Home healthcare provider
) reported net loss of $106.8 million or $3.52 per share in the
fourth quarter of 2012, a considerable slide from net income of
$4.3 million or earnings per share of 15 cents in the year-ago
quarter. However, after adjusting for a sizeable goodwill
impairment charges and other one-time items, adjusted earnings
per share declined 53.1% year over year to 23 cents in the
reported quarter, beating the Zacks Consensus Estimate by a
For the full year, adjusted earnings per share decreased 52.8%
from the prior year to $1.08, surpassing the corresponding Zacks
Consensus Estimate of $1.04. The decline was mainly on account of
significantly higher interest expense in 2012.
Amedisys primarily derives revenues from its home health and
hospice agencies. Fourth-quarter net service revenue came in at
$362.9 million, down 2% year over year. Revenues also trailed the
Zacks Consensus Estimate of $373 million.
In 2012, net service revenue edged up 1.7% from the prior year to
$1,487.9 million, missing the corresponding Zacks Consensus
Estimate of $1,498 million.
For the company's Home Health division, Medicare revenues were
$233.2 million and non-Medicare revenues were $57.5 million in
the fourth quarter. For the hospice division, Medicare revenues
were $68.1 million and non-Medicare revenues were $4.2 million in
the quarter. During the quarter, Amedisys opened four care
centers as start-up locations as home health centers and hospice
care centers. At the end of the quarter, the company operated 435
home health care centers and 97 hospice care centers.
The company reported a huge 232 basis points (bps) contraction in
gross margin to 43.2% in the quarter. Expenses on salaries and
benefits declined 1.3% to $84.3 million, while other expenses
remained flat at $48.6 million. Non-cash compensation expenses
soared to $1.2 million compared with $0.03 million in the prior
year quarter. Amedisys incurred operating loss of $154.9 million
in the quarter versus operating income of $14.7 million in the
Amedisys exited 2012 with cash and cash equivalents of $14.5
million, down 69.8% from the comparable period. Net cash provided
by operating activities in 2012 was $69.5 million, down 50.8%
from the prior year. The company's long-term obligations (less
current portion) were $66.9 million, down 40.5% from the prior
Amedisys issued guidance for 2013. Net service revenue is
envisaged in the range of $1.425 billion to $1.45 billion. The
current Zacks Consensus Estimate of $1.51 billion lies outside
the guidance range. The company forecasts earnings per share in
the range of 60 to 70 cents. The Zacks Consensus Estimates of 80
cents for 2013 lies outside the outlook band.
Amedisys posted another challenging quarter with its top-line
missing the Zacks Consensus Estimate. The guidance for 2013,
which lies below our projections, also failed to inspire
confidence. The company's performance also weighed on the stock
as share prices plunged 9.71% (or $1.19) following the results.
Apart from the considerable goodwill impairment charge, we
believe that 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 2013, thereby weakening
the company's performance.
Thus, we remain on the sidelines for Amedisys. The stock carries
a Zacks Rank #3 (Hold). On the other hand, medical stocks such as
) warrant a look. These stocks carry a Zacks Rank #1 (Strong
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