Home healthcare provider
) reported a drastic 65.8% year-over-year decline in EPS to 27
cents in the second quarter of 2012. However the EPS was 2 cents
ahead of the Zacks Consensus Estimate. The drastic reduction in the
year-over-year EPS was primarily due to significant margin
contraction during the quarter.
Amedisys primarily derives revenue from its home health and
hospice agencies. Net service revenue stood at $378.5 million in
the reported quarter, beating the Zacks Consensus Estimate of $376
million and up 2.7% year over year.
Although Episodic-based sales in home health dropped 8.9% to
$275.9 million yet it was partially offset by a 60% increase in
Medicare revenue growth within the company's hospice division to
The company reported a huge 460-basis point (bp) contraction in
the gross margin to 43.9% in the second quarter of 2012. Expenses
on salaries and benefits during the quarter increased 9.9% to $86.5
million with 4.6% increase in other expenses to $47.3 million.
However, non-cash compensation expenses declined 28.1% year over
year to $2.3 million. Adjusted operating margin (excluding the
effect of depreciation and amortization and provision for doubtful
accounts) witnessed a massive 620 bps year-over-year decline to
Amedisys exited the reported quarter with cash and cash
equivalents of $37.2 million, down from $48.0 million at the end of
Amedisys reiterated its EPS guidance of 95 cents-$1.10 for
fiscal 2012. However, the company narrowed its revenue guidance for
fiscal 2012 to $1.490-$1.525 billion (earlier range being
$1.475-$1.525 billion). The current Zacks Consensus Estimates for
EPS and revenues of $1.01 and $1.498 billion, respectively, are
within the guidance range.
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
Additionally, we believe that the implementation of the
face-to-face rule has added to the pressure on the company's
margins as the training and implementation involved in the program
Moreover, competition remains stiff, as the company is pitted
against companies like
Gentiva Health Services Inc.
). Last week Gentiva reported its second quarter 2012 results,
posting a year-over-year sales decline of 4.7% to $427.7 million,
largely due to a 7.3% decline in the Home Health Episodic segment
revenue arising from reduced Medicare reimbursement rates.
Presently, Amedisys retains a short-term Zacks #3 Rank
AMEDISYS INC (AMED): Free Stock Analysis Report
GENTIVA HEALTH (GTIV): Free Stock Analysis
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