agreement
Also in connection with the Closing, on December30, 2016, the
Company, NHI and CHS Home Health entered into an Administrative
and Management Services Agreement (the Management Agreement) to
which the Company and NHI will provide certain management and
related services to CHS Home Health.
The Management Agreement provides for a five-year term which
automatically renews for successive five-year periods unless
terminated in accordance with its terms. The Company and NHI
are required to continue to provide services under the
Management Agreement for an additional 90-day period following
its expiration or termination.
to the Management Agreement, CHS Home Health will pay the
Company and NHI an annual management fee of 5% of CHS Home
Healths net revenues for the preceding year. Additionally, CHS
Home Health will reimburse the Company and NHI on a monthly
basis for certain direct charges and employee benefits.
The Management Agreement contains standard indemnification for
losses resulting from a breach by the Company or NHI.
The foregoing description of the Management Agreement is
qualified in its entirety by reference to the full text of the
Management Agreement, a copy of which is attached as
Exhibit10.2 to this Current Report on Form8-K and incorporated
herein by reference.
Affiliation Agreement
CHSPSC, LLC (CHSPSC) is a subsidiary of CHS. In connection with
the Closing, on December30, 2016, CHS Home Health and CHSPSC
entered into an Affiliation Agreement (the Affiliation
Agreement) relating to hospitals operated by CHSPSC in the
markets where subsidiaries of CHS Home Health provide home
health services. In these markets, CHSPSC will include these
subsidiaries on any list of home health service providers given
to patients discharged from those hospitals. Under the
Affiliation Agreement, CHSPSC is required to preserve patient
freedom of choice in selecting home health service providers
and may not attempt to coerce or otherwise influence patients
decisions regarding any home health service provider.
The Affiliation Agreement provides for a five-year term which
automatically renews for successive five-year periods unless
terminated in accordance with its terms. CHSPSC has the right
to terminate the Affiliation Agreement if CHS ceases to own an
interest in CHS Home Health, and either party may terminate
upon a breach by the other party.
Under the Affiliation Agreement, CHS Home Health and its
subsidiaries are required to maintain general professional and
blanket contractual liability insurance in the amount of not
less than $1,000,000 per occurrence and $3,000,000 in the
aggregate. Additionally, CHS Home Health and its subsidiaries
are
required to indemnify CHSPSC affiliated hospitals against any
damages resulting from services provided by CHS Home Health and
its subsidiaries to discharged patients.
The Affiliation Agreement requires CHSPSC to cause any hospital
that it divests during the term to enter into a similar
arrangement with CHS Home Health.
The foregoing description of the Affiliation Agreement is
qualified in its entirety by reference to the full text of the
Affiliation Agreement, a copy of which is attached as
Exhibit10.3 to this Current Report on Form8-K and incorporated
herein by reference.
Item 2.03 Creation of a Direct
Financial Obligation or an Obligation under an Off-Balance
Sheet Arrangement of a Registrant.
In connection with the Closing, on December30, 2016, the
Company borrowed an additional $125.0 million under its Amended
and Restated Credit Agreement dated as of December5, 2016 with
JPMorgan Chase Bank, N.A., as Administrative Agent, and other
lenders (the Credit Agreement).The Credit Agreement is
described more fully in the Companys Current Report on Form8-K
dated December5, 2016.
As previously reported, under the Credit Agreements revolving
credit facility, the Company could initially borrow up to
$225.0 million under the Credit Agreement. The amount available
under the revolving credit facility increased to up to $350
million on and after the Closing.
As previously reported, the revolving credit facility is
secured by substantially all the Companys assets and the assets
and stock of its subsidiaries to an Amended and Restated Pledge
Agreement and an Amended and Restated Security Agreement, both
dated as of December5, 2016.The Companys subsidiaries also
guaranteed the revolving credit facility to an Amended and
Restated Guaranty dated as of December5, 2016. In connection
with the Closing, each of CHS Home Healths subsidiaries entered
into joinders binding them to the Amended and Restated Pledge
Agreement and the Amended and Restated Guaranty. The Amended
and Restated Pledge Agreement and the Amended and Restated
Guaranty are described more fully in the Companys Current
Report on Form8-K dated December5, 2016.
Item 9.01 Financial Statements and
Exhibits.
(a) Financial Statements of Businesses Acquired
The audited consolidated financial statements of CHS Home
Health and its subsidiaries as of and for the year ended
December31, 2015 were filed on the Companys Current Report on
Form8-K on November23, 2016 as Exhibit99.1 and are incorporated
in this Item9.01(a)by reference.
The unaudited consolidated financial statements of CHS Home
Health and its subsidiaries as of and for the nine months ended
September30, 2016 and 2015 were filed on the Companys Current
Report on Form8-K on November23, 2016 as Exhibit99.2 and are
incorporated in this Item9.01(a)by reference.
(b) Pro Forma Financial Information
The unaudited pro forma financial information of the Company
giving effect to the Closing were attached to the Companys
Current Report on Form8-K on November23, 2016 as Exhibit99.3
and are incorporated in this Item9.01(b)by reference.
(d) Exhibits
|
Exhibit |
|
Description |
|
10.1 |
Amended and Restated Limited Liability Company Agreement |
|
|
10.2 |
Administrative and Management Services Agreement by and |
|
|
10.3 |
Affiliation Agreement by and between AF-CH-HH, LLC and |
|
|
99.1 |
Audited consolidated financial statements of Community |
|
Exhibit99.1 to the Companys Current Report on Form8-K |
||
|
99.2 |
Unaudited consolidated financial statements of Community |
|
|
99.3 |
Unaudited pro forma financial information (incorporated |
About ALMOST FAMILY, INC. (NASDAQ:AFAM)
Almost Family, Inc., along with its subsidiaries, is a provider of home health services. The Company has two divisions, which include Home Health Care and Healthcare Innovations. The Home Health Care division consists of two segments: Visiting Nurse Services (VN or Visiting Nurse) and Personal Care Services (PC or Personal Care). Its VN segment provides a range of Medicare-certified home health nursing services to patients in need of recuperative care, typically following a period of hospitalization or care in an inpatient facility. Its PC segment provides services in patients’ homes primarily on an as-needed, hourly basis. Healthcare Innovations is also a segment. Its Healthcare Innovations segment includes its developmental activities outside its traditional home health business platform. It has service locations in Florida, Ohio, Tennessee, New York, Kentucky, Connecticut, New Jersey, Massachusetts, Indiana, Illinois, Pennsylvania, Georgia, Missouri, Mississippi and Alabama. ALMOST FAMILY, INC. (NASDAQ:AFAM) Recent Trading Information
ALMOST FAMILY, INC. (NASDAQ:AFAM) closed its last trading session up +0.50 at 45.80 with 132,400 shares trading hands.