Home healthcare provider
) recorded adjusted net loss per share of 1 cent in the third
quarter of 2013, after adjusting for the U.S. Department of
Justice settlement, proceeds from D&O insurance in the
reported quarter and certain other items in both the periods.
The result registered a massive decline from adjusted earnings
of 28 cents in the year-ago quarter. Apart from the decline in
top line, margin contraction and higher share count led to the
earnings downfall. As per management, the lower volume
environment in both home health and hospice, along with higher
costs, primarily in home health, adversely affected the company's
overall performance during the quarter. The result also lagged
the Zacks Consensus Estimate of earnings of 14 cents.
Quarter in Detail
Amedisys primarily derives revenues from its home health and
hospice agencies. Third-quarter net service revenues came in at
$301.6 million, down 17.2% year over year. The significantly low
volume in its segments hurt revenues by about $15 million.
Revenues also trailed the Zacks Consensus Estimate of $310
For the company's Home Health division, net service revenues
were $262.6 million (up 4.7% year over year), with Medicare
revenues of $213 million and non-Medicare revenues of $49.6
million in the quarter. However, home health revenues declined
sequentially mainly due to lower admissions. Admissions were down
For the hospice division, net service revenues were $66.6
million (up 1.9% year over year) including Medicare revenues of
$62.8 million and non-Medicare revenues of $3.8 million in the
quarter. Sequentially, hospice revenues have declined on account
of impact on admission volume from the removal of debility and
the failure to execute diagnosis as per CMS guidelines.
Amedisys exited the quarter with cash and cash equivalents of
$43.6 million compared with $14.5 million at the end of 2012. The
company's long-term obligations (including current portion) were
$70.9 million compared with $102.7 million at the end of 2012.
Net cash provided by operating activities in the quarter was
$27.9 million, up 28.1% year over year.
Following another weak quarter, Amedisys tweaked its sales
guidance for 2013. Net service revenues are expected in the range
of $1.24-$1.25 billion compared with the prior guidance of
$1.24-$1.28 billion. The Zacks Consensus Estimate of $1.26
billion lies outside the revised guidance.
The company also envisages earnings per share for 2013 in the
range of 20 to 25 cents, a huge slash from the earlier range of
45 to 55 cents. The Zacks Consensus Estimates of 56 cents for
2013 lies way ahead of the outlook band.
Amedisys posted another weak quarter with sustained volume
pressure. Accordingly, it missed the Zacks Consensus Estimate on
both fronts. It is of serious concern that this marks the fifth
consecutive quarter of top-line miss by Amedisys. We believe that
poor segment performance, sluggish growth trend and the adverse
impact from sequestration led to the dismal third-quarter
results. The lowered guidance for 2013, which lies below our
projections, also fails to inspire confidence.
We believe that the highly uncertain home nursing
reimbursement environment, coupled with significant reduction in
Medicare reimbursement in the recent past has affected Amedisys'
performance over the past few quarters. We expect the healthcare
reimbursement pressure to persist for the rest of 2013 and
continue in 2014, thereby weakening the company's performance
Accordingly, we prefer to avoid Amedisys. The stock carries a
Zacks Rank #3 (Hold). On the other hand, medical sector stocks
worth considering are
Align Technologies Inc.,
Cardinal Health, Inc.
Mindray Medical International Limited
). These stocks carry a favorable Zacks Rank #1 (Strong Buy).
ALIGN TECH INC (ALGN): Free Stock Analysis
AMEDISYS INC (AMED): Free Stock Analysis
CARDINAL HEALTH (CAH): Free Stock Analysis
MINDRAY MEDICAL (MR): Free Stock Analysis
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