Amedisys, Inc. (AMED)
Q2 2008 Earnings Call Transcript
July 29, 2008 10:00 am ET
Kevin LeBlanc – Director of IR
Bill Borne – Chairman and CEO
Dale Redman – CFO
Larry Graham – President and COO
Darren Lehrich – Deutsche Bank
John Ransom – Raymond James
David MacDonald – SunTrust
Brian Tanquilut – Jefferies
Derrick Dagnan – Avondale Partners
Newton Juhng – BB&T Capital Markets
Ralph Giacobbe – Credit Suisse
Whit Mayo – Robert W. Baird
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Good morning and thank you for joining us today for the Amedisys investor conference call to discuss this morning’s second quarter 2008 earnings announcement and related matters. By now, you should have received the copy of our earnings press release. If you have not received the press release, you may access it on the Investor Relations page on our website at www.amedisys.com.
Joining me on today’s call from Amedisys are Bill Borne, Chairman and Chief Executive Officer; Larry Graham, President and Chief Operating Officer; and Dale Redman, Chief Financial Officer.
Before we get started with our call, I would like to remind everyone that any statements made on this conference call today or in our press releases that express a belief, expectation, or intent as well as those that are not historical facts are considered forward-looking statements and are protected under the Safe Harbor of the Private Securities Litigation Reform Act.
These forward-looking statements are based on information available to Amedisys today, and the copy assumes no obligation to update these statements as circumstances change. These forward-looking statements may involve a number of risks and uncertainties which may cause the company’s results to differ materially from such statements. These risks and uncertainties include factors detailed in our SEC filings including our forms 10-K and 10-Q.
Also, the company urges caution in considering any current trends or guidance that may be discussed in this conference call. The home health and hospice industry is highly competitive, and trends and guidance are subject to numerous factors, risks, and influences which are described in the company’s reports and registration statements filed with the SEC. The company disclaims any obligations to update information on trends or targets other than in its periodic filings with the SEC. In addition, as required by SEC Regulation G, a reconciliation of any non-GAAP measures mentioned during our call today to the most comparable GAAP measures will be available on our website at www.amedisys.com on the Investor Relations page under the link Press Releases.
Thank you. Now I’ll turn the call over to Bill Borne. Please go ahead, Mr. Borne.
Thank you, Kevin, and good morning. First, let me welcome each of you to this call. We appreciate the opportunity to update you regarding the company’s performance for the quarter and share our vision for Amedisys.
Overall, we are happy with both our presentation and our preparation related to the new payment system and the timing of our strategic purchase of TLC. The new payment system is fundamentally based upon patient acuity and the level of services required to service a more chronic population. In addition, the purchase of TLC has helped us to expand our national coverage network and migrate our services significantly in both the West and Northeast.
We had outstanding results for the second quarter reporting net service revenue of $313 million and earnings per share of $0.82 after adjusting for certain TLC integration costs. This represents growth of 85% and 44% respectively over the second quarter of 2007. Based on this performance and our expectation for the remainder of the year, we recently increased guidance for 2008. As stated in our July 17 guidance update press release, our increased expectation for the year are based largely on three factors. Our integration of TLC is ahead of schedule, our revenue per episode is increasing, and our rollout of our clinical program is progressing very well.
During the quarter, we made one strategic acquisition which included five home health locations from a national hospital chain. The acquisition expanded our coverage in two CON states and furthered our presence in a third state. During the quarter, we also opened four new home health agencies and three new hospice agencies. As a result of acquisitions and de novo growth, we ended the quarter with 458 home health locations, 162 more agencies than the second quarter of 2007. In addition, we owned 46 hospice agencies at the end of the second quarter of 2008, 29 more hospice agencies than the prior year. With these acquisitions and startups, we provide services in 504 agencies covering 35 states.
On the legislative front, both chambers of commerce have overridden the President’s detail of House Medicare Bill H.R.6331, The Medicare Improvement for Patients and Providers Act of 2008. The home health industry fared well with the passage of this legislation as our market basket increase was preserved through the end of 2009. The focus of our company is on better meeting the needs of our chronic comorbid patients within our care. The number of Medicare beneficiaries is expected to almost double by 2030 to 79 million people.
As I have stated on previous calls, our nation needs to develop a more efficient process for handling the health issues of the aging population in general and most specifically, for the chronic comorbid population which are expected to require an increasing portion of our healthcare resources. Even today, this chronic comorbid patient group that consists just 12% of our Medicare beneficiaries accounts for 69% of our Medicare spending.