(Reuters) - Amedisys Inc (AMED.O) reported a surprise quarterly loss due to higher costs per patient visit and lower admissions at its centers, and the home healthcare provider cut its full-year earnings forecast.
The company’s shares fell as much as 20 percent on Tuesday on the Nasdaq.
“There’s clearly pressure on the top-line from rate cuts,” CRT Capital analyst Sheryl Skolnick said. “Their revenue per episode (of care) continues to decline due to cuts that went into effect on January 1, sequestration being the largest.”
U.S. home healthcare providers including Almost Family (AFAM.O), and Gentiva Health Services Inc GTIV.O have been suffering all year from cuts to Medicare reimbursement under President Barack Obama’s healthcare law.
Amedisys’s same-center admissions fell by 2 percent in its home health business and by 7 percent in its hospice business in the third quarter ended September 30.
The company blamed underperformance by some of its care centers for the weak admissions.
“We identified 19 (care centers) that we will close or consolidate in the fourth quarter,” Chief Executive William Borne told analysts on a post-earnings conference call.
He said the company would have 450 centers after these closures. “Locations that don’t show meaningful positive performance will likely be closed or consolidated in the coming year,” Borne said.
He also said Amedisys had 35 centers that were too small to become profitable in the reimbursement environment, and the company would invest in them to boost their growth.
The company slashed its full-year earnings forecast to 20-25 cents per share from 45-55 cents. It also lowered the top end of its 2013 net service revenue forecast range to $1.24 billion-$1.25 billion from $1.24 billion-$1.28 billion.
CRT Capital’s Skolnick said the forecast was still too high as Amedisys had not taken into account the resetting of Medicare payment rates for home health and hospice services next year.
“The outlook for reimbursement is not better next year. In fact, it’s worse,” she said.
The company booked a charge of $150 million in the third quarter related to a tentative settlement with the U.S. Department of Justice over an investigation launched in 2010 into its reimbursement and billing claims.
“The $150 million settlement severely impairs balance sheet flexibility, likely limiting the company’s capacity for near-term mergers and acquisitions,” Raymond James analyst John Ransom wrote in a note.
The company, while denying any wrongdoing, said it expected to enter into an integrity agreement with the U.S. Department of Health and Human Services as a part of the settlement.
Amedisys will pay $115 million once the agreement is finalized and the remaining $35 million six months after that.
The agreement would mean that Amedisys would not be excluded from participation in federal programs such as Medicare and Medicaid.
The company recorded a net loss from continuing operations of $90.4 million, or $2.87 per share, in the third quarter compared with earnings of $10.4 million, or 34 cents per share, a year earlier.
Excluding items, Amedisys reported a loss of 1 cent per share. Net service revenue fell 17 percent to $301.6 million.
Analysts on average had expected earnings of 13 cents per share on revenue of $314.30 million, according to Thomson Reuters I/B/E/S.
Amedisys shares were down 17 percent at $14.39 on Tuesday afternoon on the Nasdaq. The stock has risen 73 percent in the 12 months to its Monday close.
Editing by Kirti Pandey and Ted Kerr