Baton Rouge-based Amedisys Inc.’s first-quarter earnings slumped to $2.7 million, or 9 cents per share, compared with $5.4 million, or 18 cents per share, a year ago.
During a conference call with investors and stock analysts, President Ronald Laborde said the company will sell 39 care centers and consolidate 11 others.
A drop in home nursing patients and cuts to Medicare payments hurt revenue and profit, according to the home health giant. Legal fees associated with investigations into the firm’s Medicare billing practices cost the company $1.2 million, or 4 cents per share.
Stock analysts surveyed by Thomson Reuters expected Amedisys to earn 19 cents per share on revenue of $361.4 million. Amedisys’ revenue was $339.2 million, a drop of 8 percent compared with the same period in 2012.
Amedisys also lowered its earnings guidance for the year. The company now expects earnings to fall between 45 cents and 55 cents per share on revenue of $1.28 billion to $1.30 billion. Earlier, Amedisys had forecast earnings between 60 cents and 70 cents per share on revenue of $1.43 billion to $1.45 billion.
Stock analysts had predicted the company would earn 66 cents per share on revenue of $1.44 billion.
Amedisys had warned Thursday that its first-quarter results would affect the 2013 forecast. Amedisys said fewer patients and lower Medicare payments helped reduce earnings.
Chief Executive Officer William Borne said the nonperforming centers being sold or consolidated by Amedisys cost the company $10 million more a year to operate than they bring in. Borne said dumping the centers was one of three steps Amedisys will take short-term to boost results.
The others are cutting $5 million in corporate infrastructure and accelerating its patient care management program, which will help the company participate in Accountable Care Organizations.
Accountable Care Organizations are groups of health care providers that coordinate patient care and chronic disease management. The organizations’ payments are tied to keeping patients healthier.
The federal government has estimated ACOs could save Medicare $960 million over three years.
However, in a note to investors, Sheryl Skolnick, co-head of research for CRT Capital Group LLC, described Amedisys’ first quarter as “disastrous” and said the company could not shrink its way out of its current problems.
Medicare is expected to cut home health payments even further, and Amedisys’ move to increase its lower-margin, managed-care business won’t help because payments for that segment also are under pressure, Skolnick said. Amedisys’ revenue is likely to continue dropping faster than the company can cut costs, Skolnick said.
Skolnick has a “sell” rating on the stock.
Investors showed little reaction to Amedisys’ earnings report, which was released before the markets opened.
Amedisys shares closed Tuesday at $10.04, down 16 cents. Some 1.3 million shares changed hands, more than three times the average trading volume.