Leading player in the Home Health and Hospice segment in the US, Amedisys (AMED), has completed the acquisition of Beacon Hospice for $125 million. The company had announced the deal in April 2011. In fiscal 2010, Beacon reported annualized revenues of $80 million with daily volume of approximately 1300 patients. Amedisys expects that the acquisition will increase its hospice patients by nearly 40%.
Beacon Hospice, considered as one of the leading hospice companies in the New England region, has 23 free-standing locations and one inpatient unit catering Massachusetts, Maine, New Hampshire, Rhode Island and Connecticut. Apart from expanding Amedysis’ presence inthe New England region, the acquisition of Beacon is expected to add 5−7 cents (excluding one-time expenses) to its fiscal 2011 earnings.
The acquisition by Amedisys is an attempt to boost its top line which has been disappointing for sometime. During the first quarter of fiscal 2011, the company reported revenues of $364.3 million, 11.8% lower than the year-ago quarter. The company experienced a $40.5 million drop in same store agencies sales, $16.2 million decline related to the agencies shut down offset by an $8.0 million pickup in sales related to start-up and acquisition agencies. The disappointing result of Amedisys was primarily due to soft admissions volume. However, the company is making efforts to increase operational efficiencies.
Amedisys provides services to treat sick patients at their homes that helps avoid the costly hospitalization. As a result, the company expects robust growth from this service as the demand for alternative to hospitals has been rising to curb the massive hospitalization cost. Amedisys also provides hospice services to patients. Moreover, the company faces stiff competition from players such as Gentiva Health Services(GTIV), among others.
At present Amedisys is going through a difficult phase primarily due to investigations being conducted by the Senate Finance Committee, the Securities and Exchange Commission (SEC) and the Department of Justice for abuse of Medicare rules. The investigations are being conducted to check if these companies had deliberately increased the number of patient visits to receive higher Medicare reimbursements.
