Home healthcare provider
) recorded an adjusted loss from continuing operations of 7 cents
per share in the first quarter of 2014, a massive downfall from the
adjusted income from continuing operations of 15 cents per share
earned in the year-ago quarter. Adjusted loss was also wider than
the Zacks Consensus Estimate of a loss of 6 cents. Per management,
the primary factor that led to the earnings downfall was the impact
of weather-related costs.
Barring any adjustment, the quarter's reported loss came in at
39 cents a share, which compared unfavorably with the net income of
15 cents per share earned in the year-ago period.
However, following the announcement on May 8, the stock price of
Amedisys which was pegged at $13.36, made no movement till closing
on May 9.
Quarter in Detail
Amedisys primarily derives revenues from its home health and
hospice agencies. First-quarter net service revenues grossed $298.7
million, down 9.0% year over year. The top line also missed the
Zacks Consensus Estimate of $300 million by a whisker.
Within the company's Home Health division, net service revenues
were $236.7 million (down 9.7% year over year) with Medicare
revenues of $188.7 million and non-Medicare revenues of $48.0
Within the Hospice division, net service revenues were $62.0
million (down 6.9% year over year) including Medicare revenues of
$58.4 million and non-Medicare revenues of $3.6 million.
The company reported a 274 basis points (bps) contraction in
gross margin to 40.7% in the quarter. Expenses on salaries and
benefits declined 4.2% to $83.2 million, while other expenses fell
2.03% to $42.7 million. Amedisys posted adjusted operating loss of
$4.1 million compared to adjusted operating profit of $21.2 million
in the quarter.
Amedisys exited the quarter with cash and cash equivalents of
$2.84 million compared with $17.3 million at the end of 2012. The
company's long-term obligations (including current portion) were
$42.9 million as against $46.9 million at the end of 2013. Net cash
used in operating activities in the quarter was $6.34 million, down
from year-ago net operating cash flow of $32.4 million.
Amedisys posted yet another disappointing quarter with sustained
volume pressure. We believe that poor segment performance, sluggish
growth trend and the adverse impact from sequestration led to the
dismal first-quarter results. Moreover, the fact that no guidance
has been provided for the current fiscal, 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 2014, thereby retaining chances of
weakening the company's performance further.
Currently, the stock carries a Zacks Rank #3 (Hold). Some of the
better-ranked stocks in the broader healthcare space that warrant a
Mead Johnson Nutrition Company
Natus Medical Inc.
). All three stocks carry a Zacks Rank #2 (Buy).
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