Home healthcare provider
) reported net income of $3.9 million or 9 cents per share in the
first quarter of 2013, a considerable slide from net income of
$8.6 million or earnings of 18 cents in the year-ago quarter.
However, after adjusting for depreciation and amortization and
legal fees, adjusted earnings per share declined 55.2% year over
year to 13 cents in the reported quarter, missing the Zacks
Consensus Estimate of 21 cents. Apart from the declining top
line, margin contraction and higher share count led to the
Quarter in Detail
Amedisys primarily derives revenues from its home health and
hospice agencies. First-quarter net service revenue came in at
$339.2 million, down 8.5% year over year. Revenues also trailed
the Zacks Consensus Estimate of $362 million.
For the company's Home Health division, Medicare revenues were
$221.1 million and non-Medicare revenues were $51.2 million in
the quarter. For the hospice division, Medicare revenues were $63
million and non-Medicare revenues were $3.9 million in the
quarter. At the end of the quarter, the company operated 427 home
health care centers and 97 hospice care centers.
The company reported a 50 basis points (bps) contraction in
gross margin to 43.2% in the quarter. Expenses on salaries and
benefits declined 4.9% to $82.8 million, while other expenses
decreased 1.9% to $43.6 million. Amedisys posted operating margin
contraction of 280 bps to $4.2 million in the quarter.
Amedisys exited the quarter with cash and cash equivalents of
$7.0 million compared with $14.5 million at the end of 2012. Net
cash provided by operating activities in the first quarter more
than tripled to $32.4 million. The company's long-term
obligations (less current portion) were $43 million compared with
$66.9 million at the end of 2012.
Amedisys tweaked its guidance for 2013. Net service revenue is
envisaged in the range of $1.28 $1.32 billion compared with
$1.425 $1.45 billion earlier. The Zacks Consensus Estimate of
$1.415 lies outside the revised guidance. The company forecasts
earnings per share in the range of 45 to 55 cents compared with
the prior outlook of 60 70 cents. The Zacks Consensus Estimates
of 50 cents for 2013 is the midpoint of the outlook band.
Amedisys posted another challenging quarter and missed the
Zacks Consensus Estimate on both fronts. The revised guidance for
2013, which lies below our projections, also failed to inspire
We believe that the highly uncertain home nursing
reimbursement environment, coupled with significant reduction in
Medicare reimbursement in the recent past 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.
Accordingly, we remain on the sidelines for Amedisys. The
stock carries a Zacks Rank #3 (Hold). On the other hand, medical
sector stocks worth considering are
Intuitive Surgical Inc.
). These stocks carry a Zacks Rank #2 (Buy).
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