Disappointing 4Q for Amedisys - Analyst Blog

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.

AMEDISYS INC (AMED): Free Stock Analysis Report

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