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Amedysis Reports 1Q Prelim Earnings

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Home Health and Hospice Company, Amedisys Inc. (AMED - Free Report) announced its first quarter 2013 preliminary results yesterday. The company expects to report the quarter’s earnings per share (EPS) in the range of 8 –10 cents. However, this includes certain governmental investigation related legal costs which are expected to come in around $ 2 million or 4 cents a share. The current Zacks Consensus EPS Estimate is pegged at 21 cents.

Besides, the company expects the quarter’s revenue to be around $339 million, well behind the Zacks Consensus Estimate of $362 million. Amedisys plans to release its full first-quarter earnings on Apr 30, 2013, which according to the preliminary result, is going to be another miss for Amedisys.

Revs in Detail

Low revenue figures are attributable to weakness in demand in the home health and hospice division.  Growth of 2% in total medical admissions in the home health division was offset by the sluggishness in the recertification rate. Recertification rate is expected to be around 38% versus 44% in first-quarter 2012 and 40% in fourth quarter 2012. Home Health results were impacted by the sequestration, which lowered the Medicare reimbursement by 2% or 3 cents a share.

Hospice division also witnessed a decline in the reported quarter. The average daily census in the Hospice division declined to 5,091 versus 5,190 in the year-ago quarter. Hospice total admission increased 2% year over year but was offset by greater number of discharges than normal. Hospice results were not affected by the sequestration in the first quarter.

Our Take

Based on the preliminary results, it seems that Amedisys is likely to post another challenging quarter with estimates miss. While Amedisys has shown progress in the total medical admissions volumes, sluggish growth in the recertification rate remains a cause of concern. The highly uncertain home nursing reimbursement environment, coupled with significant reduction in Medicare reimbursement in 2011 and 2012 has affected  performance at Amedisys over the past few quarters. In the home health division, the sequestration cuts have negatively affected the company’s earnings. We expect the healthcare reimbursement pressure to persist even in 2013, thereby weakening the company’s performance.

Amedisys currently carries a Zacks rank #3 (Hold). Other stocks worth considering are Addus HomeCare Corporation (ADUS - Free Report) which carries a Zacks Rank #1 (Strong Buy) and China Cord Blood Corporation and Chemed Corp. (CHE - Free Report) which carries a Zacks Rank #2 (Buy).

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