Amedisys closing 29 care centers, consolidating 25

Baton Rouge-based Amedisys Inc., which has operations nationally, is closing 29 home health and hospice centers and consolidating another 25 in places where its care centers are servicing the same markets.

As a result, the company said Friday it expects to have non-recurring charges in the range of $7 million to $9 million in the first quarter of this year for employee severance payments, lease terminations and “noncash intangibles.”

Friday’s announcement comes on top of a whirlwind of activity in recent weeks and months in which an activist investment firm, which accumulated a 14.9 percent stake in Amedisys, got a member appointed to the board, while the company’s chief executive officer/founder and a senior financial officer resigned. Amedisys also posted a fourth-quarter and annual loss earlier this month.

The care center closures and consolidations will take place over the next six weeks, Amedisys said. The company said it is targeting care centers that have not been performing as desired and refocusing efforts on its more than 400 remaining care centers around the country.

The charges it will take include severance payments to employees of $3 million to $4 million and lease terminations of about $2 million to $3 million. Other noncash intangibles will result in an impairment charge of about $2 million.

The company would not say how many employees are affected.

In its breakdown of facilities, Amedisys said it is closing 23 home health and six hospice care centers, and consolidating 21 home health and four hospice care centers.

It said local teams at the affected care centers are working with the referring doctors, patients and patients’ families and friends to help them enter other Amedisys care centers or assist them in finding another provider.

The company would not specify where the facilities being affected are located.

Last year the company reported an effort to sell about 35 centers and consolidate about 15.

Amedisys operates in 37 states, Washington, D.C., and Puerto Rico, according to its website, and provides home health and hospice care to more than 360,000 patients each year.

The company said Friday it is making changes to its network of care centers “to best position us for success in the years to come.”

“This decision is part of our unwavering commitment to delivering shareholder value while supporting the patients entrusted to our care,” the company said.

Amedisys stock nudged up 2 cents to close at $14.73 on Friday, then rose 16 cents, or about 1 percent, in after-hours trading.

On Thursday, a member of a major investor was appointed to the board of directors of Amedisys.

Nathaniel M. Zilkha is a member of the general partner of KKR & Co. LP and serves as head of its credit platform and as global co-head of special situations.

After amassing a 14.9 percent stake in Amedisys in the past year, KKR Asset Management made its first move as an activist shareholder in late January by asking that Zilkha be nominated immediately to the board of directors.

KKR Asset Management’s investment strategy includes investing in distressed companies and other opportunistic situations.

“I look forward to working with my fellow board members and Amedisys’ senior management to position the company for strong future performance,” Zilkha said in a statement about his appointment.

Shortly after KKR amassed its investment in Amedisys and sought a position on the board, William F. Borne, who oversaw Amedisys Inc.’s metamorphosis from a small regional company into one of the country’s largest home nursing providers, resigned in February as chief executive officer, chairman and director.

The board then made Donald A. Washburn, lead director, and David R. Pitts, director, nonexecutive board co-chairmen, taking a greater oversight role in the company’s operations. President and Chief Financial Officer Ronald A. LaBorde was named interim CEO during a national search for a permanent CEO. Also, former CFO Dale E. Redman was lured out of retirement to serve as interim CFO in place of Thomas Dolan, senior vice president of finance and treasurer, who left the company. LaBorde then said Dolan’s departure was “completely independent of anything that’s going on here, any other changes.”

Up until 2010, Amedisys’ growth appeared inexorable. The company rolled to seven consecutive years of record profits. In April 2010, The Wall Street Journal found the number of home therapy visits by Amedisys closely tracked the levels required to trigger lucrative Medicare bonus payments. The story led to investigations by the U.S. Senate Finance Committee, the Securities and Exchange Commission and the Department of Justice.

The Senate investigation found in 2011 that Amedisys abused the Medicare bonus system at best and committed fraud at worst. But the committee levied no penalties. In November, Amedisys announced it had set aside $150 million to settle with the Justice Department. The SEC investigation is still underway.

Earlier this month, Amedisys reported a fourth-quarter loss of $9.6 million, or 30 cents per share, compared with a $106.8 million loss, or $3.52 per share, a year ago.

For the year, Amedisys lost $96.2 million, or $3.08 per share, compared with an $83.6 million loss, or $2.79 per share, in 2012.