That loud thud you just heard was the sound of Almost Family's (NASDAQ:AFAM) share price slamming back into the $16 price range -- down from last year's high of $53. The last three weeks or so have been particularly brutal, with the stock losing approximately 45% of its value. However, examining the company's recently released results, it's difficult to say with a straight face that the shellacking has anything to do with Almost Family's performance.

Last week, Almost Family reported fiscal fourth-quarter and full-year results that did not disappoint. Earnings of $0.62 per share helped the company beat analysts' fourth-quarter estimates by more than 10%. Almost Family also handily beat revenue projections, with $66.2 million during the quarter. Those numbers represented 68% and 84% year-over-year growth, respectively, driven largely by an astounding 47% increase in organic revenue growth in the company's visiting nurse segment.

Importantly, the company also achieved something it hasn't been particularly good at: It actually turned its earnings to cash, producing about $5 million in free cash flow. There was some slight relief in Almost Family's receivables build, too, with days sales outstanding declining from 51 in the third quarter to 48 in the fourth. All in all, this was an inarguably good quarter.

With that out of the way ...
Alas, those results seem largely irrelevant, given that Almost Family's fate -- along with that of competitors Amedisys (NASDAQ:AMED), Gentiva Health (NASDAQ:GTIV), and LHC Group (NASDAQ:LHCG) -- looks completely dependent on the Obama budget proposal.

Although the details are fuzzy, the budget proposes cost savings of $37 billion in home health spending over the next 10 years. Almost Family itself estimates that this will translate into a 2.75% rate cut in 2010, followed potentially by a shockingly large 10% cut in 2011.

Obviously, if those cuts come to pass, the effect on Almost Family's margins would be disastrous. And with almost three-quarters of its total revenue derived from Medicare, its earnings would be hit devastatingly hard, too.

The pain wouldn't stop at margins and earnings, though. The company would assuredly have to write down a good portion of the intangible assets it carries on its balance sheet, particularly the $92 million in goodwill. With only $95 million in stockholder's equity, that is a very scary prospect.

With a P/E ratio of roughly 8, Almost Family now trades at a valuation that it hasn't seen in at least the past five years, one that certainly embodies a great deal of negative expectations. Until the Obama budget's final details become clear, an investment in Almost Family now qualifies as an informed gamble at best. Those concerned with capital preservation should undoubtedly continue to pass. However, more enterprising investors could be handsomely rewarded if President Obama's provisions either fail to pass or get toned down along the way.

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Fool contributor Devon Rackle does not own shares in any of the companies listed in this article. Try any of our Foolish newsletters free for 30 days. The Fool disclosure policy brought you some chicken soup.