Home healthcare provider
Amedisys
(
AMED
) reported earnings per share (EPS) of 33 cents in the third
quarter of fiscal 2012, comfortably beating the Zacks Consensus
Estimate of 27 cents. However, the results were below the
year-ago adjusted EPS of 42 cents. The adjusted EPS in the
year-ago quarter has been arrived at after taking into account
impairment charges of $574.1 million ($434.6 million after tax)
or $15.10 per share, based on the decline in market
capitalization and the dismal performance in last year.
Amedisys primarily derives revenue from its home health and
hospice agencies. Net service revenue stood at $375.6 million in
the reported quarter, up 1.4% year over year. However, revenues
missed the Zacks Consensus Estimate of $380 million.
Episodic-based sales in home health dropped 5.5% to $271.3
million, but was partially offset by a 16.8% increase in Medicare
revenue growth within the company's hospice division to $70.6
million.
The company reported a huge 243 basis points (bps) contraction
in gross margin to 42.9% in the third quarter of 2012. Expenses
on salaries and benefits, during the quarter, declined 4.1% to
$81.2 million with a 3.3% increase in other expenses to $48.3
million. Non-cash compensation expenses declined 59.2% year over
year to $1.3 million. Adjusted operating margin (excluding the
effects of depreciation and amortization, goodwill and other
intangibles impairment charge and provision for doubtful
accounts) contracted 90.5 bps year over year to 8.1%.
Amedisys exited the reported quarter with cash and cash
equivalents of $39.1 million, down from $48.0 million at the end
of fiscal 2011.
Guidance
Amedisys narrowed its revenue guidance for fiscal 2012 to
$1.485-$1.505 billion (earlier range being $1.490-$1.525
billion). The company also tightened its EPS guidance in the
range of $1.00- $1.06 (earlier guidance being 95 cents-$1.10).
The current Zacks Consensus Estimates project EPS of $1.03 and
revenues of $1.498 billion, which are within the guidance
range.
Our Take
The highly uncertain home nursing reimbursement environment,
coupled with significant reduction in Medicare reimbursement in
2011 and 2012 has affected Amedisys' performance over the past
few quarters. We expect the healthcare reimbursement pressure to
persist even in fiscal 2013, thereby weakening the company's
performance.
Furthermore, we believe that the implementation of the
face-to-face rule is restricting the company's margins as the
training and implementation involved in the program have
increased costs.
Moreover, with the presence of strong players like
Gentiva Health Services Inc.
(
GTIV
) among others, competition remains stiff. Presently, Amedisys
retains a short-term Zacks #3 Rank (Hold).
AMEDISYS INC (AMED): Free Stock Analysis
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GENTIVA HEALTH (GTIV): Free Stock Analysis
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