Weak 1Q Earnings for Gentiva - Analyst Blog


Gentiva Health Services Inc. ( GTIV ) reported first-quarter 2013 operating earnings of 23 cents per share, which lagged the Zacks Consensus Estimate of 31 cents as well as the year-ago quarter level of 24 cents per share. Operating income of $7.1 million also declined from $7.4 million in the year-ago quarter.

Including a non-cash impairment charge of $224.3 million related to goodwill and other long-lived assets, along with restructuring, legal settlement and acquisition and integration costs of $0.14 million, Gentiva posted a net loss of $207.2 million or $6.73 per share, compared with net income of $4.8 million or 16 cents per share in the first quarter of 2012.

Gentiva's net revenue declined 5% year over year to $415.6 million from $435.7 million in the year-ago quarter. Net revenue also missed the Zacks Consensus Estimate of $428 million. The year-over-year decline was largely due to a significant cut in the home health Medicare rates along with the impact of sequestration and sale and closure of some branches.

The Home Health Episodic segment revenues declined 2% year over year to $207.4 million. Additionally, the Hospice segment revenues declined 8% year over year to $179.5 million.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) attributable to continuing operations decreased 6.7% to $39.1 million from $41.9 million in the prior-year quarter.

Financial Update

Gentiva exited the reported quarter with cash and cash equivalents of approximately $159.6 million, down from $207.1 million as of Dec 31, 2012. Outstanding debt was $910.2 million, down from $935.2 million at 2012 end.

During the reported quarter, net cash used in operating activities amounted to $20.6 million, narrower than the cash outflow of $34.7 million in the prior-year period. Free cash flow also narrowed to ($23.3) million from ($38.5) million in the first-quarter of 2012.

As of Mar 31, 2013, Gentiva had total assets of $1.24 billion and shareholder equity of $29.6 million, as compared with $1.51 billion and $234.7 million, respectively, as of Dec 31, 2012.


Gentiva's net revenue guidance for 2013 stands at $1.69-$1.73 billion. This guidance includes a negative impact of $21 million from the sale and closure of branches in 2012. The company expects adjusted income from continuing operations between 90 cents and $1.10 per share, calculated on the basis of 31 million outstanding shares.

Zacks Rank

Gentiva carries a Zacks Rank #5 (Strong Sell). Another healthcare company DaVita HealthCare Partners Inc. ( DVA ) reported first-quarter 2013 operating earnings of $1.84 per share, beating the Zacks Consensus Estimate of $1.78 as well as $1.50 per share reported in the prior-year quarter.

Other healthcare companies worth considering are Addus HomeCare Corporation ( ADUS ) and HEALTHSOUTH Corp. ( HLS ). Both these companies carry a Zacks Rank #1 (Strong Buy).

ADDUS HOMECARE (ADUS): Free Stock Analysis Report

DAVITA INC (DVA): Free Stock Analysis Report

GENTIVA HEALTH (GTIV): Free Stock Analysis Report

HEALTHSOUTH CP (HLS): Free Stock Analysis Report

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Zacks Investment Research

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 , Earnings , Stocks

Referenced Stocks: ADUS , DVA , GTIV , HLS



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