July 30, 2014 / 12:30 PM / 3 years ago

UPDATE 3-Care center closures boost Amedisys profit, shares jump

* 2nd-qtr adjusted net income attributable to company rises to $8 mln

* Net service revenue of $305 mln beats analysts’ estimate

* Co announced care center closures, consolidations in March

* Shares rise as much as 12 pct (Adds CFO comments; updates shares)

By Natalie Grover

July 30 (Reuters) - Amedisys Inc reported a better-than-expected rise in adjusted quarterly profit after closing some of its hospices and home health care centers to reduce costs.

The company’s shares rose nearly 18 percent to their highest in almost three years.

The closures helped Amedisys to reverse three straight quarterly losses, reflecting a turnaround in fortunes since the appointment of Ronald LaBorde as interim chief executive.

“We believe we have re-established a solid foundation which will allow us to concentrate on further improving our core business,” LaBorde said in a statement. The company is yet to announce a permanent successor.

While Amedisys did not forecast earnings for the rest of the year, interim Chief Financial Officer Dave Redmond said on a post-earnings conference call that the company was well poised to exceed analyst expectations.

“...with the current consensus ... of 16 cents for the year, we think we are going to handsomely beat that number,” he said.

Baton Rouge, Louisiana-based Amedisys said in March, a month after LaBorde became interim CEO, that it planned to close 29 care centers and consolidate a further 25 with other centers in the same markets.

In a preview of its second-quarter results released last month, it said these measures would improve gross margins and reduce costs.

Adjusted net income from continuing operations attributable to Amedisys rose to $8 million, or 25 cents per share, for the three months ended June 30 from $5.8 million, or 18 cents, a year earlier.

Toby Wann, analyst at Obsidian Research Group, called it “a clean quarter” for Amedisys, with same-store revenue from the company’s home health business returning to growth after several years of decline.

Amedisys, which says it delivers home health and hospice care to more than 360,000 patients annually, generated net service revenue of $305 million in the quarter.

Analysts on average expected the company to earn 4 cents per share on revenue of $298.9 million, according to Thomson Reuters I/B/E/S.

The company’s stock was up about 17 percent at $18.80 on the Nasdaq on Wednesday. Over 1 million shares had changed hands by 1230 ET, nearly four time the stock’s 10-day moving average. (Editing by Robin Paxton and Simon Jennings)

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