Home health care provider
) reported a 62.7% year over year decline in EPS to 22 cents in the
first quarter of 2012, in line with the Zacks Consensus Estimate.
The drastic reduction in EPS was primarily due to significant
margin contractions during the quarter.
Amedisys primarily derives revenue from its home health and
hospice agencies. Net service revenue stood at $370.8 million in
the reported quarter, beating the Zacks Consensus Estimate of $368
million and up 3.2% year over year.
Although there was 6% drop in Episodic-based sales in home
health to $301.4 million, it was somewhat offset by an 80.3%
increase in Medicare revenue growth to $69.4 million within the
company's hospice division.
The company reported a huge 410 basis points (bps) contraction
in gross margin to 43.7% in the first quarter of 2012. Expenses on
salaries and benefits during the quarter increased 4.4% to $87.07
million with 29.9% increase in Non-cash compensation expenses to
$2.5 million. However the other expenses remained unchanged year
over year. Adjusted operating margin (excluding the effect of
depreciation and amortization and provision for doubtful accounts)
witnessed a massive 415 bps year-over-year decline to 7.65%.
Amedisys exited the reported quarter with cash and cash
equivalents of $41.3 million, down from $48.0 million at the end of
Amedisys reiterated its guidance for fiscal 2012. The company
expects EPS in the range of 95 cents-$1.10 on revenues of
$1.475-$1.525 billion. The current Zacks Consensus Estimates for
EPS and revenues are $1.02 and $1.495 billion, respectively, and
within the guidance range of Amedisys.
We believe the highly uncertain home nursing reimbursement
environment with significant reduction in Medicare reimbursement in
2011 and 2012 affected Amedisys' growth performance over the past
few quarters. We expect this healthcare reimbursement pressure to
persist even in fiscal 2013, thereby further weakening the
company's already volatile position. 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 of the program brought in additional costs.
Presently, the stock retains a short-term Zacks #2 Rank (Buy).
Over the long term, we have an Neutral recommendation on the
AMEDISYS INC (AMED): Free Stock Analysis Report
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