Almost Family Benefits from Changes, Poised to Profit

Almost Family, Inc. (NDAQ: AFAM) shares rallied higher today after a positive recommendation by CNBC's Jim Cramer on his Mad Money Lightning Round. The hedge fund manager turned television star believes that there is a major nurse shortage in the United States and this stock may be the way to play it. The leading regional provider of home health nursing services is a great stock to own in this kind of environment and also promises to do well under an Obama presidency.

Almost Family is currently trading near its 52-week high at a reasonable 23x earnings. Despite the economic downturn, the company reported record second quarter results in August and is now ranked 25 on Forbes 200 Best Small Businesses list. Recent acquisitions, such as that of Patient Care, Inc. also promise to provide a boost to earnings going forward. Many also feel that the industry may be ripe for further consolidation - making almost every company a potential target.

This strong performance comes despite sweeping changes in how Medicare and Medicaid reimburses home health care. However, instead of limiting profits, the new rules expanded the number of billable diagnoses from 80 to 153 and ended the practice of increasing reimbursements by a lump sum once 10 visits are made for a particular treatment. Now, therapies involving between 6 and 20 visits have suddenly become more profitable for these firms.

Almost Family is a provider of home health services with locations in Florida, Kentucky, Ohio, Connecticut, Massachusetts, Alabama, Indiana, Illinois and Missouri. The company has two segments: Visiting Nurse (VN) and Personal Care (PC). The company’s VN segment provides a range of Medicare-certified home health nursing services to patients in need of recuperative care. Its PC segment provides services in patients' homes on an as-needed, hourly, or live-in basis.

Shares of Almost family jumped $2.15, or 5.8%, to $38.80 per share in mid-day trading.