Disappointing 4Q for Amedisys - Analyst Blog
01 March 2012 - 12:01AM
Zacks
Home health care provider Amedisys (AMED)
reported EPS of 25 cents in the fourth quarter of 2011, compared
with 86 cents in the year-ago quarter. The company recorded
goodwill impairment charge of $5.8 million during the quarter due
to decline in market capitalization and disappointing performance
over the past few quarters.
After taking into account this charge and other one-time
expenses, the adjusted EPS in the reported quarter stood at 49
cents compared with $1.03 in the fourth quarter of 2010. The Zacks
Consensus Estimate for the quarter was pegged at 29 cents. In
fiscal 2011, the adjusted EPS from continuing operation came in at
$2.27, down 50.8% year over year.
Amedisys primarily derives revenue from its home health and
hospice agencies by providing a variety of services at homes. Net
service revenue stood at $370.7 million in the reported quarter,
almost in line with the Zacks Consensus Estimate but down 4.6% year
over year.
The decline in net service revenue during the quarter was mainly
due to a 14.3% drop in same-store Episodic-based sales. Net service
revenue in fiscal 2011 was $1.5 billion, down 8.2% from $1.6
billion in the previous year.
Gross margin decreased 463 basis points (bps) to 45.19% in the
fourth quarter of 2011. Adjusted operating margin (excluding the
effect of depreciation and amortization, provision for doubtful
accounts as well as goodwill and other intangibles impairment
charge) witnessed a massive 530 bps year-over-year decline to
9.24%.
Amedisys exited the reported fiscal with cash and cash
equivalents of $48.0 million, compared with $120.3 million at the
end of December 2010.
Guidance
Amedisys provided its guidance for fiscal 2012. The company
expects EPS in the range of 95 cents–$1.10. The current Zacks
Consensus Estimate of 95 cents falls at the lower end of the guided
range. The company’s revenue guidance for 2012 is expected to
remain within $1.475–$1.525 billion.
We believe the highly uncertain home nursing reimbursement
environment (an expected reduction in Medicare reimbursements to
hit the home health-care sector in another year) will further
weaken the company’s persisting volatile position.
Presently, the stock retains a short-term Zacks #4 Rank (Sell).
Over the long term, we have an Underperform recommendation on the
company.
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