Home health care provider, Amedisys (AMED) reported EPS of 75 cents in the second quarter of 2011, down 33.6% from $1.13 per share in the year-ago quarter. However, after adjusting for certain one-time items, EPS came in at 67 cents, missing the Zacks Consensus Estimate by 2 cents and 41.7% lower than the year-ago quarter.
Amedisys primarily earns revenue from its home health and hospice agencies by providing a variety of services at homes. Net service revenues were $373.7 million in the quarter, 11.5% lower than the year-ago quarter.
The fall in net service revenue was mainly due to an $85.9 million drop in same-store agencies sales, out of which the company incurred a loss of $31.8 million related to agency shut downs. However, this was partially offset by a $20.4 million rise in sales associated with start-up and acquisition agencies.
Gross margin decreased 210 basis points to 48.3% in the second quarter of 2011. Adjusted operating margin (excluding the effect of depreciation and amortization and provision for doubtful accounts) witnessed a massive 300 bps year-over-year decline to 13.3%.
Amedisys exited the reported quarter with cash and cash equivalents of $28.1 million, compared with $120.3 million at the end of December 2010.
The company’s disappointing result was primarily due to soft home health performance arising from some regulatory changes in the division, which had a dampening impact on volume and pricing. However, in hospice segment, the company completed its acquisition of Boston-based Beacon Hospice for $125 million.
Home health services provide treatment to sick patients at their homes and help save money by avoiding costly hospitalization. Services include programs for chronic conditions and various diseases such as diabetes, coronary artery disease, congestive heart failure, and complex wound care, chronic obstructive pulmonary disease, geriatric surgical recovery, behavioral health, and stroke recovery, as well as various rehabilitative programs. Amedisys also provides hospice services to patients.
Guidance
Based on the disappointing quarter, Amedisys lowered its guidance for 2011. The company expects EPS of $2.20–$2.40 (previous range being $3.00–$3.30), lower than the Zacks Consensus Estimate of $2.97. The company expects revenues in the range of $1.47–$1.50 billion ($1.60–$1.65 billion), less than the Zacks Consensus Estimate of $1.55 billion.
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