Yesterday,
Gentiva Health Services Inc.
(
GTIV
) announced an amendment to its senior secured creditagreement i n
order to make the financial agreements more flexible for the fourth
quarter of 2011.
The amendment consists of alteration of the definition of
consolidated EBITDA (earnings before interest, taxes, depreciation
and amortization), whereby all expenses related to Gentiva's cost
realignment and the operating losses of all the branches that are
scheduled to be closed or sold in the last quarter of 2011, will be
added back during the calculation of consolidated EBITDA.
Additionally, the company will now be allowed to maintain its
consolidated leverage ratio at a maximum of $4.75:1 until the end
of 2011, up from $4.50:1 allowed previously. Nonetheless, the
interest rate applicable under the credit facility remains
unaltered.
However, Gentiva will have to pay various fees relating to the
amendment, one of them being a consent fee of 0.25% of term loans
and revolving credit obligations under the credit agreement. The
consent fee will be paid to all lenders who give their consent to
the amendment.
Gentiva is implementing a two-pronged strategy to increase the
flexibility of its financial covenants over the next few years
in an effort to bett er reflect the changed reimbursement
environment. The amendment of the credit facility is the initial
part of the strategy.
Earnings Review
Gentiva reported third-quarter 2011 operating earnings of 27
cents per share, lagging the Zacks Consensus Estimate of 48 cents
and 71 cents earned in the year-ago quarter.
The Zacks Consensus Estimate of earnings for the fourth quarter
of 2011 is currentlypegged at 30 cents per share, down by a
significant 57% year over year. 7 out of 8 firms covering the stock
revised their estimates downward, while no upward revision was
witnessed over the past 30 d ays.
For 2011, Gentiva's earnings are expected to be $1.65 per share,
sinking 41.5% over 2010. The company is a leading national provider
of comprehensive home health services and competes with
organizations like
Amedisys Inc.
(
AMED
) and
Lincare Holdings Inc.
(
LNCR
).
Gentiva currently carries a Zacks #5 Rank, implying a short-term
Strong Sell rating.
AMEDISYS INC (
AMED
): Free Stock Analysis Report
GENTIVA HEALTH (
GTIV
): Free Stock Analysis Report
LINCARE HLDGS (
LNCR
): Free Stock Analysis Report
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