Gentiva's Preliminary Estimates for Q2 Appear Impressive - Analyst Blog


Gentiva Health Services Inc. ( GTIV ) has recently disclosed some of the preliminary estimates for the second quarter of 2014.

The company has scheduled its second quarter earnings release in the last week of July. Gentiva expects net revenue to reach $496 million in the second quarter, ahead of the Zacks Consensus Estimate of $491 million. This represents a sequential rise of 1.7% and a year-over-year rise of nearly 20%. Additionally, the company reaffirmed its full-year 2014 net revenue guidance in the range $1.9-$2.1 billion. The Zacks Consensus estimate of $1.986 remains within the guided range. On realizing the aforementioned revenue outlook for the second quarter, the company will have earned half of its targeted revenues for 2014. With Gentiva's ongoing inorganic growth strategies and increase in episodic admissions, we expect the company to achieve its target.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) and adjusted operating income for the second quarter are expected to be $52 million and 33 cents per share, respectively. The adjusted EBITDA outlook represents a sequential as well as year-over-year improvement of 33%. On the other hand, the operating income guidance represents a sequential improvement of nearly 154% and a year-over-year improvement of 50%. However, the Zacks Consensus Estimate for the second quarter stands much lower at 23 cents per share.

Adjusted EBITDA is expected to be in the range of $177-195 million for full-year 2014. This represents a year-over-year improvement of 31%-41%.  

Gentiva reaffirmed its 2014 operating earnings to be in the range of 85 cents-$1.15 per share, translating into a year-over-year improvement of 102%-174%. The Zacks Consensus Estimate for 2014 is currently pegged at 91 cents, within the guided range.

Additionally, Gentiva stated that it expects to generate more value for its shareholders through its strategic plans than Kindred Healthcare Inc. 's ( KND ) offer. The company has been turning down the offer from Kindred over the past couple of months as it considers the deal to be undervalued. In May 2014, Kindred in a hostile bid had offered to acquire Gentiva for $533 million. Although it discarded the deal, we believe that with the continued takeover pressure from Kindred, Gentiva might become more aggressive in enhancing its financial structure and policies, so as to enhance its shareholders' return and retain their confidence in the stock.

Gentiva currently carries a Zacks Rank #3 (Hold). However, better-ranked stocks in the healthcare space that look attractive at current levels include AmSurg Corp. ( AMSG ) and RadNet, Inc. ( RDNT ). Both stocks carry a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: AMSG , GTIV , KND , RDNT

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