Restructuring at Amedisys – Analyst Blog

Amedisys (AMED) announced a restructuring plan which is expected to benefit the company over the long-term. The company has decided to close 13 agencies consisting of 9 home health and 4 hospice agencies. In addition, 23 home health and 3 hospice agencies will be consolidated with the existing locations.

 

Amedisys is also curtailing its start-up programs thereby suspending the progress of 28 home health agencies. The company expects to open 5-10 start-up home health agencies, way below the earlier expectation of 40. These restructuring activities will cost the company $6-$8 million during the third quarter and $1 million in the fourth quarter of 2010. A major part of the charges are associated with lease terminations. The initiatives are expected to benefit the company over the long term, but not before the fourth quarter of fiscal 2010.

 

Home health services treat sick patients in their homes, which 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.

 

Along with the second quarter results, Amedisys provided guidance for 2010, an EPS of $4.20–$4.50 on revenues of $1.63–$1.65 billion. Earlier, in July 2010, the company had suspended its full year guidance provided in April, which was EPS of $5.50–$5.70 on revenues of $1.70–$1.75 billion.

 

Amedisys and some other home healthcare providers are being currently investigated by the Senate Finance Committee for allegedly abusing Medicare rules. The investigations are being conducted to check if these companies deliberately increased the number of patient visits to receive higher Medicare reimbursements.