Gentiva Health Services, Inc. (GTIV) reported third-quarter 2014 adjusted earnings of 28 cents per share, missing the Zacks Consensus Estimate by a penny. However, the figure improved from the year-ago quarter earnings of 15 cents per share.
The upside was driven by continued success of the One Gentiva initiative and growth momentum across the company’s businesses.
Including cost saving initiatives, along with acquisition and integration activities, loss on sale of CareCentrix, the impact of closed locations and that of merger-related expenses, Gentiva posted net income of 21 cents per share, comparing favorably with net income of 12 cents a year ago.
The company’s net revenue increased 21.3% year over year to $498 million. The figure was in line with the Zacks Consensus Estimate.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) soared 37.4% year over year to $48.5 million.
Financial Update
As Sep 30, 2014, cash and cash equivalents of Gentiva were $114.2 million, up from $86.96 million as of Dec 31, 2013. As of Sep 30, 2014, the company’s long-term debt was $1.2 billion, slightly up from $1.1 billion at 2013-end.
Net cash from operating activities amounted to $13.4 million in the reported quarter, compared with $8.4 million in the third quarter of 2013. For the third quarter of 2014, free cash flow was $10.2 million as against $1.7 million in the year-ago quarter.
Business Update
On Oct 9, 2014, Gentiva announced a merger agreement with Kindred Healthcare, Inc. (KND). As per the deal, Kindred will acquire all outstanding shares of Gentiva for $19.50 per share. The deal is expected to close in the first quarter of 2015.
2014 Outlook
The company reiterated its adjusted income range outlook of 95 cents–$1.15 per share. Management also reaffirmed the adjusted EBITDA guidance of $183–$195 million. The tightening of the guidance was mainly driven by Gentiva’s robust year-to-date results.
The net revenue guidance was reiterated at $1.96–$2 billion.
The 2014 outlook takes into account the full-year effect of the Harden acquisition and the CMS issued 2014 Medicare home health and hospice reimbursement rates.
Performance of Other Industry Players
WellPoint Inc. (WLP) posted third-quarter 2014 adjusted income of $2.36 per share, beating the Zacks Consensus Estimate of $2.28.
Molina Healthcare Inc. (MOH) reported third-quarter 2014 operating earnings of 79 cents per share, handily beating the Zacks Consensus Estimate of 41 cents per share.
Zacks Rank
Gentiva currently carries a Zacks Rank #3 (Hold).
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