Amedisys (AMED), a home healthcare provider reported an EPS of 77 cents during the fourth quarter of 2010 compared to $1.35 in the year-ago period. However, after adjusting for certain one-time items, the EPS was 95 cents, beating the Zacks Consensus Estimate by 5 cents but 29.6% lower than the year-ago quarter.
For fiscal 2010, the company reported adjusted EPS of $4.29, beating the Zacks Consensus estimate of $4.22 but down 12.3% compared with 2009.
Amedisys earns revenue through its home health and hospice agencies by providing a variety of services at homes. Revenues were $394.3 million, missing the Zacks Consensus Estimate of $400 million and 2.8% lower than the year-ago quarter.
The marginal fall in net service revenue reflects the $8.0 million fall in same store agencies sales, $11.5 million decline related to the agencies shut down offset by a strong $8.3 million pickup in sales related to start-up and acquisition agencies.
However, for the full year Amedisys reported net service revenue of $ 1.63 billion, up 7.9% compared with 2009 and marginally in line with the Zacks Consensus Estimate reflecting $71.4 million and $70.9 million sales growth in same store agencies and related tostart-up and acquisition agencies, respectively, offset by $21.5 million decrease in revenue from closed agencies.
Gross margin was down 224 basic points to 49.08% in the fourth quarter 2010. Adjusted operating income witnessed a huge 29.2% year over year decline to $52.9 million driven by a 6.9% fall in gross profit and 3.24% rise in operating expenses. This in turn led to a decline of 503 bps to 13.43% in operating margin.
This disappointing result was primarily due to the ongoing investigation on Amedisys and some of its competitors by the Senate Finance Committee, the Securities and Exchange Commission (SEC) and some other agencies for alleged abuse of Medicare rules. The investigations are being conducted to check if these companies deliberately increased the number of patient visits to receive higher Medicare reimbursements.
Amedisys exited the reported quarter with cash and cash equivalents of $120.2 million, up 71.3% year over year.
Home health services provide treatment to sick patients in their homes that helps 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.
The number of home health and hospice agencies at the end of the quarter was 486 (down from 521 in the year-ago period) and 67 (65), respectively.
Guidance
Based on a disappointing quarter, Amedisys provided its full year guidance for 2011. The company expects an EPS of $3.00–$3.30 which is lower than the Zacks Consensus Estimate of $3.32. It expects revenues to be in the range of $1.60–$1.65 billion.
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